FTC ENDORSEMENT GUIDELINE Lawyer + FTC Consumer Review, INFLUENCER and Testimonial rule Attorney

How to Comply With FTC Endorsement Guidelines

Section 5 of the FTC Act generally prohibits deceptive advertising.  An endorsement must reflect the honest opinion of the endorser and cannot be used to make a claim that the marketer of a product could not legally make.  The FTC’s Endorsement Guides apply to:

• Marketers
• Advertisers
• Intermediaries (e.g., ad agencies)
• Endorsers
• Others

They also apply to all media, such as social media, blogs, YouTube, television and radio.

At its core, the revised FTC’s Endorsement Guides reflect the basic truth-in-advertising principle.

Complying with the FTC Endorsement Guides requires, in part, the clear and conspicuous disclosure of “material connections” between advertisers and endorsers that reasonable consumers would not expect and would affect how much weight to give the review.  Disclosures must be "unavoidable."

A material connection can include, without limitation:

• Friendship or family relationships with the company that sells the product
• Employment with the company that sells the product
• Being paid by the company to promote the product
• Being given something of value to promote the product

The revised Guides provide insight into what the FTC thinks about various marketing activities involving endorsements.  While they do not have the force of law, inconsistent practices often result in investigations and enforcement actions seeking disgorgement of money received from the violations.

Leading FTC Endorsement Guideline Lawyer and Review + Influencer Attorney

in June 2023 the FTC announced three important developments, including: (i) final revisions to the Endorsement Guides; (ii) a proposed new Rule on the Use of Consumer Reviews and Testimonials; and (iii) updates to a key FTC staff attorney guidance publication for businesses, endorsers, influencers and members of the advertising industry.

The Guides Concerning Use of Endorsements and Testimonials in Advertising were last revised in 2009 and offer advice for businesses and digital marketers on how the FTC Act applies in the use of endorsements.  In May 2022, the FTC announced that it was seeking public comments on proposed updates to the Guides to ensure they reflect current advertising trends, including social media marketing and review platforms.

Amongst the final changes that warrant attention, are:

• The articulation of 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.

• The attention lent to incentivized reviews, reviews by employees, and fake negative reviews by competitors.

• Adding a definition of “clear and conspicuous.”  Disclosures must be "unavoidable."

• A warning that a platform’s built-in disclosure tool might not be adequate.

• An update to the definition of "endorsements" to include fake reviews, virtual influencers, and social media tags.

• A clarified explanation of the potential liability that advertisers, endorsers and intermediaries may face for violating applicable legal regulations, and

• An emphasis upon social concerns related to child-directed advertising.

FTC Final Rule Banning Fake Consumer Reviews and Testimonials

In August 2024, the Federal Trade Commission issued a final rule relating to certain specified unfair or deceptive acts or practices involving consumer reviews or testimonials.  The final rule includes all but one of the previously proposed provisions.  Otherwise, the final rule mostly tracks the proposed rule with modifications characterized by the Federal Trade Commission as “mostly clarifications and limitations.”

The final rule, among other things prohibits selling or purchasing fake consumer reviews or testimonials, buying positive or negative consumer reviews, certain insiders creating consumer reviews or testimonials without clearly disclosing their relationships, creating a company-controlled review website that falsely purports to provide independent reviews, certain review suppression practices, and selling or purchasing fake indicators of social media influence.

The final rule prohibits:

• Writing, selling, or buying fake or false consumer reviews
• Writing, selling, or disseminating fake or false testimonials
• Buying positive or negative reviews
• Failing to make disclosures about insider reviews and testimonials
• Deceptively claiming that company-controlled review websites are independent
• Illegally suppressing negative reviews
• Selling and buying fake social media indicators

The proposed rule also included a provision relating to the unfair or deceptive re-use or re-purposing of consumer reviews.  Specifically, proposed § 465.3 “sought to address a business using or repurposing a consumer review written or created for one product so that it appears to have been written or created for a substantially different product” and was intended to “cover businesses that caused such use or repurposing.”  Following public comments expressing concerns about the applicability of the provision, however, the FTC decided not to finalize this provision.

