[Federal Register Volume 72, Number 11 (Thursday, January 18, 2007)]
[Proposed Rules]
[Pages 2214-2217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-197]


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FEDERAL TRADE COMMISSION

16 CFR Part 255


Guides Concerning the Use to Endorsements and Testimonials in 
Advertising

AGENCY: Federal Trade Commission.

ACTION: Request for public comments.

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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') 
requests public comment on the overall costs, benefits, and regulatory 
and economic impact of its Guides Concerning the Use of Endorsements 
and Testimonials in Advertising (``the Guides''), as part of the 
Commission's systematic review of all current regulations and guides. 
The Commission is also releasing consumer research it commissioned 
regarding the messages conveyed by consumer endorsements. The 
Commission is seeking comment on this research and upon several other 
specific endorsement-related issues.

DATES: Written comments must be received by March 19, 2007.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Endorsement Guides Review, Project No. 
P034520'' to facilitate the organization of comments. A comment filed 
in paper form should include this reference both in the text and on the 
envelope, and should be mailed or delivered to the following address: 
Federal Trade Commission/Office of the Secretary, Room H-135 (Annex S), 
600 Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing 
confidential material, however, must be filed in paper form, must be 
clearly labeled ``Confidential,'' and must comply with Commission Rule 
4.9(c).\1\ The FTC is requesting that any comment filed in paper form 
be sent by courier or overnight service, if possible, because postal 
mail in the Washington area and at the Commission is subject to delay 
due to heightened security precautions.
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
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    Comments filed in electronic form should be submitted by using the 
following Web link: http://secure.commentworks.com/ftc-endorsements 
(and following the instructions on the Web-based form). To ensure that 
the Commission considers an electronic comment, you must file it on the 
Web-based form at the Web link http://secure.commentworks.com/ftc-endorsements. If this notice appears at http://www.regulations.gov, you may also file an electronic comment through 
that Web site. The Commission will consider all comments that 
regulations.gov forwards to it.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. The Commission will consider all timely and responsive 
public comments that it received, whether filed in paper or electronic 
form. Comments received will be available to the public on the FTC Web 
site, to the extent practicable, at http://www.ftc.gov. As a matter of 
discretion, the FTC makes every effort to remove home contact 
information for individuals from the public comments it

[[Page 2215]]

receives before placing those comments on the FTC Web sites. More 
information, including routine uses permitted by the Privacy Act, may 
be found in the FTC's privacy policy at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Shira Modell, Attorney, Division of 
Advertising Practices, Bureau of Consumer Protection, Federal Trade 
Commission, Washington, DC 20580; (202) 326-3116.

SUPPLEMENTARY INFORMATION:

