Hunton Retail Law Resource

On February 12, 2020, the FTC announced its intention to review its Endorsement Guides (formally known as the “Guides Concerning the Use of Endorsements and Testimonials in Advertising”). These guides, first enacted in 1980 and revised in 2009, provide guidance to businesses, influencers and endorsers on how to make sure endorsements or testimonials abide by the requirements of the FTC Act. While advisory in nature, the Commission can take action under the FTC Act if an endorsement or testimonial is inconsistent with the Guides.

In its federal register notice announcing the review, the FTC is seeking input on 22 specific questions, including:

1. Whether any technological, economic or environmental changes require changes to the Endorsement Guides since they were last revised;
2. How well advertisers and endorsers are disclosing unexpected material connections in social media;
3. Whether the Endorsement Guides should address the use of affiliate links by endorsers;
4. Whether incentives like free or discounted products bias consumer reviews even when a favorable review is not required to receive the incentive;
5. Whether composite ratings that include reviews based on incentives are misleading even when reviewers disclose incentives in the underlying reviews;
6. Whether children are capable of understanding disclosures of material connections and how those disclosures might affect children;
7. What benefits, if any, have the Endorsement Guides provided to consumers, including the impact on the flow of truthful or deceptive information, and whether such benefits have imposed any significant costs on consumers;
8. Whether the FTC’s guidance document “The FTC’s Enforcement Guides: What People Are Asking” should be incorporated into the Endorsement Guides;
9. What, if any, disclosures advertisers or operators of review sites need to make about the collection and processing of publication of reviews to prevent them from being deceptive or unfair; and
10. What burdens or costs, including costs of compliance, have the Endorsement Guides imposed on businesses.

In a concurring statement, Commissioner Rohit Chopra expressed that the FTC needs to take “bold steps to safeguard” the digital economy in this new age of influencer marketing and indicated that the role of large advertisers and social media platforms will be under the microscope. Calling it “illegal payola” for companies to compensate influencers for seemingly authentic endorsement and review, the Commissioner indicated that he will push for tougher remedies for violators—redress payments, sample contractual language and requirements for technology platforms among the remedies.