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.
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 revised 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.
- 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; and
- Suggestions for implementing the Guides.
Who Should Attend?
The program 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 44 years. In 39 years as a trainer over 147,000 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.
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