New FTC Guidelines to Address "Astroturfing"

Ever wonder whether the reviews allegedly posted online by consumers about a product were actually written by independent consumers or by the people on behalf of the company itself? Me too. Apparently, so does the Federal Trade Commission. On October 5, the FTC released its new “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

The previous guides (which were almost 3 decades old) did not expressly address internet based consumer endorsements sometimes referred to as "astroturfing." The new Guides clearly do, by expressly providing that where bloggers, paid by the advertiser, post product reviews, such reviews will be treated as endorsements. As such, the new Guides apply the previous rule (that the “material connections” between the endorser and the advertiser must be disclosed), at least in part, because these are connections that consumers would not expect.

The new Guides also require advertisers who rely on research findings to disclose material connections between the advertiser and the research organization. Similarly, with few exceptions, celebrity endorsers are also required to disclose any material connection between them and the advertiser.

Another key change under the new guide is that the FTC has gotten rid of the safe harbor that had previously existed for product endorsements. Under the old guidance, an advertiser could simply include a statement to the effect that “your results may vary” as a guard against a claim of false advertising if an endorser’s statements were not generally representative consumers’ experience with the product. Not any more. Now, advertisers and their endorsers are required to clearly disclose the results that consumers should generally expect.

Finally, the new Guides expressly provide that the endorser (not merely the advertiser) can be held liable for unsubstantiated claims made in the endorsement.

Much of the new Guides focus on the FTC’s opinion as to what a consumer is likely to perceive with respect to the relationship between the advertiser and the endorser. Unfortunately, there are not a lot of bright line tests that can be used by advertisers to know what is in the mind of the average consumer. It will be interesting to see how advertisers (especially those focusing on advertising in online social media) react to this new guidance.