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New FTC Guidelines Protect Consumers Against Deceptive Advertising Practices

By Jesse Levin, Esq.

The FTC issues guidelines to the private sector that set forth what does and does not constitute lawful advertising. These guidelines apply to all sorts of advertising, including what you see on television, the internet and in print everyday. For consumers, including those that seek out and employ the services of WCCE's Class Action Department, these guidelines can serve as legal protections against unscrupulous advertisers and endorsers.

In December 2009, the Federal Trade Commission (“FTC”) adopted several new and important guidelines for advertising. The most signi?cant changes added by the FTC apply to product endorsements and testimonials; Celebrities who receive major endorsement deals will need to take heed of the FTC's changes because they signi?cantly alter the legal rami?cations of statements made to the public.

Now, whenever a celebrity makes a representation about a product in an advertisement or in a public interview, he or she can be held personally liable for any false or unsubstantiated statements. In other words, your favorite movie star or sports ?gure can no longer safely claim a particular cell phone picks up the strongest signal, a particular diet product can cause instant weight loss, or an herbal pill can result in increased libido without proof those claims are, in fact, true.

These guidelines do not just extend to traditional advertising; they apply to seemingly-spontaneous public endorsements as well. If a particular celebrity makes a statement in support of a product in any public way, (e.g. on their blog, through twitter.com, on a late night talk show, or to passing paparazzi), they are now required to reveal any material relationship they have with the company that sells that product. This means that a singing idol cannot simply heap praise on a particular brand of sneakers if she has secretly been paid by the shoe company to do so. That celebrity will have to spill more than just the latest gossip to the tabloids; she will have to reveal that the company gave her those shoes for free!

These mandatory disclosure rules do not just apply to celebrities, but to all sorts of individuals who publish reviews or make public positive commentary for merchandise. The FTC employs many teaching examples of how normal everyday bloggers, message board posters, or even radio and concert "street team" members fall under the purview of these laws when they give ringing endorsements of products to their readers/friends/ audiences. If any of these people receive free merchandise, redeemable points for product discounts, or any other perks or forms of payment, they must disclose this connection to the company they endorse. If they don’t, not only can their objectivity and credibility be questioned, but they can be held directly liable for any sales resulting from their deceptions by omission.

Consumer testimonials, a very common advertiser mechanism which infomercials regularly employ, are also now directly regulated by the FTC. Before the most recent guideline changes, advertisers could broadcast an array of video testimonials in a commercial or infomercial, showing average consumers claiming a particular diet pill made them lose spectacular amounts of weight and inches of their waistline. Even if these testimonials claimed results that were scienti?cally impossible or even just uncommon, the advertisers could save themselves by placing a small white lettered disclaimer at the bottom of the screen saying "results not typical" or "results may vary." Now, deceptive advertisers can no longer ?nd safe harbor in barely-visible disclaimers. The FTC has created new guidelines to eliminate this kind semantic chicanery. Today, if a consumer testimonial makes a claim of massive success, it must be a statistically common result of using the product that the advertiser can back up with real proof. If not, the advertisers can be held liable. Additionally, to avoid violating FTC’s new guidelines, all product testimonials the advertiser claims are from actual purchasers must actually come from actual purchasers, not actors playing a role.

By enacting these consequential guidelines, the FTC is doing a public good and keeping the free market fair, but you, as a consumer, do not have to rely on the federal government to protect your own interests. You can take your grievance to the companies and celebrities yourself whenever a product they sell or endorse does not live up to the claims they make. Our class action attorneys are highly experienced and successful at enforcing these and other consumer laws in order to make consumer purchasing decisions safe and informed. In a marketplace where consumers are actively pursuing honesty in advertising, caveat venditor, or "seller beware," can replace old norms where consumers were at the mercy of unregulated advertising.

Jesse Levin (jlevin@wccelaw.com) is an associate in WCC&E’s class action department. He advocates on behalf of his clients in consumer protection, wage and hour, business, intellectual property and entertainment litigation. After graduating suma cum laude from the University of Southern California, Jesse obtained his law degree from the UCLA School of Law, where he worked as Vice Editor-In-Chief of the UCLA Entertainment Law Review.