FTC cracks down on endorsements and testimonials

FTC Testimonial CrackdownTestimonials have been a powerful advertising tool for generations. But now the FTC is stepping in to rewrite the rules for how you can use testimonials and endorsements.

While I’m not clear on how this will shake out, the press release issued by the FTC doesn’t look pretty.

The guidelines will not only affect the testimonials used in ads, they will also affect consumers, experts, bloggers, organizations, and celebrities who endorse products.

Here a few excerpts:

Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect.

The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers.

Celebrity endorsers also are addressed in the revised Guides. While the 1980 Guides did not explicitly state that endorsers as well as advertisers could be liable under the FTC Act for statements they make in an endorsement, the revised Guides reflect Commission case law and clearly state that both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement – or for failure to disclose material connections between the advertiser and endorsers.

The press release says these guidelines are ” … administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves.”

Maybe. But it certainly indicates where the law might be going and that it may become significantly harder to use testimonials, even honest ones.

What do you think? Will this merely clean up unethical practices or will it stifle an effective selling tool?

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