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New FTC Endorsement Rules

The U.S. Federal Trade Commission continues to make Internet commerce a top priority. The FTC recently issued new regulations that govern the use of "endorsements" to promote products. Those regulations can be found at 16 C.F.R. - 255 or on the web. Note, the new regulations became effective December 1, 2009.

The new regulations cover all sorts of third party testimonials and endorsements -- by consumers, experts, and celebrities. If your promotions use customer or consumer endorsements, the FTC requires that the results described must be typical or, if not, you should "clearly and conspicuously" disclose that the results presented are not typical. Also, such customers should be "bona fide" buyers of your product, and not, for example, a fictitious person or your cousin who is doing you a favor.

For expert endorsements, the person involved should have special knowledge that qualifies him or her to make the endorsement, e.g., if you use a doctor to sell a diet plan, that doctor shouldn't be an eye doctor, but should have special knowledge in the area of nutrition.

Also, the FTC requires all endorsements to disclose any "material connection" between the vendor and the advertiser. For example, if an affiliate runs a web site offering an "independent review" of two products and gives a favorable review of one, they should disclose the fact that they are receiving a commission from the sale of that product.

These rules also apply to third parties, such as bloggers, who receive a free product and are asked to do a review. Under the new FTC rules, not only should the blogger disclose he got the product for free but the vendor who gave him the product should make some effort to make sure that the blogger makes that disclosure.

Please review these new rules yourself and if you have questions, please ask your own legal counsel. The Academy of Social Entrepreneurship Network cannot and does not give legal advice to our members, and our approval of your product does not constitute an approval of any specific marketing, promotion, or endorsement used to sell the product.

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