I. Background

    In December 1972, the Commission published for public comment 
proposed Guides Concerning the Use of Endorsements and Testimonials in 
Advertising, 37 FR 25548 (1972). Extensive comment was received from 
interested parties. On May 21, 1975, the Commission promulgated, under 
the Federal Trade Commission Act (``FTC Act''), 15 U.S.C. 41-58, three 
sections of the 1972 proposal as final guidelines (16 CFR 255.0, 255.3 
and 255.4) and republished three others, in modified form, for 
additional public comment 40 FR 22127 (1975). Public comment was 
received on the three re-proposed guidelines, as well as on one of the 
final guidelines. On January 18, 1980, the Commission promulgated three 
new sections as final guidelines (16 CFR 255.1, 255.2 and 255.5) and 
modified one example to one of the final guidelines adopted in May 1975 
(16 CFR 255.0 Example 4). 45 FR 3870 (1980).
    The Guides are designed to assist businesses and others in 
conforming their endorsement and testimonial advertising practices to 
the requirements of Section 5 of the FTC Act. Although the Guides are 
interpretive of laws administered by the Commission, and thus are 
advisory in nature, proceedings to enforce the requirements of law as 
explained in the Guides can be brought under the FTC Act.
    The Guides define both endorsements and testimonials broadly to 
mean any advertising message that consumers are likely to believe 
reflects the opinions, beliefs, findings, or experience of a party 
other than the sponsoring advertiser. 16 CFR 255.0(a) and (b). The 
Guides state that endorsements must reflect the honest opinions, 
findings, beliefs, or experience of the endorser. 16 CFR 255.1(a). 
Furthermore, endorsements may not contain any representations that 
would be deceptive, or could not be substantiated, if made directly by 
the advertiser. Id.
    The Guides advise that an advertisement employing a consumer 
endorsement on a central or key attribute of a product will be 
interpreted as representing that the endorser's experience is 
representative of what consumers will generally achieve. 16 CFR 
255.2(a). If an advertiser does not have adequate substantiation that 
the endorser's experience is representative, the advertisement should 
contain a clear and conspicuous disclosure. Id.
    The Guides define an expert endorser as someone who, as a result of 
experience, study or training, possesses knowledge of a particular 
subject that is superior to that generally acquired by ordinary 
individuals. 16 CFR 255.0(d). An expert endorser's qualifications must, 
in fact, give him or her the expertise that he or she is represented as 
possessing with respect to the endorsement. 16 CFR 255.3(a). Moreover, 
an expert endorsement must be supported by an actual exercise of 
expertise and the expert's evaluation of the product must have been at 
least as extensive as someone with the same degree of expertise would 
normally need to conduct in order to support the conclusions presented. 
16 CFR 255.3(b).
    Among other things, the Guides also state that:
    (1) Advertisements presenting endorsements by what are represented 
to be ``actual consumers'' should utilize actual consumers, or clearly 
and conspicuously disclose that the persons are not actual consumers. 
16 CFR 255.2(b).
    (2) An organization's endorsement must be reached by a process 
sufficient to ensure that the endorsement fairly reflects the 
collective judgment of the organization. 16 CFR 255.4.
    (3) When there is 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. 16 
CFR 255.5.

II. Regulatory Review Program

    The Commission has determined to review all of its rules and guides 
periodically. These reviews seek information about the costs and 
benefits of the Commission's existing rules and guides, and their 
regulatory and economic impact. The information thus obtained assists 
the Commission in identifying rules and guides that warrant 
modification or rescission. Therefore, the Commission solicits comment 
on, among other things, the economic impact of its Guides Concerning 
the Use of Endorsements and Testimonials in Advertising; possible 
conflict between the Guides and state, local, or other federal laws; 
and the effect on the Guides of any technological, economic, or other 
industry changes.
    Specifically, the Commission solicits written public comment on the 
following questions with respect to the guides appearing in 16 CFR 255.
    (1) Is there a continuing need for the Guides?
    (a) What benefits have the Guides provided to consumers?
    (b) Have the Guides imposed costs on consumers?
    (2) What changes, if any, should be made to the Guides to increase 
their benefits to consumers?
    (a) How would these changes affect the cost the Guides impose on 
businesses and others following their suggestions?
    (b) How would these changes affect the benefits to consumers?
    (3) What significant burdens or costs, including costs of 
compliance, have the Guides imposed on businesses and others following 
their suggestions?
    (a) Have the Guides provided benefits to those following their 
suggestions? If so, what benefits?
    (4) What changes, if any, should be made to the Guides to reduce 
the burdens or costs imposed on those following their suggestions? How 
would these changes affect the benefits provided by the Guides?
    (5) Do the Guides overlap or conflict with other federal, state, or 
local laws or regulations?
    (6) Since the Guides were issued, what effects, if any, have 
changes in relevant technology, such as email and the Internet, or 
economic conditions had on the Guides?

III. Consumer Endorsements and Extrinsic Evidence

    In conjunction with its regulatory review of the Guides, the 
Commission is releasing reports on two studies it commissioned 
regarding the messages conveyed by consumer endorsements. Both studies 
are available on the Commission's Web site, http://www.ftc.gov, or from 
the Commission's Public Reference Office, Room 130, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580.
    The first report, ``The Effect of Consumer Testimonials and 
Disclosures of Ad Communication for a Dietary Supplement'' (``the 
Endorsement Booklet Study''), can be found at http://www.ftc.gov/reports/endorsements/study1/report.pdf.\2\ It reports the results

