Serious reports were made earlier this week
that there might have been a United States Federal Trade
Commission (FTC) action
against
Ashton Kutcher. Now, it is being reported that there
will not be an
FTC investigation of Mr. Kutcher.
But, why is there an FTC issue at all?
Why is Ashton Kutcher -- of all people -- even on the
United States of America FTC radar?
Seems odd, doesn't it?
Here's why:
Let's say you go onto a website to learn
about a product or service, such as you might commonly Bing or
Google these days. On that website, there are reviews of
the product you are considering. You review the website
content. Product A sounds great!
You buy Product A. Product A is terrible. You find out later
that the website was owned and controlled by the manufacturer of
Product A and not disclosed to you. You wasted your money.
You feel tricked. It is that simple.
As a result of the new forms of social media
that are now pervasive, the FTC has
revised its guidelines for endorsements and proper
disclosures.
But, back to Ashton Kutcher.
In short, it was reported that the FTC
investigation might occur for Mr. Kutcher's failure to disclose
investments he made in technology companies. According to
the reporting sources, Mr. Kutcher, a social media entrepreneur
of sorts, served as guest editor for an online publication and
failed to reveal his investments relative to the magazine
content.
The
revised FTC Guidelines reflect three basic truth-in-advertising
principles:
-
Endorsements must be truthful and not
misleading;
-
If the advertiser doesn’t have proof that
the endorser’s experience represents what consumers will
achieve by using the product, the ad must clearly and
conspicuously disclose the generally expected results in the
depicted circumstances; and
-
If there’s a connection between the
endorser and the marketer of the product that would affect
how people evaluate the endorsement, it should be disclosed.
Here is an interesting celebrity example by
the FTC, paraphrased from the
Guidelines:
A well-known pro tennis player appears on
a television talk show. The host comments that the pro is
doing better than ever. She responds by saying the
improvement is resulting from her eye surgery. She touts the
procedure. But, she does not disclose that she has a
contractual relationship with the service provider, who pays her
for speaking publicly about her surgery when she can do so.
Okay, those are the basic facts. Here
is the FTC explanation:
Consumers might not realize that a
celebrity discussing a medical procedure in a television
interview has been paid for doing so, and knowledge of such
payments would likely affect the weight or credibility
consumers give to the celebrity’s endorsement. Without a
clear and conspicuous disclosure that the athlete has been
engaged as a spokesperson for the clinic, this endorsement
is likely to be deceptive.
Furthermore, if consumers are likely
to take away from her story that her experience was typical
of those who undergo the same procedure at the clinic, the
advertiser must have substantiation for that claim.
Assume that instead of speaking about
the clinic in a television interview, the tennis player
touts the results of her surgery – mentioning the clinic by
name – on a social networking site that allows her fans to
read in real time what is happening in her life. Given the
nature of the medium in which her endorsement is
disseminated, consumers might not realize that she is a paid
endorser. Because that information might affect the weight
consumers give to her endorsement, her relationship with the
clinic should be disclosed.
Assume that during that same
television interview, the tennis player is wearing clothes
bearing the insignia of an athletic wear company with whom
she also has an endorsement contract. Although this contract
requires that she wear the company’s clothes not only on the
court but also in public appearances, when possible, she
does not mention them or the company during her appearance
on the show. No disclosure is required because no
representation is being made about the clothes in this
context.
This illustrates why someone like Aston Kutcher, and other music and
sports celebrities, are or might be on the FTC radar. The
new power of a celebrity to affect consumer purchasing decisions
is important. It is important to consumers in making
purchase decisions, and it is important to celebrities and
business in managing legal compliance.
-- Gregg Zegarelli
