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What's Old With The FTC Endorsement Guides?

Updated FTC Guidelines: Big Change, Or Storm In A Teacup?

The Federal Trade Commission's updated guides governing endorsements and testimonials went into effect on December 1st.

When I first heard about the new guidelines, I'd wondered if anything had really changed, in a word, no for non-celebrity endorsers, who have always been required to disclose their material connections. I wrote about this issue of disclosure about four years ago in “Blogger Endorses Product Without Revealing Payment,” when Jeff Cutler was featured in a Globe article over a $5 non-disclosure, and I followed up with another post in, “More on Blogger Endorses Payment With Revealing Payment” a general discussion with Ed Shull from USWeb. The FTC had later moved to clarify the guidelines meaning in an announcement, I wrote about that in, “Where’s the Fire? Commercial Alert Sees Smoke Where None Exists.”

I think the new guidelines clarify the language of the law by giving up-to-date examples for non-celebrity endorsers. The last update was in 1980, long before social media and the World Wide Web.

Reading the new §255.5 Disclosure of material connections section and the now defunct part I referenced in my post, I can only find one word changed, "which," to "that".

Again the examples are significant for clarifying the meaning of the law, here’s an example about endorsement by a non-celebrity on a blog:

Example 7: A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.

Significantly for the issue of astroturfing and Paull Young, a social media friend, who has been interested in the topic of astroturfing for a while, there's a new example:

Example 8: An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product. Knowledge of this poster’s employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.

Significantly, the biggest change with the updated guidelines are for celebrity endorsers; previously, celebrities were exempt from revealing their material connection to an advertiser because it was assumed the public would understand that a celebrity was getting paid when endorsing a product. The FTC keeps that rule for traditional ads, but recognizes the changing nature of new media by requiring celebrities to disclosure their connections in TV shows and on social media.

In 2005, during my discussion with Ed Shull from USWeb he’d cited Tiger Woods as an example of someone who doesn’t have to disclose his connections, I’d made the point that was because he was a celebrity, and while things have changed for Tiger Woods when endorsing products in social media, I think Mr. Woods currently has other problems with non-disclosure!