The Federal Trade Commission is devoting a lot of attention to “up to” claims these days.
All About Advertising Law tries to keep its readers fully informed about what the FTC is up to, so we’ve been devoting a lot of attention to “up to” claims as well. We wouldn’t be performing up to snuff if we failed to stay on top of this issue.
You may have had it up to here with all the talk about “up to” claims. If so, you may want to skip this post. It’s really up to you.
In February of this year — as regular readers of All About Advertising Law already know — the FTC issued complaints and consent orders against several window makers who claimed that consumers who installed their windows would save “up to” a certain percentage on their heating and air conditioning bills. Click here to read our post about those orders.
In June, the agency reported on a study it had commissioned when it was investigating the “up to” claims that were the subject of those complaints. (I don’t know why the FTC didn’t release the study back in February when the complaints and consents were issued. Far be it from me to speculate about bureaucratic snafus, intra-agency infighting, secret conspiracies, or other governmental shenanigans. Such speculation would be highly irresponsible.) Click here to read our post about that study.
Last month, the Commission followed up on the consent orders and “up to” study by warning 15 window or window-glass manufacturers that they might have some ‘splaining to do if they didn’t stop making “up to” energy-savings claims. Click here to read that post.
Now that we’ve reviewed the bidding, everyone is up to speed, and we’re all on the same page, let’s get right to the point.
I hate to be a you-know-what in the punchbowl, but it seems to me that the FTC has staked out a position on “up to” claims that is completely inconsistent with the reasoning it applied when it revised its Guides Concerning the Use of Endorsements and Testimonials in Advertising in 2009.
You may recall that both the original and revised Guides state that “[a]n advertisement containing an endorsement relating the experience of one or more consumers [with a] product or service also will likely be interpreted as representing that the endorser’s experience is representative of what consumers will generally achieve with the advertised product or service.”
In other words, if advertising for a weight-loss product features testimonials from consumers who lost 24 to 36 pounds, the FTC believes that advertising communicates the message that consumers who use that product will generally lose 24 to 36 pounds.
If that’s true, there’s no issue. But if the testimonials reflect better than average results, the FTC’s opinion is that the ad is deceptive unless the advertiser corrects the implication that the testimonials’ atypical results are typical.
The original Guides allowed advertisers to use atypical testimonials as long as they included a “results not typical”-type disclaimer. But that “safe harbor” provision was deleted from the Guides when they were revised.
That provision now says that advertisements that feature testimonials by consumers whose experiences with a product or service are not typical are expected to clearly disclose just what results are typical.
This new requirement was based on Commission-commissioned consumer research that compared the effectiveness of different disclosures in weight-loss ads that featured atypical consumer testimonials.
The authors of that study concluded that the “results not typical”-type disclosures they tested failed to correct the misimpression created by the atypical testimonials.
But a disclosure that stated what the average weight loss was (“The average user loses about 10 pounds”) significantly reduced the number of test subjects who wrongly concluded that users of the product would achieve results similar to those achieved by the testimonials.
Part 255.2 of the revised Guides contains a hypothetical that is very relevant to our discussion today:
An advertisement disseminated by a company that sells heat pumps presents endorsements from three individuals who state that after installing the company’s heat pump in their homes, their monthly utility bills went down by $100, $125, and $150, respectively. The ad will likely be interpreted as conveying that such savings are representative of what consumers who buy the company’s heat pump can generally expect. The advertiser does not have substantiation for that representation because, in fact, less than 20% of purchasers will save $100 or more.
So what should the heat pump seller do? We know that “results not typical” isn’t good enough any more – what the revised Guides want the advertiser to do is to clearly and conspicuously disclose the generally expected savings:
There are multiple ways that such a disclosure could be phrased, e.g., “the average homeowner saves $35 per month,” “the typical family saves $50 per month during cold months and $20 per month in warm months,” or “most families save 10% on their utility bills.”
