Celebrity endorsements could suffer under proposed regulatory changes

The practice of recruiting well known personalities to endorse a product line is well known within the industry, but if the proposed changes from the Federal Trade Commission (FTC) are accepted the practice could become a legal minefield.

The FTC proposed the changes last year and although it is not certain in what form or when they will be adopted, they would significantly affect the way advertisers do business, explained lawyer Andrew Lustigman at the HBA conference in New York last week.

Primarily, the changes proposed by the government body aim to better protect consumers against misleading testimonials and endorsements.

At present, testimonials (one individual’s experience of a product) have to be accompanied by a disclaimer stating that the results may not be typical and that individual experiences may vary.

However, FTC proposes that this be replaced by a system which would force advertisers to actively state, in addition, what would be a typical experience, explained Lustigman.

Rather than just saying that the testimonial might not represent a typical case, the company would have to include a description of what does constitute a typical case, he said.

“This may seem logical at the outset but it is very difficult to show typicality,”​ he added.

Advertisers liable ​

In addition, in the case of endorsements, FTC wants to make advertisers liable for what the endorser says about the product, which, according to Lustigman, could be very problematic when dealing with off-the-cuff and unscripted remarks.

The proposed changes would also require the endorser to disclose the fact that they receive monetary benefits when they are talking about a product, he said.

Furthermore, any ‘expert’ endorser would have to be an expert in the area of the product under question: a radiologist should not comment on a skin care product, for example.

These changes have been in the pipeline for some time and it is difficult to speculate on when they might be accepted and in what form, said Lustigman.