One year after the Federal Trade Commission updated its "Guides Concerning the Use of Endorsements and Testimonials in Advertising," there is still confusion surrounding the changes and questions as to how they affect marketers, bloggers and product endorsers.

FTC maintains that no dramatic changes have been introduced. However, its Endorsement Guides were due for an update to address developments in the marketplace since their creation in 1980.

"The legal principles haven't changed," FTC says in a document posted to its website titled "The FTC's Revised Endorsement Guides: What People Are Asking."

"The FTC revised the examples to show how these standards apply in today's marketing world," the agency explains.

An obvious development since the guidelines were first published is the explosion in Internet advertising.

"We're seeing endorsements in new contexts like social networking and blogs," that were not addressed in the original guidelines crafted 30 years ago, long before Twitter and Facebook, FTC Commissioner Julie Brill noted Oct. 5 at the NAD Annual Conference in New York.

Celebs Must Disclose Connection To Brand

"It's always been the law that if an ad features an endorser who's a relative or employee of the marketer - or if an endorser has been paid or given something of value to tout the marketer's product - the ad is misleading unless the connection is made clear," FTC says.

However, the circumstances in which such disclosures are necessary are not always clear.

At the NAD conference, Brill noted that a "recognizable figure who speaks about the attributes of a product or service would be considered an endorser, even if the celebrity's statements are clearly scripted and do not contain an expression of personal belief."

Say a "celebrity discusses a product in a promotional way on a talk show or on Twitter" and is "being paid to speak publicly about the product and the consumer wouldn't otherwise be aware of the connection, they should disclose it," she said.

Whether that means stating the connection once or including it in every tweet is up for interpretation and individual discretion.

Bloggers also are subject to requirements under FTC law. The agency notes that "for a review in a newspaper, on TV, or on a website with similar content, it's usually clear to the audience that the reviewer didn't buy the product being reviewed. It's the interviewer's job to write his or her opinion and no one thinks they bought the product - for example, a book or movie ticket - themselves.

"But on a personal blog, a social networking page or in similar media, the reader may not expect the reviewer to have a relationship with the company whose products are mentioned. Disclosure of that relationship helps readers decide how much weight to give the review," FTC says.

Marketers also have responsibilities when it comes to blogger reviews. The Endorsement Guides provide an example:

If an advertiser asks a blogger to try a new body lotion and post her reaction on her blog, and if in her review the blogger writes that the lotion cures eczema, the advertiser could be liable for misleading consumers even though the company itself did not make any unsubstantiated claims about curing a skin disease.

FTC encourages advertisers to monitor endorsers and intervene as needed.

Recent Regulatory Action Reflects Guidance

FTC has launched enforcement action recently on the basis of undeclared material connections between marketers and endorsers.

It targeted Ann Taylor Stores Corp.'s Ann Taylor Loft clothing stores in a situation where the brand was sending out invitations to bloggers to review its Summer 2010 collection and promising that participants who submitted a review to the company for approval before posting to a blog would be eligible to receive a gift card valued between $10 and $500.

Ultimately the investigation was closed without formal action since few bloggers took the firm up on the offer.

Another case involved public relations agency Reverb Communications and resulted in a consent order. Reverb was hired to promote video games and in exchange for its services received a percentage of sales for each game, according to FTC. To promote games, Reverb employees posted positive reviews on iTunes without disclosing that they were paid by the game developer.

"These looked like they were reviews from ordinary consumers, which they were not," said Mary Engle, associate director for advertising practices at the FTC.

Peter Marinello, director of the National Advertising Review Council's Electronic Retailing Self-Regulation program, has taken a hard line on the material connections issue in direct response advertising such as infomercials and mobile marketing. He spoke at the NAD conference in a panel titled "Advertising Self-Regulation: The Year in Review."

Whether it is "infomercials with consumer reporters, call-ins to home shopping networks by employees or testimonials made by family members or co-owners, they must disclose it,' he said. "We're not reinventing the wheel. Anyone who does it already violates Section 5 of the FTC Act that prohibits unfair and deceptive practices."

ERSP sided with Procter & Gamble last year in its challenge of eCommerce Solutions' Vibrant White Tooth Whitener, which the marketer was touting online with glowing reviews it wrote itself. The firm also claimed its product was superior to P&G brand Crest Whitestrips .

FTC's Endorsement Guide also addresses product advertisements that focus on extraordinary user results and include a statement along the lines of "Results not typical" or "Individual results may vary." Such a disclaimer does not usually change consumers' interpretation of the ad as meaning "that the endorser's experience is what others can expect," FTC says.

It advises marketers either to have evidence to support that the results highlighted in the ad are typical or to "clearly and conspicuously disclose the generally expected performance in the circumstances shown in the ad."

- Suzanne Blecher ( ¹ s.blecher@elsevier.com )

FTC Addresses Confusion Over Updated Endorsement Guides

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