The Federal Trade Commission’s May 2022 open meeting, Alvaro Bedoya’s first since being sworn in as the agency’s fifth commissioner on May 16, considered a request for public comment on proposed amendments to its Guides Concerning the Use of Endorsements and Testimonials in Advertising. After a staff presentation on commissioners’ proposed updates and statements, the agency unanimously approved the request for public comment.
The Endorsement Guides, first issued in 1980 and last amended in 2009, reflect the commission’s interpretation of how the FTC Act applies to endorsements and testimonials in advertising. Proposed updates to the guides include the following:
- The definition of “endorser” would be expanded to include computer-generated influencers—which are not real people—and those who fabricate reviews and endorsements. The act of tagging a brand in a social media post also will be expressly considered to be an endorsement.
- The guides’ definition of a clear and conspicuous disclosure would be updated to mean “a disclosure that is difficult to miss and easily understood by ordinary people.”
- Disclosures in advertisements targeting specific audiences, like older adults, would be evaluated through the lens of members of that group.
- A new section of the guides would address consumer reviews. In procuring or presenting consumer reviews, the changes would emphasize that advertisers should not distort or misrepresent what their customers think of the products or services. The guides would also include modern examples to illustrate how the FTC views different review-related practices as misleading or unfair—namely, deleting or not publishing negative reviews, buying fake reviews, and review gating.
- Additional guidance on material connections between advertisers and endorsers, and how those connections should be disclosed. This includes some examples of relationships that could be considered material connections, such as business, family, or personal relationships between endorsers and advertisers, and where incentives are provided in exchange for reviews. Where there are unexpected material connections, the updated guides would require a clear and conspicuous disclosure that communicates the nature of the connection. For example, disclosing a connection by thanking a brand for a free product may not be sufficient if the endorser was also paid money for the endorsement.
- Endorsements in advertising directed toward children. The FTC plans to hold a virtual event in October 2022 to enhance its understanding of children’s capacity to understand online advertising and the efficacy of disclosures for children.
- A section clarifying when advertisers, endorsers, intermediaries, and platforms can be held liable under the FTC Act for misleading endorsements. For example, the updated guides would clarify that endorsers may be held liable for statements that they knew or should have known were deceptive, or for failing to disclose a material connection, especially in the context of social media posts where they create and disseminate their own endorsement. Intermediaries, like advertising agencies and public relations firms, may be liable for their roles in disseminating what they knew or should have known were deceptive endorsements.
- The development of built-in disclosure tools on social media platforms that endorsers could use in their posts. Some disclosure tools may be inadequate and may expose endorsers, who rely solely on the built-in tools, to liability for inadequate disclosures, and may expose social media platforms to liability, depending on the representations they make about these tools.
Each commissioner expressed his or her support for the proposed updates and provided additional commentary on their particular concerns relating to deceptive endorsements.
Chair Lina Khan first praised the guidance on platforms’ relationship with influencer marketing and urged that, since platforms profit from influencer marketing, they should carry greater responsibility in this area. Second, she applauded the added guidance on consumer reviews—particularly on fake reviews and suppressed negative reviews—which she said reflects recent enforcement actions taken by the commission. Third, she acknowledged the updates covering influencer marketing directed toward children, noting that children are at a greater risk of deception.
Bedoya seconded Khan’s motion to approve the request for public comment. In expressing his support, Bedoya noted his particular interest in the FTC’s follow-up work concerning children’s “unique vulnerability” to such advertising. Commissioners Noah Phillips and Christine Wilson commended the FTC on its “process”—i.e., reviewing the proposal, soliciting comments internally, and finally seeking comments from the public—stating that it “reflects the agency at its best.”
Commissioner Rebecca Slaughter had more to say. She emphasized her concern about brands that use unsophisticated influencers and then try to “pawn liability off on those influencers,” noting that brands must be responsible for influencers disclosing the relationship. Slaughter also called for greater deterrence to prevent companies from using fake or dishonest consumer reviews, citing the agency’s 2021 Notice of Penalty Offenses regarding deceptive endorsements as a start. She asserted, however, that the FTC must be able to seek civil penalties and that rules are more effective than guidelines in generating deterrence.
Once the Federal Register formally publishes the request for public comment, the window to submit comments is 60 days.