Proposed Changes to FTC Endorsement Guidelines

by John P. Feldman Comments
Posted in Articles, Government
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Playing Out the Scenario

To illustrate the point, consider a company that disseminates an advertisement for a dietary supplement that addresses symptoms of arthritis. In the ad, the sponsor presents a testimonial from a consumer who states that after one week of use as directed, he experienced a dramatic relief in pain and a virtual return of full mobility and functionality. FTC would likely find this statement purports to be representative of what consumers who buy the advertised product can generally expect. Assume further that the sponsor’s clinical data show that less than 20 percent of purchasers will achieve the advertised efficacy within one week of usage. If the sponsor were to add a disclaimer reading “Results not typical” or “This testimonial is based on the experiences of a few people and you are not likely to have similar results,” FTC would likely find the disclaimer to be ineffective and the advertisement to be deceptive and unsubstantiated. If, on the other hand, the advertiser instead disclosed “Clinical research shows that 17 percent of moderate arthritis sufferers experience a significant decrease in pain and improvement in mobility and function within one week when used as directed,” FTC would be far less likely to find the endorsement to be misleading.

Even if a company wanted to present a typical experience rather than an “inspirational” one, how does one define “typical”? FTC suggests in its Notice of Proposed Change to the Guides that it believes some percentage at or about 50 percent will suffice for a showing of typicality. This could place advertisers in a difficult position, particularly when introducing a new product without a track record. Unless an advertiser can determine what the expected results of about half of its customers would be, it may not be able to use a testimonial at all.

One might assume this burden would be particularly heavy on advertisers presenting the results for a new product that does not have a track record. FTC contemplates this proposed change to the guides could impede “newly established companies” or those introducing new products; however, it states “such an outcome would not necessarily be inappropriate.” According to FTC, just because the company is new or the product has no track record does not mean the advertiser has the right to tout atypical results in a manner that suggest that such results are typical.

FTC highlights that even if the advertiser is fastidious about keeping records and carefully discloses the typical range of efficacy or experiences that consumers are likely to achieve with the advertiser’s product or service, the testimonial would still be deceptive if the advertiser had no basis for believing the results or experiences expressed by the endorser had actually occurred or could occur. If the advertiser knows or should know that the experience claimed by the endorser is impossible or highly unlikely, then it should not use the testimonial at all.

It is entirely possible there are categories of products or services for which the requirement to substantiate and disclose that which is typical in order to express that which is atypical will impose an unacceptable burden to the degree that testimonials will no longer be possible at all. The time to put these examples on the record is now, as the comment period for these proposed changes ends on Jan. 30, 2009.

John P. Feldman is a partner in the Advertising, Technology and Media (ATM) Group at the international law firm Reed Smith LLP. The ATM Group provides counsel, regulatory and litigation services to clients who market goods and services in virtually all sectors, including pharmaceutical and nutraceutical products. Feldman can be reached at jfeldman@reedsmith.com.

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