The Federal Trade Commission’s (“FTC”) Endorsement Guides have evolved over the past forty years from regulating celebrity endorsements and testimonial advertisements to policing social media advertising, including influencer endorsements and native advertising. On February 12, 2020, the FTC announced that it had voted 5‑0 to approve a proposed Federal Register Notice, seeking comment on whether to make changes to its Guides Concerning the Use of Endorsements and Testimonials in Advertising (“the Endorsement Guides”), which were enacted in 1980[1] and amended in 2009,[2] as part of a systematic review of all current FTC rules and practices. The Endorsement Guides have steadfastly required transparency in advertising and, if there is a connection between an endorser and the company selling the product or services being advertised or promoted which, if disclosed, might affect the weight or credibility of the endorsement, such connection must be disclosed clearly and conspicuously.
On June 30, 2023, the FTC issued its final revisions to the Endorsement Guides,[3] a proposed new Rule on the Use of Consumer Reviews and Testimonials,[4] and updates to the key staff guidance publication on the Endorsement Guides for businesses, endorsers, and the advertising industry.[5]
Final Revised Endorsement Guides
The Revised Endorsement Guides reflect recent developments in enforcement and feedback received during the public comment period.[6] In its announcement, the FTC identified six final changes that merit special attention:
- Articulating a new principle regarding not procuring, suppressing, organizing, upvoting, downvoting, or editing consumer reviews in ways that likely distort what consumers really think of a product;
- Addressing incentivized reviews, reviews by employees, and fake negative reviews by competitors;
- Adding a definition of “clear and conspicuous” and warning that a platform’s built-in disclosure tool might not be adequate;
- Updating the definition of “endorsements” to clarify that it can include fake reviews, virtual influencers, and social media tags;
- Providing a clearer explanation of the potential liability that advertisers, endorsers, and intermediaries face for violating the law; and
- Emphasizing special concerns with child-directed advertising.[7]
The FTC’s Proposed New Rule on the Use of Consumer Reviews and Testimonials
The FTC also announced that it was proposing a new Rule concerning the use of consumer reviews and testimonials based upon feedback received in response to the FTC’s November 2022 Advanced Notice of Proposed Rulemaking.[8] The proposed Rule would specifically prohibit: (1) selling or obtaining fake consumer reviews and testimonials; (2) review hijacking; (3) buying positive or negative reviews; (4) insider reviews and testimonials; (5) company-controlled review websites; (6) illegal review suppression or removal; and (7) selling fake social media indicators such as fake followers or views.[9] There will be sixty days for public comment once the Federal Register Notice appears in the Federal Register.
FTC Updates Its Staff Guidance
For five years, the FTC’s “Endorsement Guides: What People Are Asking” publication has been used by businesses, endorsers, and the advertising industry as a go-to resource to help understand the “dos and don’ts” and best practices for endorsements. The new updated and revised version of the “Endorsement Guides: What People Are Asking”[10] provides a particular focus on influencers and other recent developments in FTC enforcement and guidance.
Putting it Into Practice
The long-awaited action by the FTC to update and revise the Endorsement Guides and the Staff Guidance and the proposed new Rule on the Use of Consumer Reviews and Testimonials means that the FTC’s enforcement actions regarding social media and influencers will continue to be a focus of the FTC. Care should be taken to make sure companies are in compliance with the FTC Endorsement Guides, especially in the context of social media, native advertising and when using influencers to promote your business and products. If your business utilizes positive and negative consumer reviews, scrutiny should be given to the new proposed Rule concerning the use of consumer reviews and testimonials. To fully understand how this impacts your advertising and promotion of your business, consult with your legal counsel to understand how these revisions and changes impact the advertising and marketing of your products.
FOOTNOTES
[1] https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-publishes-final-guides-governing-endorsements-testimonials/091005revisedendorsementguides.pdf; https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking.
[2] https://www.ftc.gov/news-events/press-releases/2009/10/ftc-publishes-final-guides-governing-endorsements-testimonials.
[3] Federal Trade Commission Announces Updated Advertising Guides to Combat Deceptive Reviews and Endorsements | Federal Trade Commission (ftc.gov).
[4] Federal Trade Commission Announces Proposed Rule Banning Fake Reviews and Testimonials | Federal Trade Commission (ftc.gov).
[5] FTC's Endorsement Guides: What People Are Asking | Federal Trade Commission.
[6] Proposed text of Endorsement Guides FRN (ftc.gov)
[7] FTC and endorsements: Final revised guides, a proposed new rule, and an updated staff publication | Federal Trade Commission
[8] FTC to Explore Rulemaking to Combat Fake Reviews and Other Deceptive Endorsements | Federal Trade Commission
[9] 16 CFR Part 465: Trade Regulation Rule on the Use of Consumer Reviews and Testimonials (ftc.gov)
[10] FTC's Endorsement Guides: What People Are Asking | Federal Trade Commission