On May 19, the Federal Trade Commission (“FTC”) issued its proposed revisions to the Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Guides”), which address new marketing methods introduced since the Guides were last updated in 2009.
In the revised Guides, there are new provisions addressing digital advertising and endorsements via social media platforms, ineffective disclosure of material relationships and deceptive use of virtual or “fake,” suppressing negative reviews and the protentional liability on influencers and intermediaries.
Key Proposed Amendments to the Guides
- Heightened Standard for Disclosures: the proposed definition for disclosures includes “clear and conspicuous” In other words, “a disclosure that is difficult to miss and easily understood by ordinary people”;
- Specific Material Connections Between the Advertiser and the Endorser that Must Be Disclosed: such as (1) clinical study sponsorship; (2) providing discounted, and/or free products or services; (3) early access to products; (4) or the chance to appear on television or other media promotions; (5) the chance to win a prize. Required disclosures must clearly communicate the nature of the connections to allow consumers to evaluate their significance;
- Ranking and Rating: a new proposed revision stating that a paid ranking boost is deceptive regardless of whether an express claim of independence or objectivity is made or not;
- Advertisers’ New Liability: a new principle proposed that in procuring, suppressing, boosting, organizing, or editing consumer reviews, advertisers should not distort or misrepresent what consumers think of their products. Accordingly, the advertiser is liable for procuring fake reviews for the product it sells via its own website and on third-party review websites;
- Social Media Platforms’ Protentional Liability: certain disclosure endorsements tools offered by social media platforms, are deemed inadequate and may open the platforms to liability, e.g., on the profile page of a social media account, via tools offered by social media platforms;
- Iintermediaries’ Liability: intermediaries, such as marketing and public relations firms, may be liable for inaccurate statements in endorsements;
- Tagging Qualifies as an Endorsement: tagging a “brand” on social media can be considered an endorsement, because a social media tag “generally communicates that the poster uses or likes the brand”;
- Certain Practices Related to Reviews are Considered Misleading and Unfair: such as deleting or not publishing negative reviews, “review gating” (that is, sending satisfied and dissatisfied customers down different paths to encourage positive reviews while avoiding negative reviews), threatening customers that leave negative reviews, and buying fake reviews;
- Direct Advertising to Children is of “Special Concern”: children may react differently to endorsements, thus some practices which wouldn’t be questioned when aimed at adults, may need to be re-examined when targeted at children.
What Should You Take from This?
If you are an endorser (e.g., influencer, blogger, etc.), advertiser, intermediary (e.g., content website), or practicing any digital media promotions related to your offered products or services (e.g., post reviews in your e-Commerce website) – it is your responsibility to make sure, among others, that:
- Material connections are written in clearly and conspicuously disclosed, which can be understood by your average user – for example, a disclosure indicating fees are paid in consideration for a review and recommendation of a certain product or service;
- Disclosures must be placed in an easily recognizable location;
- There are adequate practices of testimonial use and users’ reviews – for example, negative reviews must not be suppressed, omitted or arrange in a misleading manner;
It is important to note that, the proposed amendments are not final yet. The FTC will accept comments on the proposed revisions to its Guides for 60 days following the publications of the amendments.
This document is intended to provide only a general background regarding this matter. This document should not be regarded as setting out binding legal advice but rather as a practical overview that is based on our understanding. APM & Co. is not licensed to practice law outside of Israel.
APM Technology and Regulation Team.