New FTC Rules on Testimonials and Endorsements

Pay attention if you use testimonials in your salescopy, or if you endorse other people’s products on your blog or website in return for any type of compensation. The FTC has introduced new rules that require more disclosure. The rules go into effect on December 1, 2009.

The rules aim to protect consumers from:

• unrealistic expectations
• unverified results claims
• paid endorsements disguised as editorial content
• endorsements that don’t tell the truth

Here are the basics:

Testimonials

Testimonials turbocharge your marketing. If you can quote happy customers who have achieved great results, it’s almost as powerful as somebody recommending your product to a friend.

And of course you always want to quote the happiest customers who have achieved the greatest results.

Until now, all you had to do was add a disclaimer saying “Results not typical” and you were within the law. Now you need to:

• Verify that the person giving the testimonial has actually achieved the stated results
• Verify the typical results a consumer can expect to achieve, and state them (e.g., “Most consumers will save $20 – $35 per month using this product.”)
• Verify that the testimonial still stands if you make a change to the product being endorsed

That means it’s still okay to use testimonials that boast about spectacular results as long as you also make it clear what the average results are. Check the FTC’s official guide for examples demonstrating what is acceptable and what isn’t.

Endorsements

This one is a much bigger can of worms.

Endorsements are a highly effective way to get word out about your product or service. People in a buying frame of mind seek out good reviews and recommendations on other sites before they make their decision.

So smart online marketers offer free products for bloggers to try… or put their products in pay-per-post programs where bloggers get paid for reviewing them… or get their products mentioned on their affiliates’ websites.

That way, they get word of mouth PLUS links back to their site (which are invaluable for search engine optimization).

Now the FTC wants anyone endorsing a product on their own website to “disclose clearly and conspicuously” when they are being compensated for their services.

The spirit of these rules is to ensure that anything that appears as a spontaneous endorsement actually reflects the true opinions, experience, and beliefs of the person doing the endorsing.

If there’s a chance that that person’s opinions, etc. might have been swayed by money, free product, or other considerations, then they must disclose.

However, there are so many gray areas in here it’s almost impossible to figure out what “compensation” is. If a blogger gets a freebie and writes about it, is that compensation? Depends on the value of the item, how often this blogger is given free samples, and how the blogger got it for free in the first place.

How about affiliates? Looks like they’re covered by this:

“When there exists 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.”

AdSense advertisers? Social media posters? We can think of lots of other cases that might lie in that gray area, and don’t appear to be covered in detail in the full-on 81-page document. Still, if you think you might be affected, better read it.

Who’ll be affected most? “Review” bloggers and affiliates, seeing they’re the ones who have the clearest and most consistent relationships with producers.

How will this change affect you? Let us know what you think about it.