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FTC Toughens Endorsement Guidelines

As expected, the Federal Trade Commission has toughened its guidelines for on-air and online marketers when it comes to testimonials and endorsements.

According to revisions of its 1980 guidelines unveiled Monday (Oct. 5), marketers who use an atypical example, say someone who loses 150 pounds on a certain diet product or regimen, must also provide the typical results. Such testimonials previously only required the caveat "results not typical."

The new guidelines also require celebrity endorsers to reveal their association with an advertiser outside of the context of traditional ads, including appearances on talk shows and in social media online.

The FTC has clarified that celebrity endorsers, as well as advertisers, are liable for false or unsubstantiated claims.

Bloggers and word-of-mouth markers must disclose when they have received any material consideration, like free products, for endorsements. While it says enforcement is still on a case-by-case basis, the FTC also said that it was trying to make it clear that any blogger who receives cash or in-kind payments to endorse a product must disclose that "material connection."

Marketers must also disclose if they have paid for the research that backs up their claims.

"The FTC's guidelines are a mixed blessing," said Adonis Hoffman, senior V.P. and counsel of the American Association of Advertising Agencies. "On the one hand, they will provide greater transparency for consumers, especially in new and cutting edge media campaigns using buzz and viral marketing. Identifying material connections between a company and a promoter is a legitimate objective. On the other hand, the guidelines invariably will make it more costly for marketers to substantiate claims made in certain products and to comply with the new rules. These higher costs easily could be passed on to consumers."