Guides Concerning the Use of Endorsements and Testimonials in Advertising, 10104-10107 [2020-03447]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 85, Number 35 (Friday, February 21, 2020)]
[Proposed Rules]
[Pages 10104-10107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03447]


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FEDERAL TRADE COMMISSION

16 CFR Part 255


Guides Concerning the Use of Endorsements and Testimonials in 
Advertising

AGENCY: Federal Trade Commission.

ACTION: Regulatory review; request for public comment.

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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') 
requests public comments on its Guides Concerning the Use of 
Endorsements and Testimonials in Advertising (``Endorsement Guides'' or 
``Guides''). The Commission is soliciting the comments as part of its 
systematic review of all current Commission regulations and guides.

DATES: Written comments must be received on or before April 21, 2020.

ADDRESSES: Interested parties may file a comment online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Endorsement Guides, 
P204500'' on your comment, and file your comment online through https://www.regulations.gov. If you prefer to file your comment on paper, mail 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex B), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW, 5th Floor, Suite 5610 (Annex B), Washington, DC 
20024.

FOR FURTHER INFORMATION CONTACT:  Michael Ostheimer (202-326-2699), 
[email protected], Division of Advertising Practices, Bureau of 
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue 
NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: 

I. Background

    In December 1972, the Commission published for public comment 
proposed Guides Concerning the Use of Endorsements and Testimonials in 
Advertising, 37 FR 25548 (1972). Interested parties submitted extensive 
comments. On May 21, 1975, the Commission promulgated, under the 
Federal Trade Commission Act (``FTC Act''), 15 U.S.C. 41-58, three 
sections of the 1972 proposal as final guidelines (16 CFR 255.0, 255.3 
and 255.4) and republished three others, in modified form, for 
additional public comment. 40 FR 22127 (1975). The Commission received 
public comment on the three re-proposed guidelines, as well as on one 
of the final guidelines. On January 18, 1980, the Commission 
promulgated three new sections as final guidelines (16 CFR 255.1, 255.2 
and 255.5) and modified one example to one of the final guidelines 
adopted in May 1975 (16 CFR 255.0 Example 4). 45 FR 3870 (1980).
    As part of its periodic regulatory review, the Commission sought 
public comment on the Endorsement Guides in January 2007. 72 FR 2214 
(2007). In November 2008, the Commission discussed the comments it 
received in 2007, proposed certain revisions to the Guides, and 
requested comment on those proposed revisions. 73 FR 72374 (2008). In 
October 2009, the Commission substantively amended the Guides. 74 FR 
53124 (2009).
    The Guides are designed to assist businesses and others in 
conforming their endorsement and testimonial advertising practices to 
the requirements of Section 5 of the FTC Act. The Guides interpret laws 
the Commission administers, and thus are advisory in nature. The 
Commission, however, can take action under the FTC Act if an 
endorsement or testimonial is inconsistent with the Guides. In any such 
enforcement action, the Commission must prove that the challenged act 
or practice is unfair or deceptive in violation of Section 5 of the FTC 
Act. The Guides define both endorsements and testimonials broadly to 
mean any advertising message that consumers are likely to believe 
reflects the opinions, beliefs, findings, or experience of a party 
other than the

[[Page 10105]]

