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Major Advertising Associations Enlist Davis & Gilbert LLP to Draft Comments for FTC Endorsement Guides Review

New York, March 10, 2009 – Davis & Gilbert Partner Ronald Urbach, and Associates Allison Fitzpatrick and Alison Winter, submitted comments to the Federal Trade Commission (FTC) on behalf of the American Association of Advertising Agencies (AAAA) and the American Advertising Federation (AAF), in response to the FTC’s proposed revisions to its Guides Concerning the Use of Endorsements and Testimonials in Advertising (the Guides).

The FTC’s proposed revisions to the Guides would affect consumer endorsements, expert endorsements, endorsement by organizations, and disclosure of material connections between advertisers and endorsers. The comments are a follow-up to a joint AAAA/AAF filing by Davis & Gilbert in June 2007 when the FTC sought public comment on the overall costs, benefits, regulatory and economic impact of the Guides. As in 2007, the AAAA and the AAF stand firm in their belief that the existing Guides are effective in ensuring the truth and accuracy of endorsements and testimonials and do not require additional changes.

The amendments proposed by the FTC, if adopted, would represent the most sweeping changes in almost thirty years to endorsement and testimonial advertising and would change the way many companies market their products to consumers. Under the revised Guides, advertisers would no longer be able to rely upon general typicality disclaimers (i.e., “results not typical” or “results may vary”) in consumer testimonials depicting atypical results. Instead, if an advertiser does not have substantiation that the endorser’s experience is representative of what consumers can generally expect to achieve with the advertised product or service, the advertisement must disclose the generally expected results of the advertised product or service in the depicted circumstances (e.g., “generally expected results: 6 lbs”).

As the AAAA and the AAF contend, “In most cases, providing the generally expected results would impose unreasonable economic burdens on advertisers because such determinations would likely require comprehensive studies (e.g., calculating average performance across a diverse customer base), which, for most advertisers, would be a costly endeavor. In light of the current economic climate, many companies do not have the resources to conduct these comprehensive studies.”

Additionally, the FTC’s proposed changes to the Guides would require a celebrity touting a product or service in non-traditional media, such as a talk show, radio program or interview, to disclose that he/she is a paid endorser if the celebrity’s relationship with the advertiser is not readily apparent to the audience. The disclosure would be required even though the same celebrity making that same endorsement in a traditional commercial would not be required to disclose his/her relationship with the advertiser. The FTC’s proposed changes would also require a blogger who receives a free game system from an advertiser and then posts a favorable review of it on his blog to disclose that he/she received the game for free from the advertiser. According to the AAAA and AAF, both proposals raise significant issues of liability with respect to which party is ultimately responsible for the disclosure of the relationship. For this reason, without further guidance from the FTC, these revisions could have a chilling effect on advertising in non-traditional new media.

The AAAA and the AAF’s comments tout the strength of the existing regulatory and self-regulatory framework in enforcing and promoting the principles of the Guides.

“The current Guides are well-accepted by the advertising industry, consumers, self-regulating organizations, and regulators and have been quite effective in facilitating truthful and non-deceptive endorsements and testimonials.” For such reasons, the AAAA and AAF believe that the sweeping changes to the Guides proposed by the FTC would unfairly burden advertisers and have a chilling effect on advertisers’ use of legitimate, widely-accepted forms of commercial speech.

The FTC will evaluate the comments to determine whether changes to the Guides are warranted. A link to the AAAA and AAF filing can be found here:
http://www.ftc.gov/os/comments/endorsementguides2/539124-00008.pdf

For additional commentary on the proposed changes to the Guides, please contact Ronald Urbach at 212.468.4824, rurbach@dglaw.com.

About the American Association of Advertising Agencies (AAAA)
The American Association of Advertising Agencies (AAAA), founded in 1917, is the national trade association representing all components of the American advertising agency business. Its nearly 500 members, comprised of large multi-national agencies and hundreds of small and mid-sized agencies, maintain 2,000 offices throughout the country. Together, AAAA member advertising agencies account for nearly 80 percent of all national, regional and local advertising placed by agencies in newspapers, magazines, radio, television and the Internet in the United States. AAAA is dedicated to the preservation of a robust free market in the communication of commercial and noncommercial ideas.

About the American Advertising Federation (AAF)
The American Advertising Federation ("AAF"), the oldest national advertising trade association, representing 50,000 professionals, similarly offers a valuable and historical perspective with respect to consumer endorsements and testimonials in advertising. The AAF has a national network of 200 ad clubs located in ad communities across the country. The AAF's mission is to protect and promote the well-being of advertising through a unique, nationally coordinated grassroots network of advertisers, agencies, media companies, local advertising clubs and college chapters.

About Davis & Gilbert LLP
Davis & Gilbert LLP is an independent, strategically focused, full service, multi-disciplinary law firm of more than 110 lawyers. Founded over a century ago and located in a single office in New York City, the firm represents a wide range of clients - including some of the world's largest public companies, small and mid-size independent companies, partnerships, joint ventures, large media conglomerates and multinational holding companies - throughout the United States and internationally. Davis & Gilbert is widely regarded as the #1 law firm for the marketing communications industry and has practices focusing on real estate, litigation, intellectual property, labor & employment, corporate and middle market M&A, and private client services.

For more information, please contact:
Dawn M. Gertz
Chief Marketing Officer
dgertz@dglaw.com
212.468.4981