Misleading Endorsements and Testimonials May Lead to Civil Penalties
Oct 28, 2021 by Laura Brett, Vice President, National Advertising Division, BBB National Programs
The Federal Trade Commission (FTC) is sometimes referred to as “the cop on the beat” for misleading advertising. So when the agency recently sent a Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct around Endorsements and Testimonials, informing 700 companies that the misleading use of endorsements could lead to civil penalties, it drew our attention.
Upon closer review, the Notice demonstrates the FTC’s continued interest in challenging the deceptive or misleading use of endorsements or testimonials, making it the perfect time to review how to avoid some common pitfalls when using them in advertising.
When marketing a new product, many brands work quickly to build a robust collection of product reviews. Providing incentives to consumers for reviewing a product may entice consumers to try the product, a win-win that boosts both current sales and, with positive reviews, subsequent sales. But brands that engage in a strategy to incentivize consumers to try their product and review it should take steps to stay on the right side of FTC guidance.
Both truth and transparency should be top of mind for brands collecting reviews.
First, guard against using reviews that do not meet FTC standards for truth. As the FTC Notice cautioned:
- Reviews must reflect the honest opinion of the reviewer based on the reviewer’s use of the product.
- The reviewer’s experience should represent consumers’ typical experience with the product.
- Any product claims in reviews used as endorsements must be truthful. (See NAD case #6992 PerSe Beauty, Inc.)
When collecting reviews, consider these additional safeguards to stay on the right side of truth-in-advertising principles:
- Collect reviews only from verified users of your products. (See NAD case #5717 Euro-Pro Operating, LLC)
- Do not create separate channels for positive and negative reviews. (See NAD case #6365 Pyle Audio, Inc.)
- Solicit reviews neutrally and avoid questions that will influence the responses. (See NAD case #6314C Molekule Inc.)
To remain transparent, advertisers must disclose any connection between a reviewer and the product reviewed that the consumer would otherwise not expect.
- If an incentive was provided for a review, the content of the review could be influenced by the incentive, so any incentive offered in exchange for a review of the product should be disclosed. (See NAD cases #6365 Pyle Audio, Inc.; #6042 Fit Products, LLC; #5889 The Scotts Company, LLC; #5645 eSalon)
- Avoid relying exclusively on the reviewers themselves to disclose incentives. Set up a system to verify that disclosures for incentivized reviews appear when reviews are posted. (See NAD case #5889 The Scotts Company, LLC)
- Because reviews can be shared on various websites and social platforms, ensure that any disclosure about the incentive for the review “travels” with the relevant review. (See NAD case #5889 The Scotts Company, LLC)
Endorsements on Product Review Sites
Consumers often turn to product review sites before making a purchase and, based on the FTC’s recent action, such sites may see additional FTC scrutiny in the future. If a website ranks or rates products and has a material connection to the reviewed products, that website is essentially playing the role of an expert endorser. The FTC’s endorsement guides advise that an expert endorser or reviewer must exercise their “expertise in evaluating product features or characteristics with respect to which he or she is expert, and which are relevant to an ordinary consumer’s use of or experience with the product.”
The key is to avoid working with review sites that do not rate products based on expertise or sites that are otherwise not independent. A few pitfalls arise when review sites are not what they appear to be.
- Material connections must be disclosed. If a rating or review site has a relationship with the company that makes or sells a product it is reviewing (such as getting a commission on sales), the FTC endorsement guides make clear that this material connection requires disclosure. (See NAD cases #5970 Jumpsport, Inc.; #6369 Amerisleep, LLC)
- Endorsements should represent the honest experience, views, or opinions of the endorser. Often rating websites will disclose a connection with the product they are reviewing by stating, “many or all of the products featured here are from our partners who compensate us; however, this does not influence our evaluations.” Even when material connections are disclosed, ratings that consistently give high marks to those products with which the review site has a partnership, rather than an honest evaluation of the product, may face scrutiny as not reflecting the review site’s judgment or experience. (See NAD case #6341 Choice Home Warranty)
- Ratings or rankings comparing products must be based upon the expert evaluation of the product and competing products. Review sites comparing products convey the message that the site has experience and expertise in the products reviewed and rated. It is misleading to consumers if the site does not have expertise in evaluating the products or if the site’s rating is not based on that expertise. If product ratings or rankings are not based on expertise but upon material connections to products reviewed, consumers are again misled. (See NAD cases #6341 Choice Home Warranty; #6911 Safe Catch, Inc.; and NARB Panel #216 Reckitt Benckiser LLC)
The FTC’s “Penalty Offense Notice” sends a clear message to the advertising community: the FTC will be looking carefully at the use of endorsements and testimonials in the year ahead. Following the FTC’s rules of the road is more important now than ever before.
The NAD cases linked above provide additional real-world guidance on the use of consumer reviews and product reviews in advertising. Additionally, back in June we provided our 5 tips for successfully using consumer reviews in your advertising.