The FTC has updated its Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Guides”) and its corresponding FAQ-like document, FTC’s Endorsement Guides: What People are Asking (“FAQs”), to address evolutions in advertising, such as the prevalence of online reviews, reliance on star ratings, and use of influencers, and to clarify when and how to disclose material connections. As with its prior guidance, the FTC aims to explain how to avoid unfair or deceptive advertising practices in violation of Section 5 of the FTC Act. Particularly if you have an influencer program or seek incentivized reviews, this guidance may necessitate some updates to your approach – or it may provide clarity on some trickier implementation questions. Consider taking a fresh look at your program through this updated lens.
The FTC focused its revisions to the Guides in six areas:
- Risk in How Reviews Are Presented – Introducing a new principle specifically instructing advertisers to avoid “procuring, suppressing, boosting, organizing, publishing, upvoting, downvoting, or editing” consumer reviews in a way that could create a misimpression about consumers’ views of a product. See 255.2(d). In essence, the FTC is putting companies on notice that how they handle and present their reviews could be considered a deceptive practice. For instance, if an advertiser were to suppress negative reviews, the resulting pages with only positive reviews are likely to be considered deceptive. The FTC notes that advertisers still may suppress reviews in certain instances, such as when they do not relate to the service or contain unlawful, harassing, or obscene content.
- User Reviews – Discussing incentivized reviews, reviews by employees, and fake negative reviews of a competitor. For instance, the Guides address solicited reviews and how they may impact average star ratings, explaining that if an incentivized star rating materially increases the average star rating, then the advertiser should make a clear and conspicuous disclosure that the average takes into account incentivized reviews to avoid potential deception.
- Definition of “Clear and Conspicuous” – Adopting an additional definition of “clear and conspicuous” to mean “difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers.” Online disclosures must be “unavoidable” to be effective. The Guides also echo prior guidance that disclosures must also be provided in the same format and language as the endorsement; for instance, if the endorsement is made visually, then the disclosure should also be visually apparent. They also reiterated that disclosures should stand out in order to be “clear and conspicuous.” Relatedly, the FTC indicated that a platform’s built-in disclosure tool might provide for an adequate – clear and conspicuous – disclosure.
- Definition of Endorsement – Changing the definition of “endorsements” to clarify that it includes fake reviews, virtual influencers, and tags in social media. Even if the reviewer is not an authentic individual or business (e.g., an avatar or fabricated person), their statements can still be endorsements.
- Scope of Liability – Clarifying the potential liability of advertisers, endorsers, and other intermediaries (e.g., “advertising agencies, public relations firms, review brokers, reputation management companies, and ‘other similar intermediaries’”). The Guides explain that the emphasis is on those who contribute to the creation of the endorsement. This overall guidance echoes the FTC’s 2020 warning letters and its enforcement actions against influencers.
- Child-Directed Advertising – Highlighting that advertising to children and teens is of special concern given the sensitivity and potential susceptibility of the audience. Note that the Guides also remind advertisers that whether a disclosure is “clear and conspicuous” requires consideration of the nature of the targeted audience (e.g., older consumers) and should be tailored accordingly.
In addition to the above issues, the FAQs include 40 new questions and refresh some prior responses. In particular, the new materials address the influencer ecosystem such as how and when influencers should disclose their relationship (including on various platforms) and expectations for how brands that hire influencers should monitor their influencers. They also address appropriate disclosures for affiliate links, offering possible examples such as displaying the phrase “Paid link” right next to the affiliate link, or a statement like “I get commissions for purchases made through links in this post” when the links are in embedded in a product review. Determining an adequate disclosure is fact-specific and determined by how the audience is likely to understand it.
These updates reflect themes from FTC settlements and other communications. The FAQs along with the FTC’s discussion of the public comments on the Guides can be helpful with implementation of endorsement disclosures and provide insight into the Commission’s expectations. While the FTC has been active in this space, we would expect renewed scrutiny taking into account this updated guidance.
