Centers of Excellence: Entertainment Marketing

The Federal Trade Commission (“FTC”) adopted final changes to the Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Guides”). First, the revised Guides indicate that a “results not typical” disclaimer is likely not sufficient when an ad highlights a consumer’s experience with a product when such experiences are not typical (e.g., “before” and “after” photos of a woman who claims to have lost 50 pounds in 6 months with the product). Rather, the Guides require advertisers to clearly and conspicuously disclose the results that most consumers can reasonably expect (e.g., “most women who use the product for 6 months lose at least 15 pounds”).

Additionally, the Guides confirm that advertisers who sponsor bloggers must assure that the connection between the company and endorser is disclosed and should establish procedures to advise endorsers of their obligations and monitor the conduct of the endorsers. The Guides also clarified that such obligations only arise when, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statements can be considered sponsored by the advertiser.

Accordingly, individual reviews about the positive benefits of a product are not deemed “endorsements” (and therefore would not require disclosure of the connection between the reviewer and the seller) when they are (a) made by a consumer who purchases the product with his/her own money and writes in his/her personal blog or (b) made by a consumer who received a coupon from a third party (not the company) for a discount or free trial of the product and written in his/her personal blog. However, if a consumer takes part in a service whereby it receives various free products, cash, or other payments from the company and is expected to review the products, the consumer’s positive review would likely be deemed an endorsement and require disclosure of the material connection between the reviewer and the seller, including if she received the products for her review.

Additionally, the Guides provide recommendations with respect to celebrity endorsements. First, celebrity endorsers may be liable for statements about a product which are false or do not represent the celebrities own views, even though the celebrity is reading from a script. Second, advertisers should disclose the connection between a celebrity and a company when the celebrity makes a “plug” about a product or service on a talk show or other social media when it is not obvious that the celebrity is paid to speak about the product or service. Third, advertisers may use endorsements of celebrities only if the advertiser believes that the celebrity continues to subscribe to the views present.

You can view the Guides here.

These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.