The Federal Trade Commission's proposed revisions to its guides on endorsements would "impede the use of even truthful consumer testimonials" and are based on "flawed studies," trade associations say.

The Council for Responsible Nutrition and the Electronic Retailing Association March 2 jointly submitted comments on FTC's November 2008 notice of proposed revisions to the Guides Concerning the Use of Endorsements and Testimonials in Advertising.

FTC's revisions target testimonials that frequently tie an individual endorser's atypical results to a weight-loss product (¹ Also see "FTC Testimonial Guidelines Say Advertisers Must Show Typical Outcomes" - Pink Sheet, 1 December, 2008., p. 5).

When sponsors cannot verify an endorser's experience as typical, but consumers likely will interpret it as such, sponsors would have to "clearly and conspicuously disclose the generally expected performance in the depicted circumstances," under the proposed ² guides.

FTC would hold those "generally expected results" to a substantiation standard similar to what it uses for material claims made for any product or service. Agency officials said the revised guides would not chill advertising as long as marketers qualify language that does not represent typical outcomes.

However, CRN and ERA say the costs of substantiation will bar many firms from using testimonials or endorsements in advertising. Some companies "will find it impossible to comply with the new standard," according to the groups' ³ comments, prepared by attorneys Jeffrey D. Knowles and Edward F. Glynn, Jr. of Washington firm Venable.

The Natural Products Association submitted ⁴ comments on the proposal Jan. 30, asking the commission to clarify its position on the use of limited, controlled studies to support testimonial claims applied to a broader population.

With no clarification, the guides would have the "potential to field a regulatory environment in which ... the rules may be changed in the middle of the game," NPA's VP for Scientific and Regulatory Affairs Daniel Fabricant says in comments.

Additionally, NPA says while FTC acknowledged the difficulties in designing studies to substantiate the effects of weight-loss products, the commission nonetheless expects advertisers to provide such information.

"This assertion does not seem to be based upon anything other than optimism," Fabricant says.

Studies Flunk FTC's Own Standards

The commission said it based some of its proposed revisions on two studies it funded showing disclosure statements for dietary supplements did little to enhance understanding of the products' efficacy claims.

Those studies were flawed, CRN and ERA argue, pointing out that the commission referred to problems with the studies in its notice of the revised guidelines. The groups say the studies were focused too narrowly to provide the basis for broad guidelines, and failed to probe subjects' perceptions of the mock testimonials.

"It is ironic that the two studies that have been put forth" to support the changes "would not meet the standards that have been applied to advertising substantiation" by FTC, the trade groups say.

CRN and ERA say "it makes more sense for [FTC] to focus its attention on a case-by-case basis on advertisements that fool consumers into wasting their money on weight-loss or other products that do not work," rather than impose broad enforcement against firms using testimonials without the level of substantiation proposed in the guides.

Additionally, the commission would infringe on advertisers' First Amendment rights by requiring proof that disclaimers are effective, the groups argue. They say this restriction on the use of testimonials differs from the "general presumption" recognized by FTC and other federal agencies "that consumers read and understand what is legibly presented to them."

NPA also argues FTC errs in its proposed method for evaluating disclaimers. Fabricant says "neither case law, nor common sense lend ... credence to the contention that a disclaimer is valueless simply on the basis that consumers disregard it."

The original deadline for comments on the proposed revisions was pushed back to March 2 from Jan. 30. FTC has not set a date for finalizing the revisions.

- Malcolm Spicer (m.spicer@elsevier.com)

FTC’s Testimonial Guides Squeeze Advertisers’ Options – Trades

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