Is #ad Going Away? – The FTC’s Endorsement Guidelines to Be Examined

Advertising Law

The Federal Trade Commission (FTC) recently announced it is seeking public comment on whether to make changes to its Endorsement Guides as part of its systematic review of all current FTC rules and guides.

The Endorsement Guides, formally known as the Guides Concerning the Use of Endorsements and Testimonials in Advertising (the Guides), first enacted in 1980 and amended in 2009, provide guidance to businesses and others to ensure that advertising using endorsements or testimonials abides by the requirements of the FTC Act. Among other things, the Guides state that when there is a connection between an endorser and a seller of an advertised product that could affect the weight or credibility of the endorsement, the connection must be clearly and conspicuously disclosed.

In a Federal Register notice, the FTC is seeking comment on a wide range of questions, including:

  • Whether the practices addressed by the Guides are prevalent in the marketplace and whether the Guides are effective at addressing those practices
  • Whether consumers have benefited from the Guides and what impact, if any, they have had on the flow of truthful information to consumers
  • Whether changes in technology or the economy require changes to the Guides
  • Whether guidance in the FTC’s guidance document “The FTC’s Enforcement Guides: What People Are Asking” should be incorporated into the Guides
  • How well advertisers and endorsers are disclosing unexpected material connections in social media
  • Whether children are capable of understanding disclosures of material connections and how those disclosures might affect children
  • Whether incentives like free or discounted products bias consumer reviews even when a favorable review is not required to receive the incentive, and whether or how those incentives should be disclosed
  • Whether composite ratings that include reviews based on incentives are misleading even when reviewers disclose incentives in the underlying reviews
  • Whether the Guides should address the use of affiliate links by endorsers
  • What, if any, disclosures advertisers or operators of review sites need to make about the collection and processing of publication of reviews to prevent them from being deceptive or unfair

Commissioner Rohit Chopra issued a separate statement, which voiced “support [for] a close and careful review of the FTC’s non-binding Endorsement Guides and a self-critical analysis of the agency’s enforcement approach,” noting that the FTC should focus on lawbreaking advertisers rather than on small influencers and that in the recent actions against Lord & Taylor and Devumi, the FTC settled for no forfeiture of ill-gotten gains and no findings or admission of liability or fault. Commissioner Chopra welcomed broad public participation, announcing that “[t]he FTC will need to take bold steps to safeguard our digital economy from lies, distortions, and disinformation” and hoping that the FTC will consider taking the following steps beyond voluntary guidance:

  • “Developing requirements for technology platforms (e.g., Instagram, YouTube and TikTok) that facilitate and either directly or indirectly profit from influencer marketing”
  • “Codifying elements of the existing endorsement guides into formal rules so that violators can be liable for civil penalties under Section 5(m)(1)(A) and liable for damages under Section 19”
  • “Specifying the requirements that companies must adhere to in their contractual arrangements with influencers, including through sample terms that companies can include in contracts”

Why it matters: Commissioner Chopra is seeking tougher remedies for the FTC for violations of the Guides, including monetary penalties for companies and influencers that are illegally astroturfing or disguising their advertising as an authentic endorsement or review. Thus, it doesn’t look like #ad or #sponsored (a common disclosure influencers use on social media platforms like Twitter and Instagram) will be going away anytime soon.

However, we believe that industry participation could be key in shaping the changes to the Guides, and the deadline to submit public comments on the proposed modifications will be 60 days after notice is published on the Federal Register. Manatt will continue to monitor any updates to the Guides to help clients develop practical measures to comply with any changes. If you would like assistance in submitting written comments, please contact Manatt’s Advertising team.

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