FTC Moves Ahead Enforcing Endorsement Cases

A few months ago, acting Federal Trade Commission Chairwoman Olhausen stated that the FTC should shift focus to cases of actual harm, leaving many to wonder whether FTC would still actively enforce endorsement cases. However, in April, the FTC sent out ninety letters to brand influencers and marketers reminding those influencers and marketers to clearly and conspicuously disclose their relationship to brands. On the heels of these April letters, the FTC filed a complaint and ultimately reached entered a proposed settlement order (“order”) with two brothers that relied on deceptive endorsements and misleading review websites to sell Infinity and Olympus Pro brand trampolines.

The brothers operated websites selling the trampolines and touted the products with seals such as, “Trampoline Safety of America Trampoline of the Year.” The websites also featured logos for “Trampoline Safety of America,” the “Bureau of Trampoline Review” and “Top Trampoline Review” as well as links to those websites. The websites featured product reviews and opinions from experts that appeared to be impartial as well as product reviews. However, the entities were not independent organizations and were actually owned and operated by the brothers. In addition to creating fake review and testing sites to promote their trampolines, one of the brothers commented on YouTube that it recommended the Infinity trampoline as the “best trampoline I’ve ever owned” and left positive reviews on other websites.

The brothers were charged with violating the FTC Act in posting favorable reviews and operating purportedly independent review sites without disclosing the material connection to the brands and entered into a proposed settlement. The order prohibits the brothers from engaging in misrepresentations about reviews as well as making deceptive claims about testing and requires the brothers to clearly disclose unexpected material connections.

The order provides useful guidance about how best to make these disclosures:

  • Disclosure must be made through the same means as advertising statement i.e. if there is a television advertisement with a visible and audible claim there must be a visible and audible disclosure.
  • On a product label, the disclosure must be on the principal display panel.
  • A disclosure on an interactive medium, such as the internet, must be “unavoidable.”
  • The disclosure should not be contradicted by anything else in the advertisement.

The order also provided useful insight into how to describe self-sponsored reviews:

  • The reviews should not include any language that claim the organization is “independent” or provides “objective” information
  • The reviews should not claim to be from ordinary consumers.
  • The reviews should not claim to be from an “independent” organization.

FTC will be accepting comments on the Proposed Settlement until June 30, 2017.