The Federal Trade Commission (FTC), according to its website, is “the nation’s consumer protection agency” and “works for the consumer to prevent fraud, deception, and unfair business practices in the marketplace.”  To that end, the FTC publishes a number of resource guides to help businesses comply with federal law and FTC regulations.  One such guide is the Guide Concerning the Use of Endorsements and Testimonials which attempts to draw a line between “endorsements” (which must always reflect the honest opinion of the endorser) and pure “advertisements” or other non-endorsements (which do not have to comply with endorsement guidelines).  The Endorsement Guide provides examples of what does and does not constitute “endorsements” by consumers, experts, and organizations, and addresses when and how to disclose any material connection between the endorser and the marketer of the product.

For example, a television ad for Nike golf clubs showing Tiger Woods using the clubs would be an “endorsement” by Tiger, even though he makes no verbal statement in the advertisement.  In order for this to be an honest endorsement, Tiger must be an actual user of the irons at the time the commercial airs.  However, even though Nike’s compensation to Tiger is substantial, neither the fact that Tiger is paid nor the amount that he’s paid need be revealed – since this is already assumed by consumers who can judge for themselves the credibility of the endorsement without the need for disclosures.

Recently, the FTC has sought to update the Endorsement Guide, which was last updated in 1980, and extend it to viral marketers, bloggers, and personalities on social-media sites like Facebook and Twitter.  The new rules would essentially hold these “new media” outlets to the same standards, and the same liability for false statements, as traditional media outlets.  The new Guide would cover such things as paid blog reviews, blog reviews where a product has been provided to the blogger for free (the receipt of which would have to be disclosed), advertisers interacting on message boards (who would have to disclose their relationship to the product manufacturer), and so-called “street teams” (who would also have to disclose their relationship to the advertising agency).

–Matt