The final rule does not specifically refer to artificial intelligence.  According to the FTC, however, the prohibitions cover situations when someone uses an AI tool to generate the deceptive content at issue.

FTC Staff Issues FAQs on Final Rule Banning Fake Reviews and Testimonials

The FTC Final Rule on Consumer Reviews and Testimonials became effective on October 21, 2024.  It addresses deceptive and unfair conduct involving consumer reviews and testimonials.  The final rule authorizes courts to impose civil penalties for knowing violations and is important because fake, false,or otherwise deceptive reviews and testimonials have polluted the marketplace, according to the Federal Trade Commission.

In November 2024, the FTC released an FAQ with answers to 74 questions about the final rule.  Highlights of the FAQs include:.

• An explanation of the difference btween a consumer review and a testimonial.  A consumer review is a consumer’s evaluation, or a purported consumer’s evaluation, of a product, service, or business that is submitted to and published on a website or platform dedicated in whole or in part to receiving and displaying such evaluations.  So, consumer reviews could appear, for example, on a site dedicated to consumer reviews or on product pages of retailer websites.  A testimonial, one type of endorsement, is an advertising message that consumers are likely to believe reflects the opinions, beliefs, or experiences of a consumer or celebrity who has purchased, used, or otherwise had experience with a product, service, or business. Testimonials can appear in a variety of contexts, such as in television or radio ads, on a company website, in Internet ads, or in social media.  Most consumer reviews are not consumer testimonials, and most consumer testimonials are not consumer reviews. But if a business pays for or gives incentives for consumer reviews of its business, products, or services, then those incentivized reviews would also be considered consumer testimonials under the rule.
• Ordinary consumers cannot be liable under the rule for what they say or do not say in reviews or testimonials.  The provisions that address what reviews or testimonials say or do not say only apply to the conduct of businesses.  Influencers who are in the business of posting testimonials about products or services are selling celebrity testimonials and could be liable under Section 465.2(a) if they lie about having used the product or service or about their experience with it.  Also, an individual in the business of selling or creating fake consumer reviews could be liable under Section 465.2(a).
• Advertising agencies, public relations firms, review brokers and reputation management companies can be liable under the final rule.  these entities are not immune from liability.  For example, they could be liable under Section 465.2(a) if they write, create, or sell a fake or false consumer review, consumer testimonial, or celebrity testimonial.  They could be liable under Section 465.4 if they provide compensation or other incentives conditioned on the writing or creation of consumer reviews expressing a particular sentiment.  They could also be liable under Section 465.7(a) if they engage in review suppression or under Section 465.8 if they misuse fake or false indicators of social media influence.
• Businesses cannot be found liable for hosting fake or false reviews on their website provided that they did not write or buy them.  Also, businesses are not required to investigate whether reviews hosted on their website are fake.  However, if a business uses a testimonial (or highlights a review) that is fake, the business could be liable.
• An influencer hired by a business to promote its products or services should not be provided the langauge for a testimonial unless there exists a good faith reasonable basis to conclude that the it reflects the influencer’s actual experience.
• Offering incentives to write a review is acceptable providded that the reviewer is not required to express a particular sentiment.
• A business is not liable if an employee writes a reviwe without clearly and conspicuously disclosing the material relationship provided that the review was written in response to a general solicitation.  Encouraging employees to write reviews requires that the business inform employees of their legal obligation to properly discose the emloyer/employee relationship.
• Under the final rule, a hired influencer’s social media post touting a product would be considered a celebrity testimonial, not a review.  A business could be liable under Section 465.2(b) if it knew or should have known that any such influencers misrepresented that they used or had experience with the product or misrepresented their experiences with it.  When a business hires influencers, it should look for red flags indicating that a testimonial is likely fake or false, and businesses should act accordingly if such a flag is present.  For example, if someone gives a testimonial and then asks for the product, a business should question whether the testimonialist used the product.  Similarly, if a buisness knows that someone who gives a testimonial is using a competing product, it should inquire into whether the testimonial for its own product is truthful.
• Businesses are required to be reasonably diligent with respect to the existence of fake consumer reviews.  Businesses will be held to a "knew or shoudl have known" standard.
• Disclosures must be "clear and conspicuous."  They must also be "unavoidable."  Requiring a consumer to take action to see a disclosure renders it avoidable.  Disclosures should also match the medium in which a review appears (e.g., video ad should have disclosures embegged in the video itself).
• There is some flexibility with respect to how businesses moderate reviews on their websites provided that the moderation criteria is applied equally, across the board, to positive and negative reviews.  Organizing reviews is not the necessarily the same as suppressing reviews.  However, making it difficult for consumers to find negative reviews could be considered deceptive under Section 5 of the FTC Act.

