FTC Endorsement Guides

The FTC Endorsement Guides: Material Connections, Disclosure, and Liability After the 2023 Revision

The Endorsement Guides, revised effective July 26, 2023 (88 FR 48092), are "administrative interpretations of laws enforced by the Federal Trade Commission" — specifically, they "address the application of section 5 of the FTC Act, 15 U.S.C. 45, to the use of endorsements and testimonials in advertising." 16 C.F.R. § 255.0. The Guides are not freestanding rules, but "[p]ractices inconsistent with these Guides may result in corrective action by the Commission under section 5." Their reach is deliberately broad: an endorsement is "any advertising, marketing, or promotional message for a product that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser," and the definition captures implicit recommendations — in the Guides' own example, a paid live-streamer who appears to enjoy a game has endorsed it, because "the apparent enjoyment is implicitly a recommendation."

The disclosure obligation turns on unexpected material connections. Under § 255.5, "[w]hen 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, and that connection is not reasonably expected by the audience, such connection must be disclosed clearly and conspicuously." 16 C.F.R. § 255.5. Material connections sweep well beyond cash: they include "a business, family, or personal relationship," "monetary payment or the provision of free or discounted products (including products unrelated to the endorsed product)" — "regardless of whether the advertiser requires an endorsement in return" — and softer benefits "such as early access to a product or the possibility of being paid, of winning a prize, or of appearing on television or in other media promotions." The trigger is audience expectation, and the threshold is low: disclosure is required "when a significant minority of the audience for an endorsement does not understand or expect the connection." The disclosure itself need not recite every detail, but "it must clearly communicate the nature of the connection sufficiently for consumers to evaluate its significance."

The 2023 revision also codified what "clear and conspicuous" means. A disclosure qualifies only if it is "difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers," and "[i]n any communication using an interactive electronic medium, such as social media or the internet, the disclosure should be unavoidable" — and it "should not be contradicted or mitigated by, or inconsistent with, anything else in the communication." 16 C.F.R. § 255.0. The expected-connection limit still does real work: in the film-star example of § 255.5, a celebrity's compensation for a television commercial need not be disclosed "because such payments likely are ordinarily expected by viewers" — an expectation-based limit that rarely extends to influencers, whose audiences often cannot tell sponsored content from organic praise.

Liability runs to every participant in the endorsement chain. "Endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser," and advertisers face liability for "misleading or unsubstantiated statements made through endorsements or for failing to disclose unexpected material connections" — indeed, "[a]n advertiser may be liable for a deceptive endorsement even when the endorser is not liable." 16 C.F.R. § 255.1. To manage that exposure, advertisers should "[p]rovide guidance to their endorsers," "[m]onitor their endorsers' compliance," and "[t]ake action sufficient to remedy non-compliance and prevent future non-compliance." Influencers carry their own exposure — an endorser may be liable for representations the endorser knows or should know are deceptive, including when the endorser "falsely represents that they personally used a product," and for failing to disclose unexpected material connections. The 2023 revision extends the net further still: "[a]dvertising agencies, public relations firms, review brokers, reputation management companies, and other similar intermediaries" may be liable for creating or disseminating deceptive endorsements or ones missing required disclosures.

For compliance programs, the framework reduces to three questions asked of every sponsored post: is there any benefit flowing to the creator that a significant minority of the audience would not expect; does the disclosure communicate the nature of that connection in a way that is unavoidable on the platform where it appears; and can the advertiser document that it instructed, monitored, and corrected its endorsers? Because the advertiser answers for the influencer's omissions even when the influencer does not, contractual disclosure requirements without active monitoring and remediation leave the largest gap in the program.