FTC Goes After a Consumer-Endorser for the First Time

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When deciding whether to buy a product or service, how often do you check out product reviews or testimonials and how often does that research impact your purchasing decision?

The FTC seems to consider consumer reviews and testimonials as pretty persuasive – most notably in the context of online write-ups. In 2009, the Commission revised guidelines on testimonials and endorsements to address the importance of these reviews and especially the growing prevalence of online reviews. Significant in the revisions was that the FTC highlighted the possibility of endorser liability for false or unsubstantiated claims. (FTC regulations typically are directed at advertisers as opposed to those who give product endorsements or testimonials.)

Less than two years later, the FTC has filed a complaint against a consumer-endorser. The Commission, along with the Colorado Attorney General, filed an action in U.S. District Court in Colorado against Marsha Kellogg for her alleged false or misleading representations in support of an infomercial program, “Winning in the Cash Flow Business.” According to the complaint, Kellogg falsely claimed that she earned an artificially high amount of money through the infomercial program – some $50,000 more than what she actually earned.

The action was incorporated in a suit filed against the CEO/founder of that infomercial enterprise, Russell Dalbey, and related defendants. However, Kellogg already agreed to an order settling the FTC’s charges – an order that generally prohibits her from making several types of misrepresentations in the future.

Please see full article below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jeff Ifrah | Attorney Advertising

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