AAF Government Report

October 8, 2009

Clark Rector Jr., Executive Vice President – Government Affairs

FTC Changes Endorsements and Testimonials Guides

The Federal Trade Commission has substantially toughened the guidance it gives to marketers regarding the use of endorsements and testimonials in advertising. December 1, 2009 is the effective date of the new guidance.

Since 1980, advertisements could include testimonials to describe “unusual” results from products and services so long as it included a stipulation stating for example, “results not typical” or other approved disclaimers. The new guidance will require the advertising to clearly disclose the results that typical consumers using the product or service can expect to enjoy. Weight loss and exercise products have been cited as examples where “typical results” can be difficult to determine because of the great variations in commitment, starting weight, goals, etc.

Other provisions would require disclosure of compensation to bloggers, and of research results paid for by the advertiser if a consumer is not otherwise likely to realize the connection.

Finally, celebrities that give testimonials can be held liable for false advertising if they do not disclose when they are being paid by the advertiser. Not only do these celebrity requirements apply to traditional advertising but also to other forums such as social media or television talk shows.

The AAF commented to the FTC on the proposed revisions earlier in the year. Those comments can be found here.

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FTC to Increase Focus on Children and Advertising

David Vladeck the Director of the Federal Trade Commission’s Bureau of Consumer Protection recently told a National Advertising Division Conference that the FTC is beginning a number of reviews of advertising practices and in particular advertising directed toward children.

Vladeck said the Commission is planning a new educational campaign directed at children to help them understand advertising. In particular, to help them answer the questions, “Who is responsible for these ads? What does the ad say? What does it want from me?” He indicated that examination of advertising to kids is important today because of the increasing rates of obesity, cardiovascular disease and diabetes.

The director also told attendees that the FTC is in the process of clearing with OMB a major food study that will compare marketing data with a previous study done two years ago.

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Lawmakers Urge Delay of Net Neutrality

A group of Republican members of Congress, including a majority of Republicans from the House Energy and Commerce Committee have written to Federal Communications Commission Chairman Julius Genachowski urging the delay of an October 22 vote on proposed “network neutrality” rules.

Genachowski believes the rules are necessary to insure that broadband providers do not abuse their power over Internet access by favoring their own services over competitors.

The lawmakers have asked the Chairman to conduct a more thorough market analysis to determine whether the new regulations are truly necessary. They expressed concern that the regulations could discourage investment in networks by broadband providers and that consumers could suffer if providers are unable to manage traffic on their networks.

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FDA Action Leads to Drop in Online Advertising

Paid search advertising by pharmaceutical companies dropped 84% in the wake of warning letters sent to 14 drug makers by the Food and Drug Administration’s Division of Drug Marketing, Advertising and Communications. The letters said that a total of 48 different brands were in violation of the FDA’s fair balance guidelines by not including adequate risk information. The guidelines were developed for print and broadcast, not online, media.

Most ads complied with the unofficial “one-click rule” in that consumers could go from the ad to a site that offered fair balance and risk information by clicking on the advertisement.

The FDA will conduct public hearings on November 12 and 13 to begin considering Internet advertising guidelines.

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AAF Meet and Greet

The AAF will host a meet and greet for Representative Bob Etheridge, D-N.C., on October 22 in the AAF offices.  Congressman Etheridge is a member of the tax writing House Ways and Means Committee.  If you are interested in attending the meeting – or hosting a meet and greet with one of your local lawmakers – contact Clark Rector at 800-999-2231 or crector@aaf.org.

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Go to the Government Affairs Main Page.