[[Page 2216]]

of a consumer survey, conducted in the course of a law enforcement 
investigation, that examined the communication effects of a promotional 
booklet for a dietary supplement. The booklet consisted solely of three 
pages of consumer endorsements, primarily from senior citizens, touting 
the product's efficacy for treating various diseases and conditions. 
The survey was designed to examine whether consumer endorsements by 
themselves communicate product efficacy (i.e., that the product works 
for the user discussed in the testimonials) and typicality (i.e., that 
endorsers' experiences are representative of what consumers will 
generally achieve with the advertised product), and whether any of 
several prominent disclosures qualify the claims conveyed by the 
advertisements.
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    \2\ Questionnaires and advertisements used in the study and 
resulting data from the study are available at http://www.ftc.gov/reports/endorsements/study1/materials/.
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    According to the authors, the study suggest ``that multiple 
testimonials about a product effectively communicate efficacy claims, 
i.e., that the product works for the uses discussed in the 
testimonials. Testimonials also appear to communicate that the product 
will work for all, most, or about half of the people who use it. 
Finally, the study suggests that prominent disclosures in ads 
containing multiple testimonials may be ineffective in limiting the 
communication of efficacy and typicality claims. This study used 
disclosures that were more prominent and stronger than the disclosures 
typically used in ads containing testimonials.''
    The second report, ``Effects of Consumer Testimonials in Weight 
Loss, Dietary Supplement and Business Opportunity Advertisements'' 
(``the Second Endorsement Study''), can be found at http://www.ftc.gov/reports/endorsements/study2/report.pdf.\3\ It reports the 
results of a consumer survey examining the messages conveyed to 
consumers by one-page print advertisements containing consumer 
endorsements for a weight loss program, a cholesterol-lowering dietary 
supplement, or a business opportunity. Advertisements contained 
testimonials by either one or five individuals who claimed to have 
achieved specific (that is, numerically quantified) results with the 
advertised product or system (e.g., ``I am earning an extra $2,300 a 
month.''). Some of the advertisements also included one of several 
disclosures regarding the typicality of the consumer endorsers' 
experiences. The study was designed to explore these advertisements' 
communication of product efficacy and typicality.
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    \3\ Questionnaires and advertisements used in the study and 
resulting data from the study are available at http://www.ftc.gov/reports/endorsements/study2/materials/.
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    According to the authors, the testimonials tested in this study 
communicated to a substantial percentage of consumers that the 
advertised products:
     Would enable new users to achieve results similar to those 
portrayed by the testimonials (i.e., the testimonialists communicated 
product efficacy); and
     Would enable a substantial proportion (half or more) of 
new users to achieve results similar to those portrayed by the 
testimonialists (i.e., the testimonials communicated typicality).
    The study authors also concluded that two of the disclosures tested 
(``results not typical'' and ``experiences of a few'') in most cases 
failed to significantly reduce the communication of efficacy and 
typicality. The authors concluded that a third disclosure (which stated 
how much weight the average user loses in three months), tested on the 
advertisement for the weight loss program, did significantly reduce 
such communication in most cases.
    The Commission solicits written public comment on the following 
questions.
    (1) What are the implications and limitations of the Endorsement 
Booklet Study with respect to the question of whether consumer 
testimonials about a product's efficacy or performance convey that the 
product is effective for the purpose(s) discussed in the testimonials? 
What are the implications and limitations of the study with respect to 
the question of whether consumer testimonials convey that the 
endorser's experience is representative of what consumers will 
generally achieve with the advertised product? Is there any other 
research or evidence that would be relevant in answering these 
questions?
    (2) What are the implications and limitations of the Endorsement 
Booklet Study with respect to the effectiveness of disclaimers in 
limiting any communication of product efficacy from consumer 
testimonials? What are the implications and limitations of the study 
with respect to the effectiveness of disclaimers in limiting any 
communication of typicality from consumer testimonials? Is there any 
other research or evidence that would be relevant in answering these 
questions?
    (3) What are the implications and limitations of the Second 
Endorsement Study with respect to the question of whether consumer 
testimonials about a product's efficacy or performance convey that the 
product is effective for the purpose(s) discussed in the testimonials? 
What are the implications and limitations of the Second Endorsement 
Study with respect to the question of whether consumer testimonials 
convey that the endorser's experience is representative of what 
consumers will generally achieve with the advertised product? Is there 
any other research or evidence that would be relevant in answering 
these questions?
    (4) What are the implications and limitations of the Second 
Endorsement Study with respect to the effectiveness of disclaimers in 
limiting any communication of product efficacy from consumer 
testimonials? What are the implications and limitations of the Second 
Endorsement Study with respect to the effectiveness of disclaimers in 
limiting any communication of typicality from consumer testimonials? Is 
there any other research or evidence that would be relevant in 
answering these questions?
    (5) Is there any other research that would be relevant in assessing 
the messages communicated by consumer testimonials?
    (6) Is there any other research that would be relevant in assessing 
the effectiveness of disclaimers in limiting any communication from 
consumer testimonials of product efficacy or typicality?
    (7) In 2002, Commission Staff analyzed the use of consumer 
testimonials and disclaimers in the context of weight-loss advertising, 
see Weight-Loss Advertising: An Analysis of Current Trends, a Federal 
Trade Commission Staff Report, Sept. 2002. (http://www.ftc.gov/bcp/reports/weightloss.pdf).
    (a) What other evidence is there regarding the prevalence or effect 
of consumer testimonials, either generally or for specific product 
categories, especially with respect to the typicality of the 
testimonials?
    (b) What other evidence is there regarding the prevalence or effect 
of disclaimers of typicality?
    (8) What other research is there on the role of consumer 
endorsements in marketing?
    (9) The current Guides allow advertisers to use testimonials that 
are not generally representative of what consumer can expect from the 
advertised product so long as the advertisers clearly and conspicuously 
disclose either (1) what the generally expected performance would be in 
the depicted circumstances, or (2) the limited applicability of the 
depicted results to what consumers can generally

