Understanding the FTC’s Guidance on Using Endorsements and Testimonials
In the ever-evolving landscape of real estate marketing, transparency and authenticity are paramount. The Federal Trade Commission (FTC) plays a crucial role in ensuring fair business practices and consumer protection.
For the real estate industry, the FTC's Endorsement Guidelines hold significant importance, particularly in navigating the use of endorsements, testimonials, and reviews.
Earlier this year, the FTC updated its guidance in several ways, including on endorsements and testimonials to include digital marketing, such as social media and online reviews. As with all guidance documents, they are not themselves law but describe the principles the FTC will use to evaluate whether endorsements and testimonials are false and misleading under Section 5 of the FTC Act.
What is an endorsement?
The Guides broadly define an "endorsement" as "any advertising, marketing, or promotional message for a product that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.”
Best Practices
Consider these best practices when using endorsements and testimonials:
Disclosure of Connections: Promotions/endorsements of properties/services by someone having a material connection (receiving compensation, free services, etc.) must clearly disclose the relationship.
Truthfulness and Accuracy: Endorsements must reflect honest opinions, findings, beliefs, or experiences of the endorser. Ads may paraphrase, rather than directly quote an endorser; however, the endorsement cannot be out of context or reworded in a way that distorts the endorser's opinion or experience.
Responsibility of Real Estate Professionals: Real estate professionals are accountable for ensuring that any endorsements or testimonials comply with FTC guidelines and should regularly review marketing materials to ensure compliance.
Social Media: The guidelines extend to social media platforms. Endorsements on social media must also contain clear disclosures, even within character-limited spaces.
Consequences of Non-Compliance
Failure to comply with the FTC’s Endorsement Guidelines can result in severe consequences, including fines up to $50,150 per violation, damage to reputation, and loss of consumer trust. The FTC monitors and investigates potential violations, taking action against those found in breach of these regulations.
Sources: NAR | FTC's Endorsement Guides
This information is provided for educational purposes only and should not be construed as legal advice or representation and should not be relied upon as such. Broward, Palm Beaches & St. Lucie Realtors® and its affiliated companies cannot provide legal advice or opine about the specifics of your situation.
