In 2009, the FTC issued revised Guides Concerning the Use of Endorsements and Testimonials in Advertising and many expected a rash of enforcement in that area. The FTC also has promised to scrutinize statements made in the context of talk shows, which the FTC believes may constitute advertising. Although the FTC has brought a few cases challenging advertisers failure to disclose a material connection (see Spokeo, Reverb, and Legacy Learning cases) this area has not appeared to be a priority. In some instances the Commission has also opted to essentially issue a “warning,” exercising its discretion to close certain matters without bringing an enforcement action. Now, however, the FTC appears to be pursuing both endorsements and statements made on talk shows in an action announced on March 6, 2014, against ADT, a home security company. The agency alleges that ADT misrepresented the statements of paid endorsers as independent opinions of safety and technology experts.
The Complaint alleges that ADT paid three spokespersons, a child safety expert, a home security expert, and a technology expert, over $300,000 to endorse and promote the ADT Pulse home monitoring system. The endorsers also received a free Pulse system, valued at more than $4,000. The endorsers plugged the products in television interviews, radio interviews, and on blogs, with almost no mention of their connection to ADT. According to the FTC, consumers would interpret the endorsers’ recommendations of the product as the opinion of an independent expert, not an advertisement involving a paid spokesperson. Continue Reading