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The Guides Concerning the Use of Endorsements and Testimonials in Advertising (Guides) issued by the Federal Trade Commission (FTC) address the application of Section 5 of the FTC Act (Unfair and Deceptive Acts or Practices) to the use of endorsements and testimonials in advertising. The Guides provide the basis for voluntary compliance with the law by advertisers and endorsers and, if followed, help avoid UDAP violations. The most recent version of the Guides has been in place for a decade, but supplemental guidance, released in 2017, updates the rules for a number of areas, including social media.
On July 26, 2022, the FTC published a request for comments on proposed revisions to its Guides. The revisions:
- Enunciate basic principles not expressly set forth in the current Guides but are established in Commission enforcement actions.
- Represent substantive changes from the current Guides, based upon increased knowledge of how consumers view endorsements and taking into consideration the comments submitted in response to the February 2020 Federal Register notice.
- Reflect the extent to which advertisers have turned increasingly to the use of social media and product reviews to market their products.
Comments on the proposal will be accepted through September 26, 2022.
Endorsements can come from your customers, experts, and celebrities. Problems can result from unsupported claims and failure to include required disclosures, among others. Enforcement actions have been taken against companies in many industries. The penalties can be high.
The current Guides reflect FTC case law and clearly state that both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement – or for failure to disclose material connections between the advertiser and endorsers. The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.
Practices inconsistent with the Endorsement Guides may result in corrective action by the FTC under Section 5 if the FTC has reason to believe that the practices fall within the scope of conduct declared unlawful by the statute. Violations pursued by the FTC generally result from referrals from consumers, examiners and others, and from the FTC’s review of advertisements in different media. This training session is designed to prevent the occurrence of unlawful practices.
You’ll receive a detailed manual that serves as a valuable resource long after the conclusion of the recording.
Upon completion of this recording you’ll understand:
- What actions constitute an endorsement;
- Endorsement requirements:
- Honest opinions;
- No distortion of opinion;
- Bona fide user of the product;
- Competent and reliable scientific evidence;
- Experience is representative;
- Depiction as actual consumers;
- Expert is an expert;
- Actual exercise of expertise;
- Disclosure of material connections;
- Disclosure of compensation for endorsements;
- How the endorsement guidelines impact social media use by the:
- Financial institution; and
- Employees of the financial institution;
- The endorsement practices prohibited by Section 5 of the FTC Act;
- The guidance issued by the FTC to prevent unlawful endorsement practices;
- The proposed revisions to the Guides; and
- Suggestions for implementing the Guides.
The recording is designed for Departmental and Senior Management, Marketing staff, Compliance Officers, Auditors, and those responsible for marketing bank products through any medium, including social media.
Jack Holzknecht is the CEO of Compliance Resource, LLC. He has been delivering the word on lending compliance for 43 years. In 38 years as a trainer over 145,000 bankers (and many examiners) have participated in Jack’s live seminars and webinars. Jack’s career began in 1976 as a federal bank examiner. He later headed the product and education divisions of a regional consulting company. There he developed loan and deposit form systems and software. He also developed and presented training programs to bankers in 43 states. Jack has been an instructor at compliance schools presented by a number of state bankers associations. As a contractor he developed and delivered compliance training for the FDIC for ten years. He is a Certified Regulatory Compliance Manager and a member of the National Speakers Association.