The FTC recently sent notices to more than 700 consumer products companies, retailers, and ad agencies to remind them that using fake or deceptive endorsements or testimonials, including customer reviews, is a deceptive and unfair act or practice under the FTC Act. The companies that received the Notice are not suspected of any wrongdoing.
The notice does not make any new law or change existing law—it only provides information about the law to the recipients so that if they are later found to have engaged in using fake or deceptive endorsements or testimonials, they will also be deemed to have had actual knowledge that those practices violate the FTC Act. This actual knowledge of the law will subject them to significantly increased penalties up to $43,792 per violation.
According to the notice, several endorsement-related acts or practices violate Section 5 of the FTC Act:
- Claiming—directly or by implication—that a third party has endorsed a product or its performance when that is not the case (this includes fake reviews);
- misrepresenting that an endorsement reflects the experience, views, or opinions of users or purported users;
- misrepresenting an endorser as an actual, current, or recent user of a product;
- continuing to advertise an endorsement unless the advertiser has good reason to believe the endorser continues to subscribe to the views presented in the endorsement;
- using testimonials to make unsubstantiated or otherwise deceptive performance claims—even if the testimonial is genuine;
- failing to disclose a connection between an endorser and seller of a product if that connection might materially affect the weight or credibility of the endorsement or review and if consumers would not reasonably expect that connection; and
- misrepresenting—explicitly or implicitly—that the experience of an endorser represents the typical or ordinary experience of users of the product.
In order to help businesses ensure that they are following the law when using endorsements, the FTC has created an online Endorsement Guide.