By Barbara Shaibu, NCL Public Policy Intern
In an era of media saturation, advertisers are constantly on the prowl for the next best medium for reaching and attracting potential customers. Even in the face of grueling economic conditions and the resulting cutbacks in corporate advertising budgets, more than $141 billion was spent in 2008 on advertising in the United States, according to TNS Media Intelligence. In recognizing the critical role advertising plays in informing consumers about products and services and influencing their decision-making, NCL believes policymakers should take a proactive role in regulating the industry.
The explosion of cable television and the Internet has contributed to the growth of the industry. However, when flipping the channels or surfing the Internet, consumers are bombarded with advertisements with questionable guarantees of weight loss, baldness cures, and business opportunities. NCL believes that new media have fueled an increase in deceptive advertisements that prey on consumers and leave them less knowledgeable about their rights and responsibilities with regards to products and services.
In response to this issue, the Federal Trade Commission (FTC) has proposed revisions to its Guides Concerning Use of Endorsements and Testimonials in Advertising (“the Guides”). The proposed revisions require that advertisers who use testimonials be able to substantiate the claims made by consumers, experts, or celebrity endorsers in the ads. For example, when extreme results are promoted in advertisements (such as for weight-loss or baldness cures), advertisers would be required to clearly disclose the average results actual users of the product received.
Consumer advocates believe that the current disclaimers on such advertisements, such as “Results May Vary” or “Results Not Typical,” are insufficient. Another revision to the Guides would require that experts who testify on the effectiveness of a particular product must actually be qualified to make a claim. For example, an “expert doctor” whose PhD is in philosophy would not be qualified, under the proposed rules, to make a claim about the effectiveness of a diet pill. Lastly, the Commission has proposed significant revisions to section 255.1 (“General Consideration”) and 255.5 (“Disclosure of Material Connection”) of the Guides to address the growing problem of bloggers and other users of social media platforms failing to disclose compensatory relationships with advertisers in product and service reviews and endorsements.
Recently, appearing before a subcommittee of the U.S. Senate Commerce Committee, NCL Executive Director Sally Greenberg testified on this issue. In her testimony, she expressed NCL’s strong support of the proposed revisions to the Guides, indicating that such revisions were necessary and long overdue. (The Guides were last revised in 1980—when the primary means of disseminating advertisements were via traditional print, radio, and television outlets.)
Greenberg’s testimony addressed how enhanced blogger disclosure would bolster consumer confidence. NCL maintains that consumers should be informed when bloggers post information about a sponsor’s product or write opinions that aren’t necessarily their own. Without reasonable guidelines for disclosure, there is the threat that consumer distrust of the value of product reviews in the blogosphere and other social media platforms will grow substantially.
Greenberg also expressed NCL’s dismay at the undisclosed use of Video News Releases (VNRs) by media organizations and urged the FTC to investigate whether VNRs violate deceptive advertising regulations. “We believe that consumer trust in media has been compromised by the use of VNRs that purport to be news but are really paid advertising,” she noted in her testimony.
For more information on Greenberg’s Senate testimony, click here. To view a Webcast of the hearings, click here.