By Lesley Fair

Say someone tells you he’s tried a great new diet product.  He ate what he wanted and wasn’t hungry – and the pounds melted away.  Would his endorsement factor into a reasonable person’s decision to buy the product?  Probably.  Now suppose you find out the person works for the company selling the product or has been paid by the company to tout the product to others.  Would a reasonable person want to know that in weighing the endorser’s glowing recommendation?  You bet.

That common-sense premise is at the heart of the Federal Trade Commission’s revised Endorsement Guides.  As the Guides state, “When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.”  Simply put, any material connection between the seller and endorser that prospective buyers wouldn’t normally expect must be disclosed.  Examples in the Guides offer practical insights.

What if a person offering a testimonial in an ad would be perceived by viewers as a regular consumer, as opposed to a celebrity or an expert?  In that case, there should be a clear and conspicuous disclosure of any payment (or promise of payment) made in exchange for the endorsement.  What if the endorser had reason to think that a favorable endorsement would garner some other benefits – say, a TV appearance?  According to the Guides, that fact should be disclosed.

Now suppose a movie star is paid to endorse a soft drink or other product where the testimonial is based on personal taste.  Of course, the endorsement must reflect the celebrity’s genuine opinion about the product.  But must the ad disclose that the star is taking home a hefty paycheck in exchange for the endorsement?  According to the Guides, a key factor in deciding when disclosure is necessary is whether the connection is “reasonably expected by the audience.”  In that case, viewers would likely expect that a movie star would be paid for appearing in an ad for a soft drink.  Thus, the celebrity’s compensation would not have to be disclosed.

But what if a famous tennis player appears on a TV talk show and comments that her vision has substantially improved and she’s seeing the ball better than ever, thanks to laser eye surgery at a clinic she identifies by name?  Must the athlete disclose that she has a contractual arrangement with the clinic that pays her for speaking publicly about her surgery?  Under the FTC Guides, viewer expectations remain a critical factor.  Because viewers might not realize that a celebrity discussing a medical procedure in a TV interview has been paid for plugging the clinic, knowledge of the deal would likely affect the weight viewers give the athlete’s endorsement.  So without a clear disclosure that the clinic has hired her as a spokesperson, the endorsement may be deceptive. Furthermore, if consumers are likely to take away from her story that her experience was typical of people who’ve had the same procedure at the clinic, the advertiser must have substantiation for that claim, too. 

For more on the revised Guides, read The FTC’s Revised Endorsement Guides:  What People are Asking and watch the FTC’s videos.

Lesley Fair is an attorney with the FTC’s Bureau of Consumer Protection.