by Lisa Dubrow
Lots of action this week at the FTC relating to potential violations based on false endorsements and consumer reviews and testimonials. The FTC put more than 700 companies on notice that they could incur significant civil penalties (up to $43,792 per violation) for misleading endorsements which include false testimonials found in online reviews and on social media. The companies who received the notice included large brands and retail platforms (see listed companies). The FTC claims that the companies receiving the letters are “on notice” that future violations of the conduct articulated in the letter could result in the agency seeking penalties in enforcement actions.
The conduct identified by the FTC as an unfair or deceptive trade practice were as follows:
* to make claims which represent, expressly or by implication, that a third party has endorsed a product or its performance when such third party has not in fact endorsed such product or its performance.
* for an advertiser to misrepresent that an endorsement represents the experience, views, or opinions of users or purported users of the product.
* to misrepresent an endorser as an actual user, a current user, or a recent user of a product or service.
* for an advertiser to continue to advertise an endorsement unless the advertiser has good reason to believe that the endorser continues to subscribe to the views presented in the endorsement.
* for an advertiser to use testimonials to make unsubstantiated or otherwise deceptive performance claims even if such testimonials are genuine.
* to fail to disclose a connection between an endorser and the seller of an advertised product or service, if such a connection might materially affect the weight or credibility of the endorsement and if the connection would not be reasonably expected by consumers.
* to misrepresent explicitly or implicitly through the use of testimonials that the experience described by endorsers of a product or service represents the typical or ordinary experience of users of the product or service.
Interestingly, the letters to the companies affected make clear that they are not being singled out: “FTC staff is not singling out your company or suggesting that you have engaged in deceptive or unfair conduct. We are widely distributing similar letters and the notice to large companies, top advertisers, leading retailers, top consumer product companies, and major advertising agencies.” However, it is hard to imagine that this doesn’t put the recipients of the letters at an unfair disadvantage if an enforcement action were to take place. The FTC is obviously ensuring enough companies are on notice that all companies who use testimonials and endorsements will pay attention.
Takeaway: Ensure that you review your internal policies and procedures with respect to how your obtain and use testimonials by endorsers, including consumer reviews, to ensure you are in compliance with of the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising.