FTC settlement with ADT sounds alarm about deceptive use of paid endorsers

Consumers who tuned in to programs like the Today Show, Daybreak USA, and local newscasts may have caught interviews with guests billed as “The Safety Mom,” a home security expert, or a tech expert.  Among the products they reviewed was ADT’s Pulse Home Monitoring System.  Describing it as “amazing” or “incredible,” they offered glowing details about its capabilities, safety benefits, and cost.  But according to the FTC, here's one material fact that wasn’t discussed:  ADT had paid the three spokespersons a total of more than $300,000 and provided two of them with free systems valued at $4,000 (not to mention free monthly monitoring) to tout the ADT Pulse Home Monitoring System.  If you’ve been keeping your finger on the pulse of issues the FTC has been monitoring, high on that list are reviews that falsely represent the endorser to be an impartial expert.  A lawsuit just settled by the FTC charges ADT with deceptive advertising for the misleading use of paid endorsers.

One appearance cited in the FTC’s complaint was a Today Show spot featuring guest Alison Rhodes, whom host Kathie Lee Gifford described as “a national family and safety expert known as The Safety Mom.”  (You can watch the video clip from the FTC's announcement.)  The interview centered around tech products for “keeping your kids safe when you’re not around,” including ADT’s Pulse:

Hoda Kotb:   We were captivated by the first thing you have on your table.  And it’s almost, like I guess, a motion detector for kids at home while you’re at work so you can check on them, right?

Rhodes:  This is truly the virtual babysitter. I travel the lot. I’m on the road. This is the ADT Pulse Home Monitoring System. I’ve got wireless cameras. I’ve got motion detectors. I’ve got texts that come into my iPhone if my daughter doesn’t walk in the door from school . . .

Kotb:  How pricey is this whole apparatus?

Rhodes:  You know, it’s not really that much. It starts at $399 and then it’s a monthly fee, but you actually get a discount on your homeowner’s insurance because it’s your ADT security system.

Gifford:  That’s a great idea.  Smart.

Rhodes:  It’s amazing.

That wasn’t the only ADT-sponsored endorsement by Rhodes that the FTC challenged as deceptive.  The complaint also cites her appearance on the radio show Daybreak USA in a remote interview from a model home at the International Builders Show:

Scott West:  A nationally known family safety and lifestyle expert who often provides tips and advice on keeping moms and kids safe, happy, and healthy is with us this morning.  Alison Rhodes, welcome to Daybreak USA. . . . What makes this house that you’re in there in Windermere, Florida, a busy mom’s dream?

Rhodes:  . . . There are things here like the ADT Pulse Home Monitoring System.  When I'm on the road, I can look in, I can turn the lights on and off. I can turn the thermostat on and off. I can get alerts when my kids walk in the door from school. So I know exactly what's going on in this home. . . What's also nice about this system is say somebody's coming in the door, I can look on my computer. I can see the cameras. I can see who's coming in. I can see who's going out. So I also have my touch screen for the ADT set up in the bedroom.

Rhodes also used The Safety Mom blog to pitch the ADT system.  For example, in a post commemorating National Safe at Home Week, she wrote, “I’ll admit it.  I never had one before, but now that I have the ADT Pulse system I can’t imagine living without it.  We used to have dogs, which made me feel much safer, but now that I’m a single mom living in a home without dogs and was just informed by a friend that there were three break-ins in our community this past month.  Nothing has ever given me greater peace of mind.”

The FTC also cited a remote interview by a TV reporter in San Antonio with David Gregg, a technology expert who was at the Consumer Electronics Show in Las Vegas.  Gregg offered his assessment of various electronics, including a TV, a smart phone, a hearing aid – and the ADT Pulse:  “This kind of impressed us because it’s not just home security.  It also features the ability to have full home automation, so while you’re away from home, besides operating your security system, even having video cameras in your home and seeing what’s going on, you can even control your thermostat, your air conditioning, your heat, even your appliances like your coffee maker, too.”  Gregg continued, “It really is incredible and just added a dimension of home automation that you can really control remotely.”

The FTC’s lawsuit against ADT charges that the company falsely represented that the discussions about the features and benefits of the Pulse system cited in the complaint were independent reviews by impartial experts.  The complaint also alleges that ADT violated Section 5 by failing to adequately disclose that the interviewees were really spokespersons paid by the company – a fact the FTC says would be material to consumers.

To settle the charges, ADT has agreed that when advertising security or monitoring products or services in the future, it won’t misrepresent that something is an independent review by an impartial expert.  The company also will clearly and conspicuously disclose any material connection it has to an endorser.

What can advertisers glean from the ADT settlement?  As the FTC’s Endorsement Guides make clear, it’s illegal to falsely represent expressly or by implication that an endorsement or review is impartial.  Furthermore, it’s the law – and it’s always been the law – that any material connection between an advertiser and an endorser must be clearly and conspicuously disclosed.  What kind of connection would consumers find “material”?   According to the Endorsement Guides, one “that might materially affect the weight or credibility of the endorsement.”  And what does “clear and conspicuous” mean?  It depends on the context, of course, but the proposed order with ADT explains what the company will have to do in the future.  Advertisers should bear in mind that things like fine print footnotes, language buried in dense blocks of text, or information hidden behind vague hyperlinks won’t do the trick.  File your online comments about the proposed settlement by April 7, 2014.

Advertisers have questions about endorsements and the FTC has answers.  Read The FTC's Revised Endorsement Guides: What People are Asking for to-the-point guidance.  Bookmark the Business Center's Endorsements page for additional compliance resources.