Marketer should consult with an FTC endorsement rule and guideline lawyer to ensure compliance with the final rule and applicable endorsement guidelines.  Bear in mind that the FTC Endorsement Guides are broader than the final rule.  Conduct that may not violate the FTC's final rule may still vioalte the Guidelines and the FTC Act.

FTC Fake Review and Testimonial Attorney

The final rule on consumer reviews and testimonials contains a number of provisions that are covered by the FTC Guides Concerning Use of Endorsements and Testimonials in Advertising. However, the Endorsement Guides address a broader range of conduct that the final rule.

The Endorsement Guides set forth general principles relating to the use of endorsements and testimonials in advertising and reflect the FTC's administrative interpretation of how Section 5 of the FTC Act, 15 U.S.C. § 45 - which prohibits "unfair or deceptive acts or practices in or affecting commerce" -  applies to the same.

The FTC Guidelines do not have the force of law, rather, they are administrative interpretations of the FTC Act.  They provide guidance to marketers on what advertising claims might mislead consumers.  However, if advertisers fail to adhere to the FTC Endorsement Guidelines, FTC fake review and testimonial lawyers might initiate an investigate or enforcement lawsuit.  Conversely, the final rule on consumer reviews and testimonials provide a basis for FTC fake reviwe and testimonial attorneys to seek hefty monetary civil  penalties for violations.

FTC Chair Lina Khan stated : “Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors.  By strengthening the FTC’s toolkit to fight deceptive advertising, the final rule will protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive.”

Marketers that use consumer and influencer reviews and testimonials should consult with an experienced FTC review and testmonial attorney and review advertising materials, and compliance policies and procedures to ensure that they adhere to the final rule and Endorsement Guides. Unlike the Endorsement Guides, violations of the final rule have direct consequences, including, but not limited to, civil penalties of more than $50,000, per violation and consumer redress.  up to o $51,744 per rule violation (subject to annual inflation adjustment), along with other relief—including consumer redress, conduct restraints, and broad oversight authority.

Social Networking Sites and Influencers

The FTC actively polices disclosures in social media endorsements.  Material relationships to brands must be clearly and conspicuously disclosed.

Depending upon the circumstances, clicking a button or sharing a link to show what you are a fan of a particular product or service may or may not be considered an endorsement.  As a general rule, if you are doing it as part of a sponsored campaign and it involves any compensation (e.g., a discount) then a disclosure is required.

In 2017, the FTC filed its first complaint against individual social media users.  In that case, the individuals were alleged to have used social media to promote a company without disclosing that they, in fact, owned the company.  The FTC’s also alleged that the individuals had organized an “influencer program” and paid other influencers to promote its website throughout social media. Digital marketing lawyer

Social media lawyer Richard B. Newman was recently featured by Leading Internet Case Law as a legal source on the FTC’s action against social media influencers.

The Federal Trade Commission has also recently sent out warning letters reminding influencers and marketers that influencers should clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media.

