FTC and endorsements: Final revised guides, a proposed new rule, and an updated staff publication

Companies that use deceptive endorsements and reviews inflict an injurious double whammy. They harm consumers with misleading tactics that subvert their choices at check-out. And they take business away from honest competitors that work hard to comply with the law. For decades, the FTC has challenged those illegal practices and will continue that fight. But it’s important that our approach keeps current with the state of technology and marketing. That’s why you’ll want to follow three important developments just announced by the FTC: final revisions to the Endorsement Guides, a proposed new Rule on the Use of Consumer Reviews and Testimonials, and updates to a key staff guidance publication for businesses, endorsers, and members of the advertising industry.

Final Revised Endorsement Guides

Last revised in 2009, the Guides Concerning Use of Endorsements and Testimonials in Advertising offer advice for businesses on how the FTC Act applies in the use of endorsements. As part of its regulatory review efforts, the FTC announced in May 2022 that it was seeking public comments on proposed updates to the Guides to ensure they reflect current advertising trends, including how long-standing legal principles apply in social media and review platforms.

The revised Endorsement Guides reflect the feedback we received and recent law enforcement experience. Here are six final changes that merit your attention:

1. Articulating a new principle regarding not procuring, suppressing, organizing, upvoting, downvoting, or editing consumer reviews in ways that likely distort what consumers really think of a product.
2. Addressing incentivized reviews, reviews by employees, and fake negative reviews by competitors.
3. Adding a definition of “clear and conspicuous” and warning that a platform’s built-in disclosure tool might not be adequate.
4. Updating the definition of “endorsements” to clarify that it can include fake reviews, virtual influencers, and social media tags.
5. Providing a clearer explanation of the potential liability that advertisers, endorsers, and intermediaries face for violating the law.
6. Emphasizing special concerns with child-directed advertising.

Proposed Rule on the Use of Consumer Reviews and Testimonials

Not to coin a phrase, but wait – there’s more. In addition to announcing final changes to the Endorsement Guides, the FTC is proposing a new Rule on the Use of Consumer Reviews and Testimonials based on comments we received in response to a November 2022 Advanced Notice of Proposed Rulemaking. We had the benefit of a broad range of perspectives from consumers, small businesses, advocacy organizations, trade associations, review platform operators, researchers, and others with an interest in the area. And now we’re asking you to comment on a Notice of Proposed Rulemaking designed to fight clearly deceptive practices involving consumer reviews and testimonials.

What’s the need for a rule specifying certain practices as illegal? A rule that clearly spells out prohibited practices and authorizes courts to impose civil penalties could strengthen FTC enforcement actions and have a deterrent effect when companies map out their marketing strategies. You’ll want to read the Federal Register Notice for details, but the proposed Rule would specifically prohibit the following practices:

Selling or obtaining fake consumer reviews and testimonials.  The proposed rule would prohibit businesses from writing or selling consumer reviews or testimonials by someone: 1) who doesn’t exist, 2) who didn’t have actual experience with the product or service, or 3) who misrepresented their experience. It also would prohibit businesses from procuring reviews or disseminating testimonials from those same three categories.

Review hijacking.  The proposed rule would ban businesses from using or repurposing a consumer review written for one product so that it appears to have been written for a substantially different product. (The FTC recently brought an enforcement action challenging the practice of review hijacking.)

Buying positive or negative reviews.  Businesses would be prohibited from providing compensation or other incentives contingent on the writing of consumer reviews expressing a particular sentiment, either positive or negative.

Insider reviews and testimonials.  The proposed rule would prohibit a company’s officers and managers from writing reviews or testimonials about its products without clearly disclosing their relationship. It also would prohibit businesses from disseminating testimonials by insiders without clear disclosures, and it would prohibit certain solicitations by officers or managers of reviews from company employees or their relatives.

Company controlled review websites.  Businesses would be prohibited from creating or controlling websites that claim to provide independent opinions about a category of products that includes their own products.

Illegal review suppression.  Businesses would be prohibited from using unjustified legal threats, other intimidation, or false accusations to prevent or remove a negative consumer review. Also, if negative reviews have been suppressed, the proposed rule also prohibit a business from misrepresenting that the reviews on its website represent all submitted reviews.

Selling fake social media indicators.  The proposed Rule would prohibit businesses from selling false indicators of social media influence, like fake followers or views. The proposed rule also would bar anyone from buying indicators like that to misrepresent their significance for a commercial purpose.

The Federal Register Notice includes a number of questions we hope you’ll address. Once the Notice appears in the Federal Register, you’ll have 60 days to file a public comment. 

Updated Staff Guidance

FTC’s Endorsement Guides: What People Are Asking has been a to-the-point business resource for five years. We’ve revised and expanded the publication to answer 40 more questions that may be on your mind, with a particular focus on influencers, the required disclosure of material connections across different platforms, and issued related to reviews. For a 360° perspective on the use of endorsements and reviews, read the revised Endorsement Guides and the updated publication side by side.

Visit the FTC’s Endorsements, Influencers, and Reviews page for more compliance resources written with businesses, platforms, and influencers in mind.