sponsoring advertiser. 16 CFR 255.0(a) and (b).
    The Guides state that endorsements must reflect the honest 
opinions, findings, beliefs, or experience of the endorser. 16 CFR 
255.1(a). Furthermore, endorsements may not contain any representations 
that would be deceptive, or could not be substantiated, if made 
directly by the advertiser. Id.
    The Guides advise that an advertisement employing a consumer 
endorsement on a central or key attribute of a product will be 
interpreted as representing that the endorser's experience is 
representative of what consumers will generally achieve. 16 CFR 
255.2(a). If an advertiser does not have adequate substantiation that 
the endorser's experience is representative, the advertisement should 
contain a clear and conspicuous disclosure. Id.
    The Guides define an expert endorser as someone who, as a result of 
experience, study or training, possesses knowledge of a particular 
subject that is superior to that generally acquired by ordinary 
individuals. 16 CFR 255.0(d). An expert endorser's qualifications must, 
in fact, give him or her the expertise that he or she is represented as 
possessing with respect to the endorsement. 16 CFR 255.3(a). Moreover, 
an expert endorsement must be supported by an actual exercise of 
expertise, and the expert's evaluation of the product must have been at 
least as extensive as someone with the same degree of expertise would 
normally need to conduct in order to support the conclusions presented. 
16 CFR 255.3(b).
    Among other things, the Guides also state that: (1) Advertisements 
presenting endorsements by what are represented to be actual consumers 
should utilize actual consumers, or clearly and conspicuously disclose 
that the persons are not actual consumers, 16 CFR 255.2(c); (2) an 
organization's endorsement must be reached by a process sufficient to 
ensure that the endorsement fairly reflects the collective judgment of 
the organization, 16 CFR 255.4; and (3) when there is 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, 16 CFR 255.5.

II. Regulatory Review Program

    The Commission periodically reviews all Commission rules and 
guides. These reviews seek information about the costs and benefits of 
the Commission's rules and guides and their economic impact. The 
information obtained assists the Commission in identifying rules and 
guides that warrant modification or rescission. Therefore, the 
Commission solicits comment on, among other things, the economic impact 
of and the continuing need for its Endorsement Guides; possible 
conflict between the Guides and state, local, federal, or international 
laws; and the effect of any technological, economic, environmental, or 
other industry changes on the Guides.

III. Request for Comment

    The Commission is particularly interested in comments and 
supporting data on the following questions. These questions are 
designed to assist the public and should not be construed as a 
limitation on the issues on which public comment may be submitted. In 
their replies to each of these questions, commenters should provide any 
available evidence and data, such as empirical data, consumer 
perception studies, or consumer complaints, that support the 
commenter's asserted position.
    (1) Is there a continuing need for the Endorsement Guides as 
currently promulgated?
    (2) Are any specific provisions of the Guides no longer necessary, 
and, if so, which provisions and why are they no longer necessary?
    (3) Are the deceptive or unfair practices addressed by the Guides 
prevalent in the marketplace? Are the Guides effective in addressing 
those practices? Are there deceptive or unfair practices involving 
endorsements that are not covered by the Guides? Are there 
alternatives, such as individual enforcement actions under the FTC Act, 
which would be more effective or equally effective in addressing those 
practices? Do the Endorsement Guides describe any practices that are 
not deceptive or unfair, and if so, which practices and why are they 
not deceptive or unfair?
    (4) What is the degree of compliance with the Endorsement Guides? 
What effect, if any, does this have on the continuing need for the 
Guides? Do covered businesses and others following the Guides' 
suggestions self-regulate or have voluntary standards or guidance, such 
as through trade associations, that overlap with the Guides? If so, to 
what extent, if any, do the Guides support industry self-regulation or 
voluntary standards?
    (5) What benefits, if any, have the Endorsement Guides provided to 
consumers? Do the Guides impose any significant costs on consumers?
    (6) What impact, if any, have the Guides had on the flow of 
truthful or deceptive information to consumers?
    (7) What changes, if any, should be made to the Endorsement Guides 
to increase their benefits to consumers? How would these changes affect 
consumer benefits or business costs?
    (8) What burdens or costs, including costs of compliance, have the 
Guides imposed on businesses? What burdens or costs have the Guides 
imposed on small businesses in particular? What burdens or costs have 
the Guides imposed on endorsers? What benefits have the Guides provided 
to businesses? What benefits have the Guides provided to endorsers?
    (9) What changes, if any, should be made to the Guides to reduce 
the burdens or costs imposed on businesses or endorsers? How would 
these changes affect the benefits provided by the Guides to consumers, 
businesses, and endorsers?
    (10) Do the Guides overlap or conflict with federal, state, or 
local laws or regulations? Do the Guides overlap or conflict with any 
international laws or regulations?
    (11) Have consumer perceptions regarding endorsements changed since 
the Guides were last revised and, if so, do these changes warrant 
revising the Guides?
    (12) What modifications to the Guides, if any, should be made to 
address technological, economic, or environmental changes that have 
occurred since the Guides were last revised?
    (13) FTC staff periodically updates a business guidance document, 
``The FTC's Endorsement Guides: What People Are Asking.'' Is there 
guidance in the current version of that document that should be 
incorporated into the Guides? If so, what and why? Is there guidance in 
the current version of that document that should not be incorporated 
into the Guides? If so, what and why?
    (14) How well are advertisers and endorsers disclosing unexpected 
material connections on social media platforms? Does this depend on the 
type of material connection? What disclosures of material connections 
are sufficiently clear (i.e., understandable) to consumers when used in 
social media? What disclosures of material connection currently being 
used in social media are likely not understood by consumers? Does the 
sufficiency or insufficiency vary by platform, type of material 
connection (e.g., a paid post versus a free product), or other factors, 
and, if so, how? To the extent that these connections are not being 
adequately