It all sounds so simple, doesn’t it? At least it did until all this “up to” stuff hit the fan.
The FTC’s “up to” study compared consumer understanding of a hypothetical ad that promised “save up to 47% on your heating and cooling bills” to an ad that made the same promise but that disclosed that consumers save on average only 25% on their heating and cooling bills.
The raw numbers seem to show that the disclosure of average results had a definite impact. About 50% more subjects who were shown a “save up to 47%” ad with no disclosure of average results concluded that the average consumer would save about 47% as those who were also shown the same ad with an “average savings is 25%” disclosure.
And of those subjects who were shown the ad with an “average savings is 25%” disclosure, over four times as many said that the average person would save 25% (not 47%) on their energy bills as those who saw an ad with no disclosure.
Yet the authors of the study concluded that the “average savings is 25%” disclosure had virtually no effect.
This makes no sense to me, but I don’t have all the raw numbers. And even if I did, I took statistics “pass-fail” in college.
But let’s not miss the forest for the trees. The bottom line of that study is that a “save up to 47%” claim is viewed by consumers as a claim that the average consumer can expect to save 47% or pretty darn close to it – even if the “up to 47%” claim is qualified by a disclosure that the average savings are 25%.
Therefore, the FTC believes that advertisers who make “save up to 47%” claims “should be able to substantiate that consumers are likely to achieve the maximum results promised.” Disclosing the typical results that consumers are likely to achieve isn’t good enough.
“Hold on just a cotton-pickin’ minute!” you say. (Well, that’s what you say if your mother grew up in Arkansas like mine. If your mother grew up in Brooklyn, maybe you say “Oy gevalt!”) “Don’t the revised Guides Concerning the Use of Endorsements and Testimonials in Advertising say that it’s quite permissible to use testimonials who achieved results that exceed what the typical consumer will achieve as long as there is disclosure of what is typical?”
Indeed they do, boys and girls – indeed they do.
Pretend that you have a client – let’s call him “Jake” –who is a manufacturer of energy-saving windows. Jake has testing data to show that the average person will save 25% on his heating and cooling bills if he installs Jake’s windows. But Jake also has data indicating that some people will save as much as 47% on their energy bills. And Jake also has some testimonials from customers who say honestly that their savings were in the neighborhood of 47%.
Jake presents you with two different ads. The first ad proclaims “save up to 47%,” and has a clear and conspicuous disclosure that “average savings are 25%.”
The second ad contains testimonials from a couple of customers who say, “I saved 47%.” The second ad also has a clear and conspicuous disclosure that the typical consumer can expect to save 25%.
What do you tell Jake? That’s simple. You tell him to forget about the first ad and go with the second.
After all, hasn’t the FTC has made it clear that (to quote its recent warning letters to window manufacturers) “if you say that consumers will save ‘up to’ a specified percentage in savings, your substantiation should prove that all or almost all consumers are likely to get that percentage in savings”? There’s no way that Jake can prove that “all or almost all” consumers will save 47% — he knows that 25% is the expected average savings.
But using 47% testimonials is fine and dandy if you “clearly and conspicuously disclose the generally expected performance in the depicted circumstances” – which is a 25% savings.
Jake may say that your answer doesn’t make any sense. After all, it’s obvious that there is no real difference between the two ads.
And don’t try to tell Jake that a savings claim made directly by the advertiser is somehow different from a savings claim made via testimonials. After all, the FTC’s testimonial guides contain language that equates ads that make claims directly and those that make claims through testimonials:
[The advertiser must possess and rely upon adequate substantiation . . . to support such claims made through endorsements in the same manner the advertiser would be required to do if it had made the representation directly, i.e., without using endorsements.
But Jake doesn’t have the benefit of sophisticated consumer research studies. And he doesn’t understand the subtle reasoning applied by experienced government officials who are presented with such studies.
Jake is making a rookie mistake. He’s applying logic and common sense to the situation. “Tsk, tsk,” you think to yourself. “How naïve!”