Following a 5-0 vote in favor, the FTC announced that it is seeking public comment on whether to revise its Endorsement Guides, which were first enacted in 1980 and amended in 2009. As part of its systematic review of all current FTC regulations and guidance, the FTC is accepting public comments and supporting data regarding a variety of advertising, endorsement, and consumer review topics, as detailed in the Federal Register Notice regarding the proposed modifications. The deadline to submit comments is April 21, 2020.
The Endorsement Guides provide guidance to businesses and others in conforming their endorsement and testimonial advertising practices to the requirements of Section 5 of the FTC Act. Specifically, the Guides explain the obligation to conspicuously disclose material connections between an endorser and an advertised product that could affect the weight and credibility consumers afford the endorsement.
The FTC's proposal includes twenty-two questions for public comment. Prominent issues include social media advertising, technological changes, the efficacy of current disclosure requirements, and consumer expectations regarding advertising and disclosures. The FTC asks whether the Guides effectively address current advertising practices and enable consumers to receive truthful advertising information. The FTC also seeks public comment regarding the efficacy of advertising disclosures on young children, who may not adequately understand disclosures of material connections. Noting technological changes and the prevalence of social media marketing, the questions also include whether the Guides should be changed to reflect new technology and to specify advertising guidance for different social media formats. The notice seeks public assessment of how well advertisers and endorsers are disclosing unexpected material connections on social media. Additionally, endorser use of affiliate links could be a new area for FTC oversight and guidance, as the FTC is looking for information on consumers' expectations of endorser compensation arrangements for affiliate links.
Preventing deceptive and misleading consumer review websites is another area of interest for the FTC, as the proposed notice asks whether operators of review websites/platforms should be required to disclose any information about the creation, collection, processing, or publication of consumer reviews. Incentives in consumer reviews, such as free or discounted products, may become subject to further FTC scrutiny, particularly the issue of whether incentivized reviews create bias in the reviews and should be disclosed. The burdens and costs of compliance for businesses and endorsers are additional topics open to public comment.
Commissioner Rohit Chopra issued a separate statement regarding the notice. Echoing the language from his statement regarding the Sunday Riley Modern Skincare, LLC settlement, Commissioner Chopra stated that "no-money, no-fault FTC settlements . . . to address fake reviews and undisclosed influencer endorsements may be doing little to deter deception." He explained that "after reviewing the public's comments," he hoped the FTC would not only revise the voluntary guidance, but also consider taking additional action, including codifying elements of the existing guides into formal rules so that violators can be liable for civil penalties and damages. Commissioner Chopra also suggested that the FTC could consider specifying requirements for companies' contracts with influencers and developing requirements for technology platforms that facilitate and profit from influencer marketing.
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