A company holds a press event to tout the success of its newly introduced product. Someone in the audience asks a question, which the Company subsequently uses in its advertising for the product. However, the Company fails to disclose that it actually paid for the audience member to fly into the press event. Is this a problem under the FTC's Endorsement Guides? Most likely yes, since the payment of travel expenses would probably be a material connection between the consumer and the company.
A recent article in American Banker converts this hypothetical into reality, except that the company is a government agency, the Consumer Financial Protection Bureau. According to the American Banker, an outspoken critic of indirect auto lenders, Harry Douglas Lane, was in the audience at a recent CFPB forum and was called upon to speak as an audience participant. However, no one in attendance or the press covering the event was informed that the CFPB had paid for Lane's flight to the forum as well as his hotel.
As noted above, if advertisers had engaged in this sort of behavior, they almost certainly would have violated the Endorsement Guides, and the CFPB's purported justification for its failure to disclose, that the critic had only a "limited" role in the Forum, would likely be met with deafening silence by the FTC staff and Bureau Director. Even if the CFPB and other government agencies aren't literally covered by Section 5, isn't the practice of disclosing material connections still common sense? After all, government agencies, like advertisers, are often pitching a product or ideas to consumers. Doesn't the public (and the press) have the right to know that people who speak out in support of these ideas have a "material connection" to the agency advocating the policy?
The American Banker article also notes the common practice of paying for members of advisory boards and witnesses to attend government-sponsored events. To use the lingo of the Endorsement Guides, most people probably assume that advisory board members are paid for their service but the same may not be true of witnesses. If someone shows up as a speaker at an agency-sponsored event and speaks in favor of a particular policy or program, disclosing that their travel and perhaps other expenses were reimbursed might well be a disclosure worth making. Perhaps it's time that what's good for the goose is good for the gander.
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