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FTC Releases First Update To Endorsement Ad Guidelines In A Decade.

Podcasters and radio personalities are specifically called out in a newly finalized update to the Federal Trade Commission’s guidelines on endorsement ads. The revisions, which were released Thursday, are the first changes to the FTC’s Enforcement Guide since 2009 and cap off a three-year process.

The new FTC guidelines include an expanded definition of what an “endorsement” includes, to clarify that fake reviews, virtual influencers, and tags in social media are all covered under its rules. They also offer further guidance of what “clear and conspicuous” disclosures mean, including a warning that the built-in disclosure features on a platform may not be adequate to meet the FTC’s demands.

As part of its focus on making disclosures “clear and conspicuous,” the FTC says a disclosure in audio ads on radio and in podcasts “should be delivered in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand.” And when an endorsement targets a specific audience, such as older adults, its measure of “ordinary consumers” includes members of that group.

Yet unlike most rulebooks, the FTC does not use a “do this” and “don’t do this” format. For instance, there is no rule that says how long an audio ad’s disclosures must last. Instead, the FTC offers up examples of how endorsement ads may play out in the real world and says whether they would be considered deceptive or not. What constitutes a deceptive ad is mostly in the eyes and ears of the regulator.

In one example where an ad would be considered deceptive, the FTC says a radio personality who talks about how much they enjoy making coffee with a particular machine would be found to cross the line if the DJ’s comments suggest they regularly use the coffee maker when, instead, they only used it during a demonstration by the advertiser. The Commission modified the example to clarify that the air personality is speaking during a radio advertisement played during commercial breaks. It deleted a previous reference to the personality owning the coffee maker.

In another case involving a podcaster, the FTC says if a host begins an episode by reading what is obviously a commercial, the host need not make a disclosure because, even without a statement identifying the advertiser as a sponsor, listeners will likely still expect the podcaster was compensated.

Answers In The FAQ

The FTC also issued an updated version of a guidance document that answers frequently asked questions about endorsements. Primarily addressing when and how to disclose material connections, the FAQ section was last revised in 2017. The new version includes 40 additional questions and updates dozens of other answers.

Radio personalities and podcasters are most likely to use audio disclosures and the FTC notes that simply saying “XYZ company asked me to try their product” might be sufficient if the context of the endorsement makes clear that the endorser got to keep the product for free after trying it, and if the endorser didn’t get anything else.

“It wouldn’t be sufficient if those things aren’t clear or if the company gave money or something else to the endorser,” the FTC says. It also warns the word “gifted” does not sufficiently disclose the relationship if it does not come with the brand name attached.

On social media, many endorsers opt to add the “#ad” hashtag to the end of their posts. The FTC says there is no rule that it must be at the beginning or end of the post. But it does say the #endorsement hashtag doesn’t cut it since it doesn’t make it clear to people that money changed hands.

“The issue for us is whether the disclosure is easily noticeable, easily understandable, and hard to miss by ordinary consumer,” the FTC says.

Among the other questions taken on by the FTC is whether online media has stricter rules than traditional media, like radio. The FTC says rules apply across the board, regardless of media channel. “The issue is – and always has been – whether the audience understands the reviewer’s relationship to the company whose products are being recommended. If the audience understands the relationship, a disclosure isn’t needed,” it says.

The FTC rules may be ambiguous, but the Commission says they are not all that complicated, and no lawyer is needed to draft any disclosures. It says a disclosure such as “company X gave me [name of product] to try, and I think it’s great” is usually sufficient to give consumers the information they need.

One area where the FTC makes it clear that it is hands-off is with campaign ads. “The FTC doesn’t have jurisdiction over political advertisements,” it says.

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