Well ok, its effective December 1st – but the FTC has now come out with guidelines governing paid endorsements made by bloggers and others (FTC article & link below). Personally, I think this is a good idea and in some ways, I am glad to see it arrive. The other part of me worries about what they might dream up next.
So what brought this about and what does this mean to the average homeowner or consumer? Well when blogging started to take off, a few marketing and sales genius said “hey that’s a great idea, let’s start our own”. A few of the smarter ones (and a few of the failures) simply looked around for bloggers that were respected and went “Hmmmm, let’s see if they will give us a good word, maybe we can give them some samples, a percentage of increased sales, etc…” Well guess what, it worked and Cha-Ching, welcome to the start of Managed Social Media Marketing. If you would like to see how bad it has gotten you might want to check out this thread on the non-existent homeowner that was one company’s main marketing program that helped drive tons of sales to a homebuilder.
So what does this mean to the average homeowner or consumer? Truthfully not much to start with in this arena, but it might help clean up some of the shady tactics out there. I guess only time will tell, but here’s hoping. Now one other interesting tidbit is that advertisers will not be allowed to pull the “Results not typical” in small print, and must actually start stating what is typical from here on out. I think that this one item will have the greatest impact on not only consumers but also advertisers to start with. Now if we could just do something about those companies that pitch a discount if you write us referral that would be a good thing.
In light of the new FTC guidelines – we at SLS Construction are not paid; get free samples; or goodies to endorse any product in the Homeowners Resource Center. We are very careful as a company about referring any company’s service or product unless we are positive they will perform as advertised. I have known of other construction companies that have had their names tarnished by referring a sub to take care of an issue that does not show up, or does not perform the same level of work as they did for the contractor in question.
FTC Publishes Final Guides Governing Endorsements, Testimonials
The Federal Trade Commission today announced that it has approved final revisions to the guidance it gives to advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act.
The notice incorporates several changes to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, which address endorsements by consumers, experts, organizations, and celebrities, as well as the disclosure of important connections between advertisers and endorsers. The Guides were last updated in 1980.
Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor.
The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.
Celebrity endorsers also are addressed in the revised Guides. While the 1980 Guides did not explicitly state that endorsers as well as advertisers could be liable under the FTC Act for statements they make in an endorsement, the revised Guides reflect Commission case law and clearly state that both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement – or for failure to disclose material connections between the advertiser and endorsers. The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.
The Guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.
The Commission vote approving issuance of the Federal Register notice detailing the changes was 4-0. The notice will be published in the Federal Register shortly, and is available now on the FTC’s Web site as a link to this press release. Copies also are available from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,700 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.
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