Revised Endorsement Guides

Background on the Endorsement Guides

First released in 1980, The Endorsement Guides provide non-binding guidance to the consumer industry on how to manage and interact with customer reviews, endorsements, and social media influencers such that their advertising remains truthful and not misleading, consistent with the principles of consumer protection law and the Federal Trade Commission Act (FTC Act). At a high level, an individual or entity that endorses a product (e.g. a celebrity, influencer, podcast host) must give their honest opinion. An endorser cannot make a claim that the marketer of the product could not legally make. Additionally, if there is a “material connection” between an endorser and the advertiser (i.e., a connection that might materially affect an endorsement’s weight or credibility) that a significant minority of consumers would not expect, the Guides require that the connection be disclosed “clearly and conspicuously” if such a connection would affect how consumers evaluate the endorsement (and whether the connection would indeed impact a purchasing decision is a question closely examined by the FTC in determining whether an ad aligns with the Endorsement Guides).

New Revisions

The Endorsement Guides were last updated in 2009. In 2020, the FTC initiated a regulatory review aimed at updating the Guides to reflect the current advertising environment, soliciting public comment on several issues, including whether the Guides reflect current consumer perceptions regarding endorsements, what impact the Guides have on the flow of truthful information to consumers, how well advertisers and endorses disclose material connections on social media, and how children understand disclosures of material connections. The revisions are intended in part to update the Guides in light of the rapid rise of social media and influencers.

The final revised Guides include new examples that are relevant to a social media context, substantive and minor clarifications to the verbiage in the Guides themselves, and new definitions. Some key changes include the following:

• Updated scope of endorsements to reflect social media practices: The FTC amended the definition of “endorsement” to clarify that tags in social media and other kinds of communications on social media “can be” endorsements if certain other conditions are met (e.g., the poster is being paid or otherwise compensated by the product’s marketer to post about the product). Likewise, the FTC clarifies that fake positive reviews and virtual influencers are within the definition of “endorsements,” meaning advertisers can be liable for their statements.

Updated guidance on disclosure of material connections: Endorsers are required to disclose, in a clear and conspicuous manner, their connection with the advertiser. The Guides now include a definition of “clear and conspicuous” to describe the characteristics necessary to comply with the requirement. Broadly, a disclosure is clear and conspicuous when it is “difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers.” Significantly, the updated Guides note that a platform’s built-in disclosure tool may not meet the definition of “clear and conspicuous,” and the placement, readability, and clarity of the disclosure are all factors in determining whether viewers can easily notice and understand the disclosure. For example, the Guides note that a built-in disclosure that appears in small white text, set against a light background of an image that appears for only five seconds would be easy to miss and would not meet the definition of “clear and conspicuous.” The Guides do not require that a disclosure include the complete details of the material connection. However, the disclosure must communicate the nature of the connection such that consumers can evaluate the connection’s significance. For example, a disclosure should include if a social media influencer was paid for a product, but does not need to include how much the influencer was paid.

• Clarified scope of advertisers’ liability: As in the prior iteration, the revised Guides state that advertisers may be potentially liable for misleading or unsubstantiated statements made by their endorser(s). However, the FTC newly states that a connection between the advertiser and endorser is not needed for the advertiser to be liable. The Guides provide an example that if an advertiser retweets a positive review by an unrelated third party, the review becomes an endorsement for which the advertiser could be liable, even though there is not a meaningful connection between the advertiser and endorser. Further, the Guides state that advertisers’ potential liability extends not only for an endorser’s wholly untrue statements, but also include the broader category of an endorser’s “deceptive statements.”

• Added section regarding advertisements directed to children: A new section in the Guides states that endorsements in advertisements directed to children “may be of special concern because of the character of the audience.” The section also notes that practices that are permitted in ads directed to adults may come under greater scrutiny when directed towards children. This policy would apply to any endorsement addressed to children, whether or not on a child-specific platform. The section does not provide specific guidance for advertisements directed towards children, as the FTC is “exploring next steps” for developing guidance specific to children.

