For the first time in nearly 30 years, the Federal Trade Commission has issued new and updated guidelines regarding the use of endorsements and testimonials, including various kinds of positive comments from consumers, experts, celebrities, and organizations. The purpose of the new guidelines is to make consumers aware when someone making a positive comment about a product or service has a vested interest in doing so; in other words, the guidelines are meant to ensure that consumers understand the relationship between the author or publisher and the endorser and, specifically, to ensure that the consumer is warned if the endorser received money or other benefits from the author or publisher in exchange for an endorsement. Both the provider and the recipient of an endorsement may be at risk if the endorsement is not in compliance with the Federal Trade Commission Act. Some publishers are already wondering how the new guidelines will affect a number of industry practices, including sending free review copies, soliciting blurbs, and marketing through book bloggers and online reviewers at sites like Amazon and Facebook. What follows is a short summary of the key provisions of the guidelines as they apply to the publishing industry, and my own analysis of how they may affect publishers. The FTC has announced that the application of the new guidelines must be considered on a case-by-case basis, and posted the complete text of the Guides Concerning the Use of Endorsements and Testimonials in Advertising.

Blogs, Bulletin Boards, and Other “Consumer-Generated Media”

The new guidelines address “consumer-generated media,” including blogs, bulletin boards, and Web sites where consumers can post their own book reviews. The guidelines also modify earlier requirements about what disclosures must be made when product testimonials are used in advertising and promotional materials. As a general rule, the FTC guidelines require the disclosure of “material connections” between the “advertiser” and the “endorser” of a product or service. For our purposes here, the “advertiser” is a publisher and/or an author who advertises and promotes a book (or any related product or service) using an endorsement or testimonial that was provided by someone else, and the “endorser” is the person who provides the endorsement or the testimonial. The FTC has announced that “under usual circumstances,” reviews published in “traditional” media (such as a newspaper, magazine, or broadcast station with “independent editorial responsibility”) fall outside the scope of the guidelines so long as the reviewers are not receiving any benefits directly from the publisher or author. Such reviews may continue to be quoted in the advertising and promotional materials for the book without special disclosures, and publishers may continue to quote such reviews as long as the quote “fairly reflect[s] its substance.” A new and different rule, however, applies to “consumer-generated media” such as blogs, bulletin boards, e-commerce sites (including Amazon.com), and social networking sites (including Facebook) where consumers can post their own comments about a book. If there is a “course of dealing” between a publisher or an author and an endorser, both the endorser and the publisher or author may be required to disclose the “material connections” between them in a “clear and conspicuous” manner whenever the endorser’s comments are used.

What Counts as a “Material Connection”?

The guidelines do not make it entirely clear what kind of dealings between a publisher and an author and an endorser amount to a “material connection” that requires a disclosure. Based on recent conversations with my contacts in the FTC, the fact that a publisher has given a free review copy to a reviewer or a book blogger—or the fact that a reviewer or book blogger routinely receives free review copies from a publisher—probably does not require a disclosure under ordinary circumstances. However, if the publisher or author is paying money for an endorsement, it must be disclosed, and a disclosure is probably also required if the publisher or author bestows other benefits on an endorser. The disclosure must appear in a “clear and conspicuous” manner both at the place where the endorsement is first given (e.g., the blog, bulletin board, or other Web location where a positive comment is displayed) and whenever the publisher or author quotes the endorsement in advertising and promotional materials. If, for example, a blogger is also participating in an affiliate program that results in a payment of money to the blogger when a recommended book is purchased, the blogger is required to post a disclosure, and the author or publisher who uses the blogger’s endorsement in their own advertising and promotional materials should also make a disclosure. Although the guidelines do not specifically mention blurbs, the same rule applies—if someone is being compensated for a blurb, it must be disclosed wherever the blurb is used. And a publisher or an author who posts a positive comment about a book on a bulletin board, a social networking site, or a bookselling site—or who arranges for someone else to do so—is probably required to make it clear who is posting the comment on the principle that the consumer is entitled to know.

Implications for Product Testimonials

Some of the new guidelines apply specifically to use of testimonials from consumers, celebrities, experts, and organizations. Most such testimonials are used in connection with health and fitness products, but the new guidelines appear to apply to some books, too. Suppose, for example, a book offers diet, health, medical, financial, legal, psychological, or other expert advice or information, and an endorser claims to have benefited from the book. If the publisher or author “does not have substantiation that the endorser’s experience is representative of what consumers will generally achieve,” then any advertising or promotional materials featuring the testimonial must also include a clear statement of what the typical consumer can expect. This is a major change in FTC policy. No longer will it be sufficient to use the phrase “results not typical” in small type at the bottom of an ad or a press release. Instead, the copy must specify what the consumer can actually expect from the book if the endorser’s experience is not typical. Different rules apply to product testimonials depending on whether the endorser is a consumer, an expert, a celebrity, or an organization. The rules are highly technical, and getting expert legal advice is a good precaution.

What to Do

Until the impact of the new guidelines on the publishing industry is clearer, it is difficult to know precisely what precautions a publisher or author is required to take when using endorsements or testimonials in advertising and promotional materials. However, the following principles constitute a good starting point.

• Free review copies provided to traditional review media do not require any special disclosures.
• Free review copies provided to bloggers who routinely post comments about books probably do not require any special disclosures.
• Under all other circumstances, if a publisher or author is bestowing a benefit on someone in exchange for a blurb, a positive review, a testimonial, or some other form of endorsement, the author or publisher should carefully consider whether it amounts to a “material connection” and thus requires a “clear and conspicuous” disclosure by both the endorser and the recipient of the endorsement. The more valuable the benefit—and especially if money is being paid—the more likely that a proper disclosure is required by law.
• If the publisher or author or someone associated with the publisher or author posts a favorable item about a book to an online message board or a review site such as Amazon.com, the person who posts the comment must “clearly and conspicuously” disclose his or her relationship to the publisher or the author.
• Whenever a book offers diet, health, medical, financial, legal, psychological, or other expert advice, and a publisher or an author is using a product testimonial in advertising or promotional materials for the book, the publisher or author should make sure that the testimonial reflects what a typical consumer can be expected to experience or achieve, based on substantial evidence. If evidence of this is not available, or if the available evidence suggests that consumers’ experience will differ, then a proper disclosure is required.
• Consulting an attorney who is experienced in publishing and FTC matters is always a good precaution and may be essential in determining how the new guidelines apply to you in specific circumstances.

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