August 14, 2022

Volume XII, Number 226

Advertisement
Advertisement

August 12, 2022

Subscribe to Latest Legal News and Analysis

August 11, 2022

Subscribe to Latest Legal News and Analysis

FTC Strengthens Advertising Guidelines Against Fake Reviews

The FTC is seeking public comment on proposed changes to its Endorsement Guides. These changes aim to strengthen the guidelines against advertisers posting falsely positive reviews or by manipulating reviews by suppressing negative ones.

The Endorsement Guides were enacted in 1980—and amended in 2009—to ensure that advertisements utilizing endorsements and testimonial reviews are truthful and not misleading. For example, the Guides require that advertisers disclose material connections between those endorsing products and sellers of advertised products. The Commission sought comment in February 2020 on whether changes should be made to the guides in light of changes in the marketing landscape since 2009.

The proposed changes to the Endorsement Guides reflect the comments received and the overwhelming impact of social media and influencers on advertisement. In her accompanying statement, Chair Khan stated that “more than 75% of brand marketers intend to dedicate a budget to influencer marketing in 2022.” The Revised Guides would effectively expand the definition of “endorsers” to include social media influencers.

The Revised Guides place a greater burden on social media platforms, warning that their disclosure tools may be inadequate, exposing both the platforms and influencers that utilize them to liability. The Revised Guides also explicitly lay out how encouraging fake reviews and suppressing negative reviews may constitute violations of the law.

The Revised Guides also make several changes targeted as strengthening protections for children. The proposed changes warn that that the FTC is particularly concerned with child-directed influencer advertising, to the point that those who market to children cannot assume that compliance with the guides is a safe harbor. The FTC notes that children are at a great risk of deception unless they are able to differentiate between advertising and other forms of media. The Commission is holding a public event on October 19, 2022, focusing specifically on children’s capacity at different ages and developmental stages to understand advertising content and distinguish it from other forms of entertainment.

Putting It Into Practice: The final version of the Revised Guides may be different than those proposed, but the proposed changes to the Endorsement Guides are consistent with recent enforcement efforts. That the FTC—now at full strength with five commissioners after the confirmation of Alvaro Bedoya—voted unanimously in favor of the potential changes is indicative of the strong, seemingly bipartisan support for this agenda within the FTC. Digital platforms, advertisement agencies, businesses, and endorsers should review their advertising practices to conform with the proposed updates, particularly with regards to child-directed advertising.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 151
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm
Partner

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

213-617-4171
A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC
Associate

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...

202-747-2323
Katie Daw Government Investigations Attorney Sheppard Mullin Law Firm
Associate

Katie’s practice focuses on government investigations into antitrust and competition issues and antitrust litigation.

Prior to joining the firm, Katie completed internships with United States Senator Dianne Feinstein and with United Kingdom Member of Parliament Graham Allen, for whom she conducted nutritional poverty research and drafted initiatives. She also served as a law clerk for the Baltimore Police Department, where she focused on compliance with the city’s consent decree entered into with the Department of Justice.  

202-747-2191
Advertisement
Advertisement
Advertisement