• Incorporates new policy on product reviews: The revised Guides note that “procuring, suppressing, boosting, organizing, publishing, upvoting, downvoting, reporting, or editing” product reviews should not result in distorting or misrepresenting consumer experiences, “regardless of whether the reviews are considered endorsements.” In an example, the FTC notes that a product page showing customer reviews on a five-star scale represents that it is providing an accurate reflection of the views of purchasers who submitted product reviews, and not publishing reviews with fewer than four stars or other negative reviews would be misleading to purchasers. Editing or censoring posts may be done, so long as it is done equally over positive and negative reviews and not with a bias towards one or the other.

• Added examples of “results not typical” disclosures: The Guides have consistently reflected FTC’s position that an advertiser must indicate where an endorser’s experience is not representative of what consumers will generally achieve, and “results not typical” type disclaimers are not effective disclosures for consumers. The updated Guides provide additional examples illustrating this concept, noting that in a testimonial for a weight loss product where a consumer claims to have lost 50 pounds in six months, a disclosure that states a range of what consumers could expect (e.g., “most women who use Weight Away lose between 10 and 50 pounds”) can be ineffective if it is so broad that a consumer cannot know what results to expect, even if an appreciable number of consumers lost 50 pounds. Furthermore, a disclosure that states the typical weight loss of consumers that stick with the program for a period of time could be misleading if only a small percentage of consumers stuck with the program, e.g., 20%. The Guides state that more effective disclosures would state the generally expected result and state what percentage of consumers lost 50 pounds, and disclose what the typical outcome is for users at the start of the program, if needed.

To accompany the updated Endorsement Guides, the FTC also issued an updated version of its guidance “FTC’s Endorsement Guides: What People Are Asking.” The updated guidance includes 40 additional questions and updates to existing answers, incorporating guidance for social media influencers on disclosing material connections and examples of how to handle online reviews.

Proposed Rule Regarding Fake Reviews

Following an advance notice of proposed rulemaking published last November,¹ the FTC announced a proposed rule last week entitled “Rule on the Use of Consumer Reviews and Testimonials” (“Proposed Rule”) that would prohibit marketers from using deceptive endorsement practices. Specifically, the Proposed Rule would prohibit:

• Writing or selling fake customer reviews or testimonials (i.e., reviews by non-existent people, or people who do not have an experience with the product or that misrepresent their experience).

• Buying positive or negative reviews, either through a direct purchase or other incentive.

• Using or repurposing a review for one product on a different product (i.e., “review hijacking”).²

• Representing that posted reviews are representative of all reviews when certain reviews are being suppressed.³

• Using unjustified legal threats (defined as a threat to initiate or file a baseless legal action) or other intimidation or false accusation to prevent creations of negative consumer reviews, or removing all or part of a negative review.

• Allowing a company’s officers and managers to writing reviews or testimonials of its products or services without disclosing their relationships to the products or services.

• Creating or controlling websites that purportedly provide independent opinions about a product or service but that are controlled by the business selling the product or service.

• Selling false indicators of social media influence, like fake followers or views, or buying such indicators to “misrepresent their importance or influence for a commercial purpose.”⁴

Importantly, the rule is intended to enhance the FTC’s ability to pursue monetary damages on behalf of consumers. A 2021 Supreme Court decision in AMG Capital Management, LLC v. FTC⁵ limited the FTC’s long history of imposing civil penalties on companies engaging in unfair or deceptive practices under Section 13(b) of the Federal Trade Commission Act (FTC Act) (15 USC § 53(b)) and returning that money to consumers. The FTC explains the Proposed Rule would allow it to pursue civil penalties for companies publishing fake reviews under Section 19(a)(1) (15 USC § 57b(a)(1)) of the FTC Act, which allows the FTC to obtain redress only when a company has violated a regulation.

The Proposed Rule contains 24 questions on which the FTC is specifically seeking comment, available here.

Next Steps

The Proposed Rule and revised Endorsement Guides have not yet been formally published in the Federal Register. Comments will be due on both items 60 days after formal publication. We are available to assist with questions regarding the Endorsement Guides or Proposed Rule, including social media advertising, endorsement policies, and best practices.

Authored by Meryl Bernstein, Veronica Colas, Connie Potter, and MK Barker.