The Federal Trade Commission (FTC) oversee and implement all rules regarding fair trading in the United States. The job of this government body is to determine fair practices for trading businesses, advertising and any other process undertaken by a business that affects other companies or the public.
One of these issues, is the concept of endorsement. In a world where we’re drowned by consumer goods and we have competition shoving us from every angle, a review or endorsement is a great way to know what to choose. If a friend comes up to you and tells you of a wonderful hotel they stayed in with incredible service and at a very low price, you’re inclined to trust them and perhaps try it for yourself.
Where FTC comes in on this issue, is that their guidelines for businesses providing endorsements have changed.
But Why Change Them?
The reason these guidelines have changed is because the FTC have found that despite rules of advertising being explicit on TV, radio and on billboards, many companies online are providing exaggerated or deliberately false endorsements, claims and expectations that slip through some of the holes in the original guidelines. The FTC have also found that businesses are paying or reimbursing individuals to clandestinely complete these reviews this on their behalf.
What this means at a basic level, is that imagine you found that your friend who recommended the hotel, was in fact working for that particular hotel, it makes you cynical of the credibility of their recommendation. The FTC have been working on providing revisions, to make it clear and fair to consumers about what they can expect from a business, despite endorsements by third parties.
How Does This Affect Businesses?
There are a handful of revisions that make the original Act clearer to understand, providing patency for consumers, and ensuring that companies don’t find themselves unwittingly exposed to false advertising claims. Additionally, any companies who are employing underhand techniques, can be either shut down or altered.
What are these revisions?
1. Pretending the ‘Unusual’ is Typical
Using the example of the hotel, perhaps you see an advertisement online where a family claims that they were ‘upgraded’ to a better room, and due to this you should choose this hotel brand. Previously, it would have been acceptable to write ‘Not typical service’ underneath, in the small print. Now the FTC feel businesses have a duty to explain what the typical service that a customer would receive is and when this ‘extra’ service would occur, otherwise a consumer has expectations which do not match reality.
Additionally, this applies to claims or endorsements of something that cannot be proven. ‘Every time I ordered room service, I received a free drink.’ If this can’t be proved to be typical, it can’t be used as an endorsement. If you do use it, you may need to hire yourself some criminal lawyers, as the FTC will hold you in contempt.
2. You Can’t Pretend you Don’t Know Them
If your business is paying a third party to endorse a product or write a review, whether that be with ‘free’ goods or financial compensation, this must be explicitly declared to the public. The reason for this is, that the FTC feel that an endorsement is given more value if someone feels it is genuine; once paid for, people should be allowed to determine whether this is genuine enough or not. If this information is not declared, it is ambiguous and therefore misleading.
The FTC believes this should be related not only to reviews on the company’s own websites, but also bloggers and celebrities speaking on talk shows etc. Although this is not the law, only a guideline, the FTC feel that it allows your consumers to gain trust in you and that without knowing that a contract exists “the endorsement is likely deceptive without a clear and conspicuous disclosure”.
3. Name your Research
When a research study is conducted for a company, the company itself has the right to ‘leave out’ certain pieces of information that may seem to discredit the business. With this in mind, any endorsements that pay homage to research on the topic that has been paid for by the company, need to explicitly declare this information so that consumers have the chance to decide its validity for themselves. If you don’t declare that the research body was hired, your business can be liable for fraudulent claims.
4. Don’t Lie
As with all advertising, falsely claiming something to be true when it isn’t is against the law. Under the new guidelines by the FTC, any endorsers who makes false claims, is now as liable as an advertiser for providing false information. This means that if an endorser lays a false claim against your business as a recommendation or endorsement that is not true, they can find themselves in trouble with the law as well as you.
About the Author:
Father of three, Benjamin Baker is a freelance writer and self-proclaimed research hound. When researching the new FTC guidelines, he found himself looking at various sites to give him a good idea of what a business should know if they were to break FTC rules or guidelines. This even led him to check out some sites like www.bgs.com where you would likely turn to if you ran into trouble. As the writing addict that he is, he gave up his spare time which he usually uses to go camping and fishing, to instead provide some insight to all the businesses who might miss out!