[US] Testimonials and Endorsements In Online Advertising – Can We Trust Them?

You have seen it many times – blogs or social media posts that contain word-of-a-mouth advertisements regarding weight loss supplements, or an exceptional new book, or any other product mentioned by the reviewer. These reviews often come with a number of “before” and “after” pictures and satisfied customers` testimonials. Needless to say, in a significant number of cases, the truth about the product result is far from what is depicted in the “before” and “after” pictures and the testimonials are not always even real, which seriously undermines our trust in the online reviews we read.

2009 FTC Guidelines

What changed after December 1, 2009 is that the US Federal Trade Commission`s (FTC) Guides Concerning the Use of Endorsements and Testimonials in Advertising came into effect. Having a husband active in blogging and social media advertising and being a consumer at the same time, I thought I might have double personal interest to further research the essence of the guidelines and how can they affect the trust in online advertising, not only in US, but rather internationally, with internet being an international phenomenon.

The 2009 Guidelines have introduced two main changes that can affect e-commerce in comparison to the previous Guidelines that were last updated in 1980. On one hand endorsements and testimonials or any representation as to products or services must be substantiated. The Guidelines define endorsement as “…any advertising message … that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser”. On the other hand any “material connection” between the online marketer and the product/service being advertised must be clearly disclosed.

What does it mean from the online marketer or blogger point of view?

Regarding substantiation of product endorsements and testimonials, it means that online marketers will be liable for false or unsubstantiated claims and reviews. When including a product or service review on their blogs or even on their Facebook or Twitter profile, they will have to be able to prove the results or product features they are claiming to be true. Additionally, the product claims have to be representative for the average customer cases and not only for the exceptional situations. Thus, disclaimers such as “results not typical” will no longer be enough to save them from liability under the FTC Act. Moreover, when representing a product result, online marketers will have to consider disclosing any additional factors that might have contributed to the result.

Let`s take the weight loss product example. In providing a review of a successful customer who lost 10 kilograms in 2 weeks using the miracle supplement, they will have to be able to consider and prove the following things: this customer`s case is representative for the average use of the product and is not an exceptional result, there were no other factors such as a vegetarian diet or every day sports practice that affected the result or if such factors are present, they will have to be clearly disclosed as to not mislead the public and if striking before/after pictures are included, again additional factors that influenced the result should be made public. Furthermore, in case customer testimonials are provided, the pictures that go along with the testimonial, need to be photos of the actual customer and not some random pictures the online marketer has the copyrights for, as was the practice in many cases so far.

Regarding the second aspect of the change, the “material connection” disclosure requirements, bloggers and online marketers need to consider disclosing any relationship with the merchant/sponsor of the product they are reviewing, be it a payment in return of mentioning the product, free samples, or any other material stimuli provided in exchange of the product review. The differentiation comes from identifying whether the material connection is established as part of let`s say a program aiming at providing a group of people with free products or it is provided with the goal of obtaining a product advertisement, i.e. the border line for what is considered an endorsement and thus leads to liability, is the intent of advertising. In practice online marketers, if not wanting to participate in deceptive marketing and avoid possible sanctions such as fines, injunctions and even reimbursement of consumer losses, will have to be very careful in promoting products and diligently disclose any free gifts they are receiving for the products they mention or in case of providing affiliate links, they will have to be marked as such.

The 2013 update

In 2013 FTC published an update in the Guidelines called .com Disclosures to reflect the changes in the online world, such as the significance of Social media.

• It is now clearly stated that disclosures should be made even in respect of posts in social media, even in short-form media, such as Twitter.
• Several clarifications have been included regarding the way a disclosure should be made. These are the main principles of a disclosre:
  • Proximity – a disclosure should be located in a close proximity to the statement or endorsement;
  • Prominence – it should not be hidden and almost made invisible somewhere in the page;
  • Audio/video – a disclosure should be made even for audio and video posts.

It is also important to note a disclosure should be understandable for most of the viewers, even in short-form media such as twitter, e.g. “ad”, “advertisement”, “sponsored” or similar indications in posts.

So how do the FTC Guidelines affect the customer?

Most of all, they are focused on ensuring transparency and consumer protection. Complying with them, might be a kind of a stumbling block for false advertisers promoting miracle cures and snake oils, but should not be that much of a problem for law-abiding bloggers and marketers. Consumers will be better aware of the expected results of a given product and the relationship that stands behind the product mentioning. Raising transparency will eventually lead to building trust. Hopefully.

References:

1. http://www.ftc.gov/opa/2009/10/endortest.shtm
2. http://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-staff-revises-online-advertising-disclosure-guidelines/130312dotcomdisclosures.pdf
3. http://www.entrepreneurs-journey.com/2088/what-to-do-about-ftc-guidelines/
4. http://zacjohnson.com/ftc-to-regulate-blogging/
5. http://www.clicknewz.com/2142/how-ftc-guides-affect-social-media-marketing/
6. http://www.johncow.com/you-absolutely-must-read-this-before-you-write-another-blog-post-or-promote-another-product/
7. http://www.business.ftc.gov/advertising-and-marketing/endorsements
8. http://www.ftc.gov/news-events/media-resources/truth-advertising/advertisement-endorsements
9. http://www.socialmediaexplorer.com/social-media-marketing/disclosures-for-bloggers-and-brands/