Bloggers

Although regulatory enforcement focus has traditionally been on advertisers and ad agencies, the FTC does monitor bloggers and individual endorsers for violations of Section 5 of the FTC Act, such as the failure to make required disclosures.  Paying for a product yourself or getting a free sample is not, by itself, an issue.

Endorsements made on behalf of a sponsoring advertiser are a different story.  For example, a blogger that is given something of value in exchange for mentioning a product.

If a consumer knowing about a gift or incentive would affect the weight or credibility readers could give to a recommendation, disclosure is necessary.  The incentive need not necessarily have financial value to trigger the Guides.  The FTC recommends that disclosures on blogs be made at very close to, or part of, the endorsement to which it relates.

Exceptional Results

Testimonials claiming specific results are usually interpreted to mean that the endorser’s experience reflects what others can also expect.  Advertisements that feature endorsements from people that achieved above average results are typically utilized in conjunction with weight-loss product advertising campaigns.

An advertiser must be able to substantiate that the endorser’s experience represents the generally expected results.  Statements like “results not typical” or “individual results may vary” are insufficient.

Advertisers must either have proof to substantiate express and implied representations that the results are typical, or properly disclose the generally expected performance.

Example:  An advertisement ad in which a woman says, “I lost 30 pounds in 6 months with WeightBeGone.”  If consumers cannot generally expect to achieve such results, the advertisement must state how much weight consumers can expect to lose in similar circumstances.  E.G., “Most women who use WeightBeGone for 6 months lose at least 10 pounds.”

The Guides offer dozens of examples involving various endorsement scenarios.

Photos and Videos

Just posting a picture of a product in social media or a video depicting use of a product could potentially convey approval thereof.  Words are not always necessary to convey a positive message and the FTC considers opinions or beliefs about a product to be endorsements when there exists a relationship with the sponsoring advertiser.

Disclosure Language and Placement

There is no magic wording for disclosures.

The important thing is to provide material information in plain language.  For example, “Company X gave me [name of product] to try . . .”  Disclosures should also be clear and conspicuous and placed where consumers cannot miss them.

Hyperlinks are also unlikely to be sufficient to convey the importance, nature and relevance of the information to which it leads.  They are frowned upon by the FTC when it comes to disclosures, especially the relatively brief “material connection” disclosures.

Disclosures should always be made in plain and unambiguous language.  They should find consumers and, in general, be:

• Close to the claims to which they relate
• In a font that is easy to read
• In a shade that stands out against the background
• For video ads, on the screen long enough to be noticed, read, and understood
• For audio disclosures, read at a cadence that is easy for consumers to follow and in words consumers will understand

Continuous audio and text disclosures, or multiple, periodic disclosures during videos are recommended by the FTC.

Disclosures should always be placed where they are unavoidable and will grab a users’ attention. Influencers and brands are both potentially liable for failing to properly disclose a material connection.

Snapchat, Instagram and Twitter

The guidelines focus heavily on disclosures for social media like Instagram, Facebook and Twitter.

The FTC states that disclosures may be superimposed on Snapchat or Instagram Stories as long as it is easy to notice and read in the time that followers have to look at the image.  When assessing how much time followers should be given to look at the image, consider:

• How much competing text exists
• The size of the disclosure
• How the disclosure contrasts against the image

FTC guidance provides that the same general disclosure principles apply, without regard to real estate limits such as those on Twitter. The words “Ad,” “#ad,” “Paid ad,” “Sponsored” or “Promotion” are unambiguous and would likely be effective. The FTC also recommends that the disclosures be placed at the beginning of a post, or at least where it will be easily noticed and understood.

