United States: Part III -- FTC's Proposed Revisions To The Endorsement Guides (Consumer Endorsements)

Last week, the Federal Trade Commission released its long-awaited, proposed revisions to its Guides Concerning the Use of Endorsements and Testimonials in Advertising.  I'm writing a series of blog posts that do a "deep dive" into the proposed changes.  This is Part III, which discusses the FTC's proposed amendments to Section 255.2 of the Guides, which is the "Consumer endorsements" section.  You can find Part I (Purpose and definitions) here and Part II (General considerations) here.

Generally Expected Performance

The basic guidance in the "Consumer endorsements" section of the Guides remains largely unchanged.  One of the main principles in this section is that, if an advertiser is using a consumer endorsement to communicate a claim about the performance of a product, the advertiser must generally have adequate substantiation that the product performs as advertised.  In its proposed update to the Guides, the FTC emphasizes, in Section 255.2(a), that advertisers must substantiate both the "express and implied" claims that are communicated.  The Guides also explain that when an advertiser can't substantiate that the endorser's experience is representative of the performance that consumers will generally achieve, the advertising should clearly and conspicuously disclose the generally expected performance.  In the proposed updates to Section 255.2(b), the FTC notes, however, that "The disclosure of the generally expected performance should be presented in a manner that does not itself misrepresent what consumers can expect." 

Consumer Reviews

The most significant update to this section of the Guides is a new section on the use of consumer reviews, which is incorporates informal guidance that the FTC has provided to industry over the last couple of years.  The FTC explains, in a new Section 255.2(d), that when managing consumer reviews, "advertisers should not take actions that have the effect of distorting or otherwise misrepresenting what consumers think of their products, regardless of whether the reviews are considered endorsements under the Guides."  

In a footnote, the FTC did indicate, however, that advertisers are not required to display consumer reviews that contain "unlawful, harassing, abusive, obscene, vulgar, or sextually explicit content or content that is inappropriate with respect to race, gender, sexuality, or ethnicity, or reviews that the seller reasonably believes are fake, so long as the criteria for withholding reviews are applied uniformly to all reviews submitted."  The FTC also acknowledged that marketers don't need to display reviews that are unrelated to their products or services, but cautioned that reviews related to customer service, delivery, returns, and exchanges should not be suppressed, because they are, in fact, related to the product or service. 

Examples

The Examples in the Guides provide important additional guidance, and the FTC made a number of significant changes to the Examples in the "Consumer endorsements" section.

In Example 2 (heat pump), the FTC explains that, even if you've included a disclosure that explains the generally expected performance that consumers will achieve, the disclosure may still be misleading if the advertised performance is only applicable to limited circumstances that are not described in the advertising.  For example, if the energy savings achieved by using a heat pump will only be achieved in a certain climate or geography, that information should be disclosed as well.  This addition is an important reminder that, when advertising nationally, advertisers should consider whether the results advertised will generally be achieved by all of the consumers who will be exposed to the advertising.  

In Example 4 (Weight Away shakes), the FTC provides additional guidance on how to advertise atypical results and then disclose the generally expected performance that consumers will achieve.  In this Example, the FTC discusses a weight loss product where the advertising features people who have lost more weight than what consumers will typically lose. When disclosing what the generally expected performance will be, the FTC cautions advertisers to ensure that the disclosure provides full information about what that typical performance is.  For example, the FTC advises that it's misleading to disclose that consumers will lose "1-2 pounds per week" if the disclosure also doesn't communicate the period over which such weight loss can be expected.  The FTC also advises that giving a big range of pounds that people could lose -- such as "lose between 10 and 50 pounds" -- is also not adequate, because "the range specified is so broad that it does not sufficiently communicate what users can generally expect."  In addition, the FTC says that, when disclosing what the generally expected performance will be, the marketer should be sure to calculate the average in a manner that doesn't misrepresent those results.  The FTC explains that using the mean may not always be the best way to communicate that information, if the average is "substantially affected by outliers."   Finally, the FTC advises that it's important to ensure that the disclosure doesn't mispresent the experience of all relevant consumers.  For example, if most consumers don't stick with the weight loss program, the FTC says it's deceptive to just give the results of the people who completed the program (even if you disclose that this is who you are talking about), since it doesn't fairly represent what the typical outcome will be.

In a new Example 8 (camping goods), the FTC explains how to fairly moderate consumer reviews in line with its new guidance discussed above.  The one important thing to note in this Example, however, is that the FTC cautions against labeling a favorable review on a product page as "the most helpful review," if the advertiser is making the selection of the review to feature.  The FTC believes that doing this "suggests that it was voted most helpful by consumers visiting the website."  This isn't to say that a marketer can't choose to highlight particular reviews on its website, but it shouldn't do so in a manner that otherwise communicates misleading claims. 

In a new Example 9 (paying for reviews), the FTC says it's improper to pay consumers to write "positive reviews," even if the payment is disclosed.  On the other hand, the FTC says that paying consumers to write reviews, where there is no requirement for the review to be positive, and where the reviewers "understood that there were no negative consequences from writing negative reviews," is permissible, so long as the payment is disclosed.  Importantly, the FTC is doubling down on its position here that payment is always a material connection, even if the reviewer is free to write anything that the reviewer wants.  

In a new Example 10 (negative reviews), the FTC tells marketers not to threaten consumers who post negative of their products.  

And, finally, in a new Example 11 (solicited reviews), the FTC says that while it's acceptable for advertisers to invite customers to post reviews about their products, its deceptive to only invite satisfied customers to post reviews.  

Stay tuned for Part IV of this post, where I'll discuss the proposed changes to the "Expert endorsements" and "Endorsements by organizations" section of the Guides.

Originally Published by Advertising Law Updates

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