The Federal Trade Commission announced significant changes in October to guidelines for the practices of product testimonials and endorsers in advertising (read the FTC’s release). Among notable changes included testimonials no longer being protected by the disclaimer “results not typical.” Instead, advertisers must disclose the results consumers should expect from the advertised product. Endorsements by celebrities, bloggers, or word-of-mouth marketers must now be disclosed in terms of stating the nature of a relationship between endorser and brand (e.g., paid endorsement or endorser received free products to evaluate).
This week, the Direct Marketing Association, an industry group impacted significantly by the FTC changes, released a statement that it had approved changes to its Guidelines for Ethical Business Practices to be consistent with the FTC. While the direct marketing industry should be commended for aligning its ethics policies with federal guidelines, it is disappointing that it took the FTC’s action to bring about change. This situation is a great example of how inattention to self-regulation by an industry can lead to government regulation forcing change. If the DMA had taken the lead on these issues long ago, particularly the testimonial issue that has long been contentious, it could have had a stronger voice in setting policy.
It is almost always better for an industry to be responsible for policing itself instead of allowing regulatory agencies to dictate guidelines (at least from the industry’s perspective). In this case, the direct marketing industry either refused to believe the FTC would make changes (the existing guidelines were developed in 1980), or it failed to anticipate a new administration’s stance on consumer protection could accelerate government involvement in changing the guidelines. Perhaps other industries will learn from the DMA’s experience and be more proactive in self-regulation.
