Introduction
On June 29, 2023, The Federal Trade Commission (FTC) announced the finalized version of the agency’s updates to the Endorsement Guides and updated its guidance document “FTC’s Endorsement Guides: What People Are Asking” to incorporate new issues raised by the updated Endorsement Guides. The Endorsement Guides provide information to businesses and individuals to ensure that advertising which uses reviews or endorsements is fair and truthful. Notably, the Endorsement Guides were last updated in 2009, in the early days of online reviews and social media (and before the creation of now-popular sites like Instagram or TikTok). The FTC’s updated Endorsement Guides provide some helpful clarity for this new age of advertisements, and address previously unanswered questions.
Changes in the Endorsement Guides
Giving additional guidance to advertisers, the new Endorsement Guides now provide a definition of “clear and conspicuous,” the standard for disclosing a material connection between an endorser and an advertiser. Specifically, a clear and conspicuous disclosure is one that “is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers.” The Endorsement Guides also stress that the disclosures made on social media or the Internet must be “unavoidable” and should be appropriate for both mobile and desktop viewing. When the triggering endorsement is audible, the accompanying disclosure should be audible; when the endorsement is visual, the disclosure should be visual as well; and simultaneous visual and audible disclosures are more likely to be clear and conspicuous. Finally, when endorsements are targeted at a specific audience, the effectiveness of the disclosure will be evaluated from the perspective of that audience. That said, the Endorsement Guides do still contain some ambiguous points. For example, the FTC declined to clarify whether the use of a built-in “paid partnership with” feature on a social media platform would qualify as an adequate disclosure; instead, the agency maintains that “it depends.”
Additionally, the updated Endorsement Guides show a renewed focus on endorsements made via social media. Specific to social media, the FTC has clarified that “tagging” a brand in a social media post can be an endorsement of the brand, because consumers are likely to understand that the poster uses or likes the brand. If the poster has a relationship or material connection to the brand and tags the brand, then a disclosure is required. Of course, if the original poster does not have a relationship or a material connection with the brand, then no disclosure is required. The FTC also addressed fake or purchased likes and followers on social media. While not directly an endorsement issue, the updated Endorsement Guides note that it is a deceptive practice for users of social media platforms to purchase or create indicators of social media influence (such as likes or followers) and to use those indicators to misrepresent such influence for a commercial purpose.
The FTC also offered clarity on the role of consumer reviews as endorsements. Incentivized reviews must clearly and conspicuously disclose those incentives, or the reviews are likely to be deceptive. This is also relevant for aggregated “star” ratings. If an advertiser’s aggregated star ratings contain incentivized reviews, then this needs to be disclosed. Similarly, companies need to take special care in curating consumer reviews. If a company is curating reviews, it must do so in a manner that does not distort or misrepresent consumer opinions. For example, companies should not suppress negative reviews or create an incentive program that favors positive reviews over negative reviews. Nothing in the updated Guides prevent companies from editing reviews to remove offensive, abusive or harassing language; however companies should ensure that their criteria for editing or removing consumer reviews is applied uniformly across all reviews, both positive and negative.
Finally, the Endorsement Guides clarify that the Guides apply to more than just advertisers and endorsers. Intermediaries, such as advertising agencies, public relations firms, and reputation management companies can also be liable for creating or disseminating endorsements that they knew, or should have known, to be deceptive.
Conclusion
In this update of the Endorsement Guides, the FTC has taken important steps to provide more clarity for advertisers and the people who endorse their products. But in the end, the Endorsement Guides stay consistent with their original purpose to provide a framework for ensuring that endorsements reflect the honest opinions, findings, beliefs, or experience of the endorser and that advertisers are subject to liability for misleading or unsubstantiated statements made through endorsements or for failing to disclose unexpected material connections between themselves and their endorsers.
