The FTC has recently released new Guides on Endorsements and Testimonials. These new Guides mean new rules for all types of marketers and talent. But are you ready to comply? Take this pop quiz to see if you are prepared:
Can celebrities have liability for endorsing a product that does not work?
Can you ever use a disclaimer like “results not typical�
Do you need to do a study to show what the generally expected result will be for your product? If so, what kind of data do you need?
Are you responsible for the claims your affiliates make? If so, what can you do to avoid liability for the actions of rogue affiliates who make claims you don’t agree with?
A celebrity wears clothing with your logo as part of a contract. Is this an endorsement?
What is a clear and conspicuous disclosure on a blog?
When you show a testimonial, are you claiming that others will experience similar results?
Can you structure your TV spots in a way that does not send consumers the message that they will experience similar results?
(How) Can you comply by simply editing your existing spot?
What is the FTC particularly concerned about? How can you make sure you are complying with the Guides?
Get the answers to these questions and ask your own at the ERA Spotlight Sessions: Endorsements and Testimonials. The first session is December 7 in New York City, the second session is December 14 in Long Beach, CA and the final session will be a live webinar on December 17 (free to ERA members).
Rich Cleland, an Assistant Director in the FTC’s Bureau of Consumer Protection will participate in each session. He will be joined by top legal experts in the industry to answer your questions. The two in-person sessions will be half-day events including two panels and a question and answer session with all of the panelists. These in person sessions will give you the opportunity to meet and share strategies with others experiencing similar challenges. See the details and register now. retailing.org/ERA_Spotlight_Sessions
Yesterday, the Federal Trade Commission released its revised Guides Concerning the Use of Endorsements and Testimonials in Advertising. The Guides are more than 80 pages long, so we’re still analyzing the changes. However, there is no question that our extensive advocacy efforts have had an effect on the final iteration of the Guides. The commentary included with the changes explains that advertisements using consumer testimonials should be evaluated by the net impression of the advertisement. A footnote in the revised Guides also suggests that in some cases a disclaimer could be sufficient. A more comprehensive legal document will be circulated shortly, but it is clear from a preliminary review that our efforts have not been made in vain. The 35 advocacy meetings on the Hill, 40 constituent meetings at the Fly-In, the testimony before the Senate, two sets of detailed comments and our suggested language were all helpful in presenting our case to the FTC.
However, the new Guides certainly do present some challenges, both to traditional TV marketers and those in social media. ERA is already planning educational opportunities that will provide suggestions for compliance with these changes. We hope the FTC will seize the opportunity to improve the marketplace by presenting to these changes to ERA members at one of our conferences.
Members who attended the Fly-In, supported the Leadership Reception, participated in the Government Affairs Committee, helped to author and review our comments to the FTC, and of course, testified before the Senate, were all instrumental in mitigating some of the more harmful changes. We thank you.
It has been an exciting week in the world of net neutrality. This week, Julius Genachowski, the Chairman of the FCC, announced the Commission’s intention to enter into a formal rulemaking process to codify the four principles of net neutrality currently in use and to add two more principles. The additional principles include a statement that consumers must be able to access the lawful content of their choice, subject to reasonable network management. Essentially, ISPs cannot block traffic to say, NBC Video, just because they have a partnership with Hulu. However, they still may prioritize all video content over all file sharing in order to manage the use of the network. In addition, networks must be transparent about what they are doing to manage traffic. This would give small business and direct response marketers more information about how consumers are experiencing online offerings like video advertising. Specifically, if you are providing an application for wireless devices or making videos available on sites like YouTube, you will know if some of the network providers are slowing certain services during peak hours. You will then be able to adjust your content delivery accordingly.
Tomorrow, the Consumer Protection Subcommittee of the Senate Commerce Committee will hold a hearing entitled “Advertising Trends and Consumer Protection.†The hearing will consider several issues in advertising, including the use of the word “free†and Endorsements and Testimonials. This is part of a broader reevaluation of the FTC’s powers and funding. An explanation of tomorrow’s hearing is really not complete without an explanation of last week’s hearing. Last week, from the first opening statement to adjournment, the hearing focused on testimony from consumer groups and emphasized that consumers are targeted by scams and needed additional protection from the FTC (P.S.- You can watch this hearing and kind of see me in the background on C-SPAN here). On a panel of four, a lone dissenter, Tim Muris, former FTC chairman, claimed that the FTC did not need a major expansion in order to effectively protect consumers.
