If you’re like many people, before you lay your money down — particularly for big-ticket items — you want to hear what past buyers say about them. The FTC took a big step today to make sure that what you hear is truthful. It warned businesses that the endorsements they use to help sell their products must reflect the actual experience and opinions of real people who used them.
The FTC sent a “Notice of Penalty Offenses” to more than 700 large companies, top advertisers, leading retailers, well-known consumer product companies, and major advertising agencies. The Notice describes advertising practices involving endorsements that the FTC found were deceptive in past lawsuits. The recipients were picked because they are top marketers and agencies, not because they are suspected of doing something wrong. But they are now all on notice that, if they use any of these deceptive practices in the future, they can face penalties of up to $43,792 per violation.
What kinds of advertising crosses the line? Among other things, companies that use endorsements:
- Can’t misrepresent that an endorser is an actual, current, or recent user of a product
- Can’t misrepresent that endorsers’ experiences represent people’s typical experiences
- Can’t use an endorsement without good reason to believe the endorser still holds the views expressed
- Can’t use an endorsement to make deceptive claims about how a product performs, and
- Can’t fail to disclose an unexpected relationship between the endorser and the advertiser, like a business or family relationship, a payment, or a gift of a free product.
- The Notice could apply not only to a company’s own ads but also to its use of influencers, fake reviews, and reviews by customers with connections to the company.
When shopping for a product or service, you’ll want to evaluate any reviews carefully.
- Consider the source of the reviews. What do you know about the reviewer? Or about the site or platform where you’re reading the reviews?
- Look at more than one source. Good places to start are well-known websites that have credible and impartial expert reviews.
By Seena Gressin, Attorney, Division of Consumer & Business Education, FTC