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expect to receive, i.e., that the depicted results are not 
representative.
    (a) What would be the effects on advertisers and consumers of 
requiring clear and conspicuous disclosure of the generally expected 
performance whenever the testimonial is not generally expected 
performance whenever the testimonial is not generally representative of 
what consumers can expect from the advertised product?
    (b) What information, other than what is required to substantiate 
an efficacy or performance claim, would be required for an advertiser 
to determine generally expected results? How difficult would it be for 
the advertiser to make this determination? Do the answers to these 
questions vary by product type and, if so, how?

IV. Material Connections

    Section 255.5 of the Guides states that advertisers must disclose 
connections between themselves and their endorsers that might 
materially affect the weight or credibility of the endorsement (i.e., 
the connection is not reasonably expected by the audience).
    Section 255.5 also indicates that consumers will ordinarily expect 
that endorsers who are well known personalities (i.e., celebrities) or 
experts will be compensated for their endorsements; therefore, an 
advertiser need not disclose the payment of compensation to such 
endorsers. A September 2003 petition submitted to the Commission by 
Commercial Alert suggests an exception to the principle that consumers 
will ordinarily expect that endorsers who are well known personalities 
are compensated for their endorsements. According to an August 11, 2002 
New York Times article cited by the petitioners, ``dozens of 
celebrities * * * have been paid hefty fees to appear on television 
talk shows and morning news programs and to disclose intimate details 
of ailments that afflict them or people close to them. Often, they 
mention brand-name drugs without disclosing their financial ties to the 
medicine's maker.'' The Commission is interested in any extrinsic 
evidence regarding consumer expectations about celebrity endorsements 
made during an interview. Specifically, the Commission solicits written 
public comment on the following questions.
    (1) Is there any research showing whether consumers have any 
expectations regarding compensation paid to celebrities who speak 
favorably about particular products while being interviewed outside the 
context of an advertisement (e.g., during television talk shows) and, 
if so, what does that research show?
    (2) Would knowledge that a celebrity endorsing a product during 
such an interview is being paid for doing so affect the weight or 
credibility consumers give to the celebrity's endorsement?

V. Invitation to Comment

    All persons are hereby given notice of the opportunity to submit 
written data, views, facts, and arguments addressing the issues raised 
by this Notice. Written comments must be received on or before March 
19, 2007. All comments should be filed as prescribed in the ADDRESSES 
section above.

List of Subjects in 16 CFR Part 255

    Advertising, Trade practices.

    Authority: 15 U.S.C. 41-58.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 07-197 Filed 1-17-07; 8:45 am]
BILLING CODE 6750-01-M