New considerations have emerged for advertisers who publish reviews or endorsements. On June 29, 2023, the FTC finalized its updated Endorsement Guides, which provide insights to businesses on how the use of reviews and endorsements might be considered unfair or deceptive in violation of Section 5 of the FTC Act. Over the past several months, the FTC sought public comments on proposed updates to the Endorsement Guides to accurately reflect the modern landscape of advertising, which includes reliance on social media and content creators.
Taking into consideration the public comments it received, the FTC made a series of revisions. The updated Enforcement Guides now include:
- A new standard regarding procuring, suppressing, boosting, organizing, publishing, upvoting, downvoting, or editing consumer reviews;
- Guidance on incentivized reviews, reviews by employees, and fake negative reviews regarding a competitor;
- A definition of “clear and conspicuous” with an acknowledgment that a platform’s built-in disclosure tool may not provide adequate disclosures;
- A revised definition of “endorsements” to clarify the inclusion of fake reviews, virtual influencers, and tags in social media;
- A clearer explanation of the potential liability of advertisers, endorses, and intermediaries; and
- Added emphasis on child-directed advertising as an area of special concern.
In addition, the FTC also released an updated guidance document responding to frequently asked questions about the Endorsement Guides.
In navigating social media and collaborating with future endorsers and reviewers, advertisers should be cognizant of these new guidelines. Given the increasing volume of paid endorsements and incentivized reviews, the Enforcement Guides seek to ensure transparency in modern endorsements and provide guidance on what claims can legally be made. As an example, if there is a connection between an endorser and marketer that a significant minority of consumers would not expect and the connection could influence how the endorsement is perceived by consumers, the connection should be disclosed clearly and conspicuously. Accordingly, ads featuring endorsers who are related to or employed by the marketer are deemed misleading without clear and conspicuous disclosure of the connection. Furthermore, endorsers who have achieved “exceptional” or “above average” results from an advertised product must have proof that others would generally achieve similar results.
Ultimately, the Endorsement Guides are about truth-in-advertising. As advertisers connect with more influencers and content creators, varied incentives within the review and endorsement ecosystems have blurred the contours of their authenticity. Amidst this era of social media and content creators, the Enforcement Guides reinforce the FTC Act’s goal of prohibiting deceptive advertising by ensuring that an audience understands the relationship between a reviewer or endorser and the company whose products are being recommended. Moving forward, advertisers should strive to ensure any such relationships are made clear to consumers from the outset.
For further information, please contact:
Holly A. Melton, Partner, Crowell & Moring
hmelton@crowell.com
