The FTC Needs to Update Its Endorsement Guides

Today, TINA.org filed a comment in connection with the FTC’s request for information regarding its Guides Concerning the Use of Endorsements and Testimonials in Advertising, which tell marketers how to use endorsements in ads without misleading consumers. Two years ago, as part of the agency’s systemic review of all current FTC rules and guides, the commission requested and received more than 100 comments pertaining to whether – and if so, how – the Guides should be revised (which were last revised in 2009). Now, in 2022, the FTC has drafted proposed revisions and has sought public comment on its proposals.

TINA.org has done extensive work in this area, including warning letters to hundreds of brands and endorsers, and complaints to regulators about more than 100 companies and influencers, on issues ranging from social media endorsement marketing that fails to properly disclose material connections (like DJ Khaled and the Kardashians), to deceptive testimonials that promote atypical results, frequently in the form of unusual income and earnings claims (like so many MLM companies), to testimonials that make unsubstantiated disease-treatment claims (like many supplement makers, MLM companies, and even a pillow company). Our work has made clear that the use of deceptive endorsements and testimonials in marketing has been and continues to be a serious problem and one that deceives millions, including children, seniors and other susceptible consumers. These tactics will only continue to flourish if not effectively reined in by regulators. As such, TINA.org suggested a number of additions to the FTC’s proposed revisions, including the following:

• The Guides Should Include and Define “Fabricated Endorsers”: The FTC has proposed revising its definition of “endorser” to include the “party whose opinions, beliefs, findings, or experience the message appears to reflect.” According to the FTC (in its discussion of the proposed revisions), this new language indicates that the Guides apply to endorsements by “fabricated endorsers.” But the commission doesn’t include this term in the proposed revisions themselves or provide any context or definition for it. And this leaves too much wiggle room for deceptive marketers. To avoid the risk of confusion and misunderstanding, TINA.org urged the FTC to include specific language or illustrative examples (or both) in the Guides to make clear what types of endorsers are covered by this revised definition, and to include the following types of endorsers: virtual influencers, which TINA.org discussed at length in its June 2020 Comment to the FTC, as well as AI-controlled avatar influencers, an emerging issue recently flagged by TINA.org in its April 2022 Roblox complaint.
• The Guides Should Inform Marketers How to Properly Disclose Information When Typical Disclosure Tools Are Not Available: The FTC has proposed new examples that illustrate when endorsement disclosures do and do not meet the clear and conspicuous standard. While these new examples are helpful additions to the Guides, TINA.org urged the FTC to include further examples in order to highlight two unaddressed scenarios: avatar influencers within advergames and closed metaverse platforms (both AI-generated and human-created, as discussed in our Roblox complaint) and tile views on certain social media platforms. In other words, how do you disclose a material connection when you’re advertising in the form of your video game or metaverse avatar, playing and communicating with other players? And how do you include required disclosures when consumers view your promotional images in tile view and the usual accompanying captions are missing (like in the screenshot below of Justin Bieber’s NFT promotions)?
  

  

  TINA.org urged the FTC to provide some parameters.

• The Guides Should Make Clear that Intangible Material Benefits are Still Material Benefits: The FTC’s proposed revisions explain that material connections can include a business, family or personal relationship; monetary payment; the provision of free or discounted products or services to the endorser; early access to a product; or the possibility of winning a prize, of being paid, or of appearing on television or in other media promotions. However, as some recent TINA.org investigations have shown, material connections and benefits aren’t always so direct. Sometimes, simply being a part of a marketing campaign can attract new fans and followers to the endorser, as well as increase their brand awareness and consumer engagement. (Case in point: DJ Khaled’s appearance in a national TV commercial for Ciroc alongside Sean “Diddy” Combs, despite having “no contractual, financial or any other relationship with Diageo.”) Though these benefits aren’t as simple as cash – or free products – exchanging hands, they are nonetheless material and must be disclosed. And the Guides should say so.
• The Guides Must Effectively Address Endorsement Marketing Directed at Children: With respect to endorsement marketing targeting kids, the proposed revisions inadequately and ineffectively state that endorsements in marketing addressed to children may be of special concern and might be questioned, without providing any guidance to marketers. It is beyond dispute that children do not interpret and/or understand marketing material in the same ways that adults do – not all children have the ability to recognize advertising messages, and even those that do may not be able to critically evaluate the underlying marketing message. As such, TINA.org urged the FTC to use the research we provided, as well as any other research and data it collects in connection with its May 2022 request for comments and its October 2022 event regarding ways to protect children from stealth advertising in digital media to provide more specificity in the Guides with respect to endorsement marketing directed at children.

To date, more than 50 other comments have been filed with the FTC regarding its proposed revisions to the Guides. We’ll be keeping tabs on the commission’s next steps. Check back for updates.