In contrast, this week we have two ERA members testifying and one representative from the National Advertising Review Council (NARC), which administers the ERSP program (ERA’s independent self-regulatory program). We look forward to hearing some dynamic testimony from Guthy-Renker’s Greg Renker and Product Partners’ Jon Congdon. We worked hard to make sure our industry was represented and that this hearing would be more balanced than the last. We’re certain that Renker and Congdon will provide effective counterpoint claims that the FTC needs more authority on the testimonials issue. They can show that our industry is enthusiastic about creating an environment that protects consumers. They are our customers for Pete’s sake! They will also show how effective principled self-regulation is in promoting honest business practices.
For more information or to watch tomorrow’s hearing live or immediately upon completion, click here. (The video may not post until the conclusion of the hearing)
Follow me on Twitter for my live updates from the hearing: Tomi_ERA
If you are thinking about buying something online, one of your first steps in evaluating the product might be to see what kind of reviews the product has received. But what if the reviewer was paid to give a favorable review? This is a practice that clearly has some troubling implications. That’s why the FTC recently addressed this practice in the Guides Concerning the Use of Endorsements and Testimonials in Advertising (yes, this is the same proposal that would require evidence of typicality for some testimonials).
But, consider this: You want your product to appear on reviews because you believe it will help increase the visibility of the product or brand. You send a free sample to a well-known blogger and you explicitly tell them they should be neutral in their review and should disclose that they received the product for free. Under the FTC’s proposed changes you may have liability. If on the same day you also send your product to a product reviewer for a publication without any agreement requiring disclosure, and they do not disclose that they received the product for free, you do not have liability!
Product reviews online come in many forms. In some contexts consumers will expect that the product was given to the reviewer as a free sample. If a college student reviews a new game console every week, would anyone really think that he or she is spending thousands of dollars a month to share friendly advice? This is a complicated issue deserving careful analysis; the FTC must consider the nuances of product reviews before adding new regulations for bloggers.
Get involved! You can learn more and do something about these proposed changes here.
For more information on ERA’s government affairs efforts, click here.
As you probably know, the FTC is planning to eliminate the safe harbor for testimonials with disclaimers. If you are concerned about these changes, make sure you sign up to receive updates from us on this issue. We will send occasional updates that will keep you up to speed. This is part of the grassroots effort we will be launching shortly and these updates will make sure you know about opportunities to get involved. Please make sure you don’t miss out - fill out the form here.
ERA hosted the 2009 Government Affairs Fly-In in Washington, D.C. on April 20 and 21. Over 50 ERA members came together in our nation’s capital to network and meet with members of Congress to highlight their concerns over the revised Federal Trade Commission (FTC) Guides on Endorsements and Testimonials. Attendees participated in over 40 meetings with members of Congress and their staff, enjoyed a dynamic keynote speech by Senator Mark Pryor (D-AR), and networked with the movers and shakers of the D2C industry at two cocktail receptions.
For more video testimonials, click here. To learn more about ERA’s government affairs efforts, click here.
As this year’s ERA Government Affairs Fly-In comes to a close, the FTC’s view on testimonials and endorsements has been the hot topic. The following column addressing this issue first appeared in Electronic Retailer in March of 2007.
Disclaimer: Some readers of the following column may be amused and entertained; others may be put off by a perceived self-indulgent rant. Results may vary.
A few years ago, a client of mine who was sponsoring a car at the Indy 500 was gracious enough to invite me along. Just prior to the start of the race, a parade of stars was introduced. Who do you suppose elicited the greatest ovation from the crowd? Was it pop star and Proactiv endorser Jessica Simpson? Late night star cum racing team leader David Letterman? Jim “Gomer Pyle†Nabors singing “Back Home in Indiana†just prior to “Lady (thank you, Danica Patrick) and gentlemen, start your engines?†No, it was Jared Fogle. Jared Fogle? Yes, Jared–the Subway Guy.
