What You Need to Know About the New FTC Endorsement Rules -- and Why

From Bloggers to Celebs, Spokespeople Must Disclose That They Are Being Paid

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NEW YORK (AdAge.com) -- Under new FTC rules, Jared won't be able to say he lost 60 pounds anymore. Now, he'll have to say something like "I lost 60 pounds on the Subway diet, but most people only lose 10." Revlon won't be able to give away its product to mommy bloggers without asking them to disclose it in their writings. And if Jennifer Love Hewitt claims her blemish-free skin is the result of Proactiv, she had better be telling the truth.

The Federal Trade Commission attempted to clarify rules this week with a new set of guidelines, effective Dec. 1, establishing (or trying to establish) when a blogger or consumer becomes an endorser and what an endorser can say about a product before the testimonial spells trouble. Here's what to know to stay in the clear.

How much leeway does my endorser have?
If your endorser is making a claim that you, as a marketer, couldn't make, you're on thin ice. No longer will the "results not typical" disclaimer fly, meaning many weight-loss, hair- and muscle-gain infomercials are going to have to change. "Now," said Julie O'Neill, former FTC official now of counsel at Morrison & Foerster, "they can only make a claim that is accurate for most users." In some cases, advertisers will have to do their own research to make sure they're armed with empirical evidence that the claims made in their ads are typical of most users.

What if I want to use a testimonial in my ad that's a best-case scenario?
It's still OK, but you better also explain what typical results look like. Or give more information about how the best-case results were achieved and mix in more typical outcomes. "Marketers will have to be more creative in selecting the testimonials, depicting the testimonials and combining them," said Linda Goldstein, chair of the advertising and marketing division of Manatt, Phelps & Phillips.

What if my endorser is using humor or the scenario is obviously fictionalized?
You may be in the clear. If it would be obvious to the viewer that they are being entertained and not hearing, in the words of the FTC, "the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser," then those would not count as endorsements under FTC guidelines.

Ad Age Webcast
Question the experts live at our 'Hot Topic: The Skinny on the FTC's Endorsements and Testimonials Guidelines' webcast on November 3.

If I'm paying someone to tout my brand or giving bloggers free products or services, do I need to worry?
This is perhaps the most clear-cut of all the FTC's new guidelines: Almost any time money or something of value changes hands, the relationship must be disclosed. Unless, that is, a consumer would reasonably know that there was a connection between an advertiser and an endorser, such as Tiger Woods starring in a Buick ad. But Tiger mentioning via Twitter that he loves his new Rolex? Better disclose he's sponsored by the brand.

This rule also applies to third-party ad networks, which are paid by advertisers and then turn around and pay bloggers or Twitterers on behalf of the ad client.

So no more distributing freebies?
"It comes down to what's the speaker's relationship with the marketer," said Mary Engle, associate director for advertising practices at the FTC. "Do they have a contract or written agreement and what are the terms?" Was there a suggestion that they write or disseminate information about the product?

Under a broad-based sampling program, a consumer receives a free trial for a product or service because she's in the brand's target market and has, perhaps, been identified for the freebie based on past purchases -- not because she's got a blog and an audience the marketer wants to reach. Because there's no relationship between the consumer and the advertiser, her writing about the product on her blog shouldn't constitute a violation of the guidelines.

Is there a dollar limit on what a blogger can accept without having to disclose?
"If something has such a small value -- say a coupon for $1 off Pampers and it's a one-time thing -- it might be so nominal a value that it wouldn't matter to a consumer that the blogger got $1 off," said Ms. Engle. "But what if it was $5? What if it was $10 every month? A free carton every month would be material."

In fact, the FTC will be looking at this along with other questions, such as: What's the length of the relationship? Has the endorser previously received products or services from this or a similar advertiser?

How can I cover myself to make sure I don't get in trouble?
Three things: Enact and communicate a disclosure policy for social-media marketing; monitor the social-media sphere to ensure compliance; and attempt to fix anything that's been misrepresented. You should do the same for internal employees, who now need to identify themselves and their relationship with your company if they post about it on social media.

What if I give product to a blogger of an editorial site for review?

This is a huge gray area left open by the FTC guidelines. In between traditional media and recreational social networkers are a gamut of professional blogs and sites. Advertisers that don't abandon the space will want to be as conservative as practical and disclose any relationship that might impact expressed opinions. But the bigger danger may lie in lawsuits that could result. "I think the real struggle for brands ahead will be how to continue to harness the power of social media without incurring the risk for product claims," Ms. Goldstein said.

Can I still give product to traditional outlets such as radio, newspapers and magazines?

Ask the FTC

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