[[Page 10106]]

disclosed, do the problems tend to be in the substance of the 
disclosures or in their conspicuousness (e.g., placement, visibility, 
or audibility)? Should the Guides provide more detail on what 
disclosures of material connections are sufficiently clear or unclear 
in different social media formats? Does the fact that Commission Guides 
are generally reviewed every ten years affect your answer as to whether 
providing more detail would be helpful?
    (15) The FTC has received complaints that young children may not 
adequately understand disclosures of material connections. To what 
extent would knowledge of a material connection affect the weight or 
credibility that young children give to an endorsement? At what age are 
children capable of making a connection between credibility and a 
material connection? Does this age differ from the age at which 
children are capable of identifying advertising? Why or why not and, if 
so, how? To what extent do young children understand disclosures of 
material connections? What should advertisers and endorsers appealing 
to young children know about their intended audience's understanding of 
a particular endorsement, advertising format, or disclosure? How can 
disclosures of material connections in media consumed by young children 
be made clearer or more effective? How, if at all, are your answers to 
the above questions impacted by parental involvement in the media 
consumption of young children? What disclosures of material connections 
should advertisers and endorsers appealing to young children provide to 
parents?
    (16) Some marketers give incentives (e.g., free or discounted 
products) to consumers in exchange for posting reviews of their 
products or services without specifically requiring that the reviews be 
favorable. Do such incentives skew or bias the resulting reviews? Why 
or why not? If so, how and to what extent do incentives skew or bias 
the resulting reviews, and what factors may make such impacts more or 
less likely? Should such incentives be disclosed? Why or why not and if 
so, how? Does the nature or value of the incentive matter? If so, how? 
Do such incentives skew composite ratings? Why or why not and if so, 
how? Do such incentives impact the order in which products or services 
are presented to consumers on retail or other review platforms? Why or 
why not and if so, how?
    (17) Some consumer reviewers who receive incentives in exchange for 
their reviews disclose their material connections in their reviews. Are 
such disclosures adequate when incentivized reviews are included in 
composite ratings? Why or why not? Are composite ratings that are based 
in whole or in part on such incentivized reviews misleading? If such 
composite ratings are misleading: (1) Are there disclosures that could 
adequately address this concern and if so, what disclosures; and (2) 
how should the Guides address composite ratings if disclosures are not 
sufficient or there is not an opportunity for the marketer to make 
adequate disclosures (e.g., when the reviews and composite ratings 
appear on a third party's website)?
    (18) Some marketers actively solicit customer feedback and send 
satisfied customers down one path to relevant review sites and send 
customers with negative sentiment down another path, sometimes into 
some sort of customer service resolution process. What are the costs 
and benefits of this practice? Should it be addressed in the Guides 
and, if so, how?
    (19) Some advertisers contend that consumers who use social media 
understand that influencers who promote products are generally doing so 
only because they are paid or given something by the marketer, 
regardless of what or whether disclosures appear in social media posts. 
What evidence is there to support or contradict this assertion and does 
the answer differ depending on the nature of the material connection? 
In particular cases, what factors might be considered to determine 
whether a material connection is unexpected? Do consumer expectations 
vary by the age of the audience, the product category, the nature of 
the influencer, the format or substance of the endorsement, or 
otherwise, and if so, how?
