Does the Federal Trade Commission want you to be Boring?

By: Jordan Mummau, CIS Compliance Associate
jordanmummau@cis-partners.com

Advertisement: Tired of being boring? Do you dread going to work on Mondays because you can’t ever answer the question ‘what did you do this weekend’ without revealing that your weekends consist of repainting action figures and building replica airplanes? Well worry no more, because we have a product for you; it’s called BOR-NO-MOR.
Testimonial: “I used to be so boring. Now with BOR-NO-MOR, I’m not only the coolest Cat in the office on Mondays, but Tuesday through Friday as well. I even crack jokes! Thanks BOR-NO-MOR!”
Disclaimer: “Results Not Typical.”

The Federal Trade Commission (FTC) has released its final revisions to the guidance it gives advertisers. These revisions detail how advertisers can keep their endorsements and testimonial advertisements within the confines of the FTC Act. According to the FTC’s website, the FTC “works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them.”[1]

With the new guidelines in place, advertisers who decide to run an advertisement or testimonial that features a consumer experience are now expected to clearly disclose the results that consumers typically expect from using the product being advertised. Taking this into consideration, the healthcare industry might no longer see advertisements and testimonials like the example of ‘BOR-NO-MOR’ illustrated above. The FTC is very specific in announcing that the advertiser and the person/entity endorsing the product must fully disclose their relationship. Material connections between these two parties must be exposed to the general consumer, including connections that consumers may not expect, such as offering someone money or free products to endorse your product.[2]

The guidelines specifically address celebrity endorsers. It is important to note that the guidelines implicitly state that “both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement – or for failure to disclose material connections between the advertiser and endorsers.”[3] The revised guidelines also outline regulations the FTC is trying to impose on “new-media” outlets, such as the internet; more specifically the FTC is targeting websites, bloggers, and social networking sites such as Facebook.[4]

Richard Cleland, Assistant Director of the Division of Advertising Practices at the FTC, said, “We were looking and seeing the significance of social media marketing in the 21st century and we thought it was time to explain the principles of transparency and truth in advertising and apply them to social media marketing.”[5]

For those of us who are interested in blogging, social networking sites, or having high-profile celebs endorse our products, the FTC may have just changed how viral marketing works forever, and our days of seeing advertisements, like the one for fictional “BOR-NO-MOR” may be numbered. The FTC is concerned about consumers and has implemented these guidelines in order to help them make better decisions about the products they use. Whether or not you agree with these new guidelines, it is difficult to criticize their intended purpose.

Sources:
[1] http://www.ftc.gov/bcp/edu/pubs/consumer/general/gen03.shtm
[2] http://www.ftc.gov/opa/2009/10/endortest.shtm
[3] http://www.ftc.gov/opa/2009/10/endortest.shtm
[4] http://news.cnet.com/8301-13577_3-10368064-36.html
[5] http://www.nytimes.com/2009/10/06/business/media/06adco.html