I mention all this because as the Federal Trade Commission (FTC) begins the process of reviewing its policy on testimonials in advertising, Jared and the billowing pants he used to wear when he was 235 pounds heavier are about to endure the kind of scrutiny serial dieters reserve for their waistline. The FTC is examining whether highlighting such extraordinary cases of success within advertising creates expectations in the mind of the consumer that are misleading or even deceptive, even though they may be accompanied by a disclaimer along the lines of “results not typical.†Given the prevalence in health, fitness and even financial direct marketing of such endorsements, this may threaten a core device advertisers have long employed to spur couch potatoes to take action.
The Jareds of the world are aspirational catalysts who inspire others to change their lives. Does anyone really think that by working out at 24 Hour Fitness, they can ride a bicycle like Lance Armstrong? No, but by endorsing this chain, Armstrong may lead the target audience to healthier living. Similarly, a tearful weight-loss infomercial testimonial that causes a viewer to pick up the phone could be viewed as a public service. Given the rate of obesity in America, shouldn’t these authentic testimonials be framed in a positive light?
In a world with scant heroes, perhaps we shouldn’t be surprised that commoner Jared received the greatest roar at Indy. Subway has tried many different campaigns in the near-decade since our bespectacled everyman first “ate fresh,†but keeps coming back to the icon that represents the ability of the average person to achieve extraordinary results. And what of the role of personal responsibility in making choices (something I would think our government would want to extol)? Having sat through countless focus groups, I can attest that consumers pay close attention to those mouse-typed disclaimers, and comprehend every word. The FTC should give them more credit. Perhaps a more appropriate disclaimer for such testimonials would be: “Individual desire or will may vary.†Fat chance.
Rick Petry is a freelance writer who specializes in direct marketing. He can be reached at rick.petry@me.com.
For more information about ERA’s government affairs efforts, click here.
On the evening of April 20 and all day on the 21st, ERA will be hosting the Government Affairs Fly-In. In addition to two fantastic networking receptions, a keynote address by Senator Pryor, and detailed issue briefings, you will have the opportunity to really let lawmakers know about how this issue affects your business.
Consumers lured by advertisements promising rock-hard abs, sparkling white teeth and bulging bank accounts soon may get a reality check.
Updated guidelines on ad endorsements and testimonials under final review by the Federal Trade Commission—and widely expected to be adopted—would end marketers’ ability to talk up the extreme benefits of products while carrying disclaimers like “results not typical” or “individual results may vary.”
Instead, companies would be allowed to tout extreme results only if they also spelled out typical outcomes.
“For a good part of the last decade, we have noticed a problem, particularly with consumer testimonials,” said Richard Cleland, assistant director of the FTC’s division of advertising practices. “The use of consumer testimonials had become almost a safe harbor for companies as long as they threw in some sort of disclaimer about results not being typical.”
The changes are sending shudders through companies that worry about their ability to motivate consumers to buy their products if they can’t sell the sizzle.
“There would never be another Jared,” said Julie Coons, president and chief executive of the marketing trade group Electronic Retailing Association, referring to Jared Fogle, who became Subway’s spokesman after losing 245 pounds eating the chain’s sandwiches and exercising. “We’re all going to have to regroup” if the proposals stand.
The Electronic Retailing Association (ERA) was mentioned in a recent AdvertisingAge article for its work with the FTC on the proposed changes to endorsements and testimonials.
According to AdvertisingAge, “Results not typical” or “Experience may vary” used to be enough to protect marketers using testimonial ads to move their wares. But maybe not for much longer.
The Federal Trade Commission wants to toughen the rules for endorsements and testimonials by requiring evidence that results are likely to be typical — a move that would put pressure on purveyors of diet pills and exercise equipment, among others.
The FTC is proposing the change as part of a rewrite of its now-29-year-old guide for endorsements. In part, it’s an attempt to bring the rules up to date in order to meet some of the challenges of the internet and buzz-marketing age.
The biggest change: Advertisers that feature endorsers touting dramatic results will either have to demonstrate that consumers are “likely” to have similar success or describe in the ad what the “generally expected performance” is.
The Direct Marketing Association warned that the change could make it difficult for new competitors to advertise at all, and the Electronic Retailing Association and the Council for Responsible Nutrition said the change could make even well-documented claims difficult to make.
Want to have your voice heard on Capitol Hill? Then we invite you to ERA’s Government Affairs Fly-In on April 20-21, where you’ll have the opportunity to meet with members of Congress and let them know your concerns and opinions on this issue and many others affecting the direct-to-consumer, multichannel marketing industry. Click here for more information.
