The Problems with Endorsements

Oct 6, 2022 by Laura Brett, Vice President, National Advertising Division

Consumer engagement in social media and an accelerating shift to digital commerce have increased the use of endorsements in advertising on many platforms. Celebrities consuming the latest food trend, influencers using the newest beauty product, consumers reviewing the newest gadget, and “independent” third parties rating a range of products in a category based on consumer reviews are increasingly influencing consumer purchases.

But a problem arises when consumers engage with content without knowing that payments or incentives are fueling the platforms and people who appear to organically embrace a new product or service. When brands are not transparent in their advertising to consumers it violates the law. It also undermines consumer trust. Consumers often learn that brands are behind the content they trusted as authentic and lose trust not only in the brand and the content viewed, but also in digital commerce generally.   

With a goal to help enhance consumer trust in the marketplace, BBB National Programs shared its concerns about these practices in a comment submitted last week to the Federal Trade Commission (FTC) as a part of the FTC’s proposed updates to its Endorsement Guides.  

In the BBB National Programs’ comment, representing the experience of our Children’s Advertising Review Unit (CARU), Direct Selling Self-Regulatory Council (DSSRC), and National Advertising Division (NAD), we highlighted several concerns including:  

  • The blurring of advertising and non-advertising content. 
  • Disclosures that are not clear and conspicuous.
  • Endorsements that go beyond the experience or expertise of the endorser.
  • The use of reviews in advertising, including a call for additional guidance on collecting reviews, the use of ratings that are based on reviews, and whether third parties can rate or rank products if they have a business relationship with any of the marketers of the ranked products.   
  • The ways in which marketing can be seamlessly woven into gaming and entertainment content and the need for clear and conspicuous advertising disclosures appropriately tailored to the audience and media sources where they appear, especially in child-directed content.
  • The need for advertisers to avoid manipulative tactics, including but not limited to social pressure or validation, deceptive door openers, or misleading design techniques when marketing to children. 
  • The use of direct-seller earnings claims in advertising with a request that the Guides provide additional examples of how to qualify such claims when the earnings are atypical.  

 

The implications of the concerns we shared with the FTC impact consumer trust as well as fair competition and are increasingly the focus of FTC guidance and law enforcement actions. The advertising industry should take note and adopt a new and more aggressive approach to curtailing these misleading advertising practices. Companies should stop using these practices in their own advertising and, when identified, they should challenge a competitor’s misleading advertising practices through self-regulatory challenge processes at BBB National Programs.  

Challenging advertising that distorts the marketplace not only brings specific value to businesses but builds consumer trust more broadly, a value all good businesses should support.     

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