In general:

• When making endorsements on Instagram material connections should be disclosed above the “more” button
• Consumers will likely not understand a disclosure like “#sp,” “Thanks [Brand],” or “#partner” in an Instagram post to mean that the post is sponsored
• Tagging a brand, even without further description or praise for the product, is an endorsement if there exists a relationship with that brand
• Hashtags should be used that make relationships clear

The FTC has stated that the following are not considered to be conspicuous:

• Strings of multiple tags, hashtags, or links
• Multiple tags, hashtags or links when they appear at the end of a long post
• Hashtags like “#sp,” “Thanks [Brand],” or “#partner” are not understood by consumers to mean a paid endorsement
• A disclosure in the audio portion of a video or snapchat “story” only (consumers may not turn on the sound

Affiliate Marketing

Affiliate marketers that are compensated for purchases made via their links must clearly and conspicuously disclose relationships with third-party product or service providers.  Updated guidance states that using the term “affiliate link” or “buy now” is insufficient to explain the relationship.

Before and After Photos

Before and after photos are considered endorsements. Photos have to be true and cannot be deceptive or false.

Photos must depict what consumers can accurately expect from using the product.  If photos are not accurate representations of typical results, advertisers will need to include a clear and conspicuous disclosure regarding same and as to what most consumers can expect to achieve from use of the product or program.  If the photos are not an accurate representation of typical results, advertisers will need to include a clear and conspicuous disclosure as to what most consumers can expect to achieve from use of the product or program.

To the extent the photos reflect a claim of what the product/program will deliver, this can be considered a representation as to the efficacy of the product and advertisers should have some way to substantiate the claim.  If an advertiser has no substantiation that attested results are representative – it must clearly and conspicuously disclose that consumers should not expect to experience the attested results and disclose the generally expected results.  If an advertiser cannot do that, they no testimonials should be used, including photos.

There are numerous ways that a testimonial can be deceptive. For example, an endorser may not have experienced the reported result, the reported result may be attributable to other factors, or if a testimonial claims extreme and atypical results but presents it as typical and ordinary, it is likely to be deceptive without a proper indication of the more modest results of that the typical user would experience.

False or misleading claims can be conveyed in words and in before-and-after images.  Stock photography images of models to advertise a product are considered to be deceptive if the images are of people other than the verified users.

Testimonials may be acceptable as long as they are verified users, and advertisers possess a testimonial affidavit and a release form which may include use of images.

Training and Monitoring

Advertisers are responsible for what third-parties do on their behalf.  The FTC recommends that advertisers implement reasonable social media programs and policies to train and monitor influencers, bloggers and other brand endorsers.

Advertisers should consider:

• Explaining what endorsers can and cannot represent
• Explaining endorsers’ responsibilities
• Utilizing written social media policies
• Training and monitoring endorsers
• Audit what endorsers are saying
• Taking appropriate remedial action in the event of violations
• Documenting and maintaining records of compliance efforts

The design and implementation of a reasonable training, monitoring and compliance program by an experienced FTC advertising regulation compliance attorney can make the difference between a warning letter and a formal investigation or enforcement action.

Endorsement Basics

The Federal Trade Commission continues to signal that compliant endorsements on social media remain a high priority.  Consult with an experienced FTC ad compliance attorney because adhering to guidance concerning endorsements, influencers and reviews is critical.

The Guides apply to both marketers and endorsers.  An endorsement has to represent the accurate experience and opinion of the endorser.  An endorsement from someone that has not tried a product will be considered deceptive.

FTC Recommendations:

• Clearly disclose when you have a material connection, including, but not limited to, a financial or family relationship with a brand
• Ensure your sponsorship disclosures are difficult to miss
• Treat sponsored tags, including tags in pictures like any other endorsement
• On image-only platforms like Snapchat, superimpose disclosures over the images

Practices to Avoid:

• Do not assume followers know about all your brand relationships
• Do not assume disclosures built into social media platforms are sufficient
• Do not use ambiguous disclosures like “thanks,” #collab, #sp, #spon or #ambassador
• Do not rely on disclosures that people will see only if they click “more”

Additionally, endorsements will not substantiate express or implied advertising claims.  Claims about a product that would require proof that the advertiser does not possess cannot be made.  Endorsers are potentially subject to liability for making claims without having a reasonable basis for them.