    (20) Some endorsers (including the authors of some product reviews) 
include affiliate links that can be used to purchase the products they 
are endorsing. Should the Guides address such links, and if so, how? To 
what extent do consumers expect that these endorsers are compensated 
for purchases through those links? If so, what compensation 
arrangements do consumers ordinarily expect? To what extent would 
knowing of such compensation affect the weight or credibility given to 
those endorsements? Is there a distinction in terms of either consumer 
expectations or the weight ascribed to an endorsement between affiliate 
links to a product's marketer and affiliate links to one or more 
retailers? If so, how, why, and how should that be addressed?
    (21) What disclosures, if any, do advertisers or the operators of 
review websites or review platforms need to make about the creation, 
collection, processing, or publication of reviews or ratings in order 
to prevent those reviews or ratings from being deceptive or unfair?
    (22) What other fact patterns or scenarios should be addressed by 
the Guides and why?
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before April 21, 2020. 
Write ``Endorsement Guides, P204500'' on your comment. Your comment--
including your name and your state--will be placed on the public record 
of this proceeding, including, to the extent practicable, on the 
https://www.regulations.gov website.
    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it through https://www.regulations.gov, 
by following the instruction on the web-based form.
    If you file your comment on paper, write ``Endorsement Guides, 
P204500'' on your comment and on the envelope, and mail or deliver it 
to the following address: Federal Trade Commission, Office of the 
Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex B), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW, 5th Floor, Suite 5610 (Annex B), Washington, DC 
20024. If possible, please submit your paper comment to the Commission 
by courier or overnight service.
    Because your comment will be placed on the publicly accessible 
website https://www.regulations.gov, you are solely responsible for 
making sure that your comment does not include any sensitive personal 
information, such as your or anyone's Social Security number; date of 
birth; driver's license number or other state identification number or 
foreign country equivalent; passport number; financial account number; 
or credit or debit card number. You are also solely responsible for 
ensuring your comment does not include any sensitive health 
information, such as medical records or other individually identifiable 
health information. In addition, your comment should not include any 
``[t]rade secret or any commercial or financial information which . . . 
is privileged or confidential''--as provided in Section 6(f) of the FTC 
Act, 15 U.S.C. 46(f), and

[[Page 10107]]

FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)--including in particular 
competitively sensitive information such as costs, sales statistics, 
inventories, formulas, patterns, devices, manufacturing processes, or 
customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request, and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted publicly at www.regulations.gov--as legally required by FTC 
Rule 4.9(b)--we cannot redact or remove your comment, unless you submit 
a confidentiality request that meets the requirements for such 
treatment under FTC Rule 4.9(c), and the General Counsel grants that 
request.
    Visit the FTC website to read this request for comment and the news 
release describing it. The FTC Act and other laws that the Commission 
administers permit the collection of public comments to consider and 
use in this proceeding as appropriate. The Commission will consider all 
timely and responsive public comments that it receives on or before 
April 21, 2020. For information on the Commission's privacy policy, 
including routine uses permitted by the Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

    By direction of the Commission.
April J. Tabor,
Acting Secretary.
[FR Doc. 2020-03447 Filed 2-20-20; 8:45 am]
BILLING CODE 6750-01-P