iAfter an extended public comment period, the Federal Trade Commission (FTC) adopted revised Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides) on June 29, 2023. As we previously reported, the FTC voted to publish proposed revisions for public comment in May 2022. The updated Endorsement Guides and companion FAQs, which include 40 new questions, are intended to provide more specific guidance for companies that engage third parties to promote their brands, products, and services, or which encourage consumers or their own employees or agents to do so. The revisions better reflect the ways companies advertise now, and they address issues such as online influencers, social media tools, fake reviews, virtual or fabricated endorsers, and children’s advertising.
The final revisions are similar to the proposed revisions that were published in May 2022, but they include some new examples to illustrate key definitions, and the FTC stated that the examples are illustrative, not exhaustive. The FTC modified some definitions and example language in response to public comments. Among other things, the FTC clarified the following:
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Fake positive reviews used to promote a product are endorsements subject to the Endorsement Guides;
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Tags in social media posts and certain other types of communications can be endorsements;
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Online disclosures about the relationship between an advertiser and an endorser must be “clear and conspicuous” (i.e., “unavoidable”);
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An advertiser is liable for deceptive endorsements and not just statements that are false;
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The Endorsement Guides apply to “intermediaries,” which include advertising agencies, public relations firms, review brokers, reputation management companies, and other similar third parties;
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A material connection to a testing and certification entity may constitute an endorsement (for example, if the advertiser commissioned the agency to conduct a comparative test of its and a competitor’s product); and
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The ban on an advertiser’s procuring, suppressing, boosting, organizing, or editing consumer reviews of its products or services in a way that distorts or otherwise misrepresents what consumers think of the products or services has been expanded to include publishing, upvoting, downvoting, and reporting consumer reviews.
The FTC’s examples are fact-specific, and the FTC acknowledges that it has the burden of proving that a particular communication is a deceptive or unfair endorsement.
These are not the first updates to the FTC’s Endorsement Guides; the FTC proposes modifications periodically as advertising practices and the media and technologies companies use to promote their products and services evolve. More updates may be forthcoming, particularly in the area of endorsements aimed at children. The Federal Register notice does not provide specific suggested disclosure language for kid-oriented endorsements, but stresses that disclosures aimed at adults may not work for children. In the wake of a workshop held last year on children’s ability to understand advertising, the notice states that the FTC is exploring next steps.
The FTC has been actively enforcing the Endorsement Guides pursuant to its authority under Section 5 of the FTC Act. Companies that engage influencers, celebrities, and other third parties to express opinions about or promote their products and services, or that encourage consumers and their employees and agents to do so, should remain mindful of current guidance.