The FTC recently released revisions to its self-regulatory principles for online behavioral advertising. But, how might these changes affect your business? In these particular principles, the FTC is focused on “third-party†advertising, rather than contextual or “first-party†advertising. Basically, a website using behavioral advertising only for one website and not aggregating data across multiple sites will not be directly subject to these principles, although they are still subject to other applicable privacy laws. Similarly, advertising based on a specific web query or click will not be subject to the principles unless that data is stored and applied to future actions.
The FTC’s principles focus on increasing transparency and consumer control, reasonable security and limited data retention, affirmative express consent for material retroactive changes to privacy promises, and affirmative express consent or prohibition of the use of sensitive data.
• Increasing Transparency: The principles require a disclosure to consumers that data is being collected and give a meaningful opt-out opportunity. The FTC voiced the desire for strong self-regulation even where data is not personally identifiable if that data “could reasonably be associated†with a particular consumer or device. The FTC also encourages disclosure in places other than the privacy policy. This might include a disclosure on or near an advertisement. They also encourage the use of empirical data to test whether the consumer understands the disclosure.
• Data Security and Retention: The protections should be based on the sensitivity of the data and the nature of a company’s business operations, the types of risks a company faces, and the reasonable protections available to a company. The FTC added that companies should retain data only as long as necessary to fulfill a legitimate business or law enforcement need.
• Material Retroactive Changes: Consent must only be obtained if the change is both material and retroactive. This makes data collected under the old privacy policy subject the old standards and new data subject to new standards, unless affirmative consent is obtained.
• Sensitive Data: The FTC continues to promote “opt-in†standards that require affirmative consent from consumers.
Ultimately this is an attempt to encourage and direct industry self-regulation, but it does not have an independent enforcement mechanism.
Yesterday, the Federal Trade Commission released its revised 
It has been an exciting week in the world of net neutrality. This week, Julius Genachowski, the Chairman of the FCC, announced the Commission’s intention to enter into a formal rulemaking process to 
Tomorrow, the Consumer Protection Subcommittee of the Senate Commerce Committee will hold a hearing entitled “Advertising Trends and Consumer Protection.†The hearing will consider several issues in advertising, including the use of the word “free†and Endorsements and Testimonials. This is part of a broader reevaluation of the FTC’s powers and funding. An explanation of tomorrow’s hearing is really not complete without an explanation of last week’s hearing. Last week, from the first opening statement to adjournment, the hearing focused on testimony from consumer groups and emphasized that consumers are targeted by scams and needed additional protection from the FTC (P.S.- You can watch this hearing and kind of see me in the background on C-SPAN 
If you are thinking about buying something online, one of your first steps in evaluating the product might be to see what kind of reviews the product has received. But what if the reviewer was paid to give a favorable review? This is a practice that clearly has some troubling implications. That’s why the FTC recently addressed this practice in the Guides Concerning the Use of Endorsements and Testimonials in Advertising (yes, this is the same proposal that would require evidence of typicality for some testimonials).
As you probably know, the FTC is planning to eliminate the safe harbor for testimonials with disclaimers. If you are concerned about these changes, make sure you sign up to receive updates from us on this issue. We will send occasional updates that will keep you up to speed. This is part of the grassroots effort we will be launching shortly and these updates will make sure you know about opportunities to get involved. Please make sure you don’t miss out - 
Disclaimer: Some readers of the following column may be amused and entertained; others may be put off by a perceived self-indulgent rant. Results may vary.
After the Obamamercial, in which 
On the evening of April 20 and all day on the 21st, ERA will be hosting the Government Affairs Fly-In. In addition to two fantastic networking receptions, a keynote address by Senator Pryor, and detailed issue briefings, you will have the opportunity to really let lawmakers know about how this issue affects your business.
The 
The FTC recently released revisions to its self-regulatory principles for online behavioral advertising. But, how might these changes affect your business? In these particular principles, the FTC is focused on “third-party†advertising, rather than contextual or “first-party†advertising. Basically, a website using behavioral advertising only for one website and not aggregating data across multiple sites will not be directly subject to these principles, although they are still subject to other applicable privacy laws. Similarly, advertising based on a specific web query or click will not be subject to the principles unless that data is stored and applied to future actions. 
