The FTC and the Strange Death of the Celebrity Endorsement?

Lost in all the hoopla about the new blogger guidelines on endorsements and testimonials is the rather important issue of celebrity endorsements. Given a narrow interpretation of the FTC Guidelines, it's clear that these expanded rules on The Use of Advertisements and Testimonials in Advertising could have a chilling effect (it's a legal term, look it up) on the way brands deploy celebrities as spokespersons.

Specifically, there are several clauses in the Guidelines that could be troublesome. For the sake of brevity, let's refer to them as the bona fide, typicality and material connection clauses:

Section 255.1: "When an advertisement represents that the endorser uses the endorsed product, the endorser must have been a bona fide user of it at the time the endorsement was given. Additionally, the advertiser may continue to run the advertisement only so long as it has good reason to believe that the endorser remains a bona fide user of the product."

Section 255.2: "If the advertiser does not have substantiation that the endorser's experience is representative of what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation."

Section 255.5: "When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e. the connection is not reasonably expected by the audience), such connection must be fully disclosed."

One of the inherent problems of celebrity endorsements, of course, is that any celebrity touting a handbag or car or watch might not actually (gasp!) use that handbag, car or watch. Or, they may use it a few times, but not actually use it as often as the ads might imply. This is the bona fide clause.

Another problem is that if a celebrity is touting a product and implying that the product is responsible for his or her superior performance, this might still run afoul of the FTC for the simple reason that this superior performance may not be "typical" and "representative." Maria Sharapova may endorse a Prince tennis racket, but that doesn't mean that you'll be winning a major pro tennis tournament any time soon if you buy the same racket (or even a tournament at your local country club). This is the typicality clause.

The final problem is that, given the constant 24/7 attention that the media lavishes on celebrities, it's not always clear when celebrities are talking as "satisfied customers" (the FTC wording) or as "endorsers." If Yankees baseball superstar Derek Jeter appears on the David Letterman show and starts talking about his great ride to the TV studio in a Ford Motor Company SUV, he would need to interrupt the show with a little disclosure that, hey, he happens to be an endorser of Ford. This is the material connection clause.

As a result of its renewed "truth in advertising" mandate, the FTC is placing a greater burden of proof on the advertiser when it comes to celebrity endorsements. So, celebrity endorsements are ubiquitous these days -- but would they be if every celebrity endorsement came under relentless FTC scrutiny?

[image: The Celebrity Endorsement Game via New York Times]

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