[Harp-L] Endorsers - FTC Rules

["Bill Kumpe" <bkumpe@xxxxxxx>]

Late in 2009, the FTC changed the interpretation of existing rules
concerning endorsers.  The FTC release in full can be found here:
http://www.ftc.gov/opa/2009/10/endortest.shtm

 

Here are some highlights of the FTC press release (in italics) with my
comments following (plain type):

 

Under the revised Guides, advertisements that feature a consumer and convey
his or her experience with a product or service as typical when that is not
the case will be required to clearly disclose the results that consumers can
generally expect. In contrast to the 1980 version of the Guides - which
allowed advertisers to describe unusual results in a testimonial as long as
they included a disclaimer such as "results not typical" - the revised
Guides no longer contain this safe harbor.

 

In the past, if somebody made a million dollars with a "guaranteed sales
system" or caught five hundred fish with his Popeye Compact fishing pole,
that testimonial could be used so long as the fine print said, "results not
typical."  That practice is now officially frowned upon.  I don't know how
this could be applied to the business world since nobody wants to hear what
the AVERAGE player sounds like on an instrument, but that is the result the
FTC is aiming at here.   The place this gets tricky is where you see a
presentation of Harry the Harp King hitting a string of fantastic overblows
etc. giving the impression a particular  number can be played on the harp
when the "average" consumer for FTC purposes can't even reliably bend much
less overblow.

 

The revised Guides also add new examples to illustrate the long standing
principle that "material connections" (sometimes payments or free products)
between advertisers and endorsers - connections that consumers would not
expect - must be disclosed. These examples address what constitutes an
endorsement when the message is conveyed by bloggers or other
"word-of-mouth" marketers. The revised Guides specify that while decisions
will be reached on a case-by-case basis, the post of a blogger who receives
cash or in-kind payment to review a product is considered an endorsement.
Thus, bloggers who make an endorsement must disclose the material
connections they share with the seller of the product or service.

 

So, if Harry the Harp King gets free harps or a big discount on his gear
from Hasenfeffer harps, he has to disclose that relationship.  And, if a
blogger like me gets a free harp or set of strings and then writes an online
review, that transaction must be disclosed as well.   

 

And a paid endorsement - like any other advertisement - is deceptive if it
makes false or misleading claims. 

 

Celebrity endorsers also are addressed in the revised Guides. While the 1980
Guides did not explicitly state that endorsers as well as advertisers could
be liable under the FTC Act for statements they make in an endorsement, the
revised Guides reflect Commission case law and clearly state that both
advertisers and endorsers may be liable for false or unsubstantiated claims
made in an endorsement - or for failure to disclose material connections
between the advertiser and endorsers. The revised Guides also make it clear
that celebrities have a duty to disclose their relationships with
advertisers when making endorsements outside the context of traditional ads,
such as on talk shows or in social media.

 

Reading deeper into this area, the new interpretation allows inappropriate
statements made by endorsers to be attributed to the equipment manufacturer.
Some lawyers who regularly work in this area are recommending much stronger
endorsement agreements that warn the endorser to play by the rules, etc.

 

I don't know that these new rules are completely enforceable.  They are
certainly not practical.  But, like everything else legal, that might not
prevent them from creating problems.

 

Bill Kumpe

Tulsa, OK

 

This post is presented for conversational purposes only and is not intended
to be legal advice nor should it be construed as such.  If you have
questions about this post, you should contact a lawyer in your jurisdiction.