Advertisers Lobby FTC for Right to Not Tell the Truth

Last Updated Mar 9, 2009 12:52 AM EDT

Advertising industry lobbyists have asked the FTC to stop proposed reforms for expanding its jurisdiction over infomercials, celebrity endorsements, bloggers and consumer testimonials. The advertisers' comments ask the FTC not to require that they disclose when they are making claims that don't tell the whole truth.

A BNET exclusive on Nov. 22, 2008, reported that the FTC was seeking to change advertising regulations that would make it easier to go after advertisers who mislead the public. The item also pointed out that the proposed rules would allow the FTC to expand its enforcement jurisdiction to celebrities and bloggers. (The ad trade media has yet to pay attention to the review, which is rolling on regardless.)

In comments to the FTC, advertisers have asked that they not be required to disclose "generally expected results" for a product such as a diet regimen or exercize machine; that they should not have to disclose when they have given free products or gifts to reviewers who write blogs or newspaper reviews; and that as long as consumers don't believe the ads they're seeing, advertisers should be allowed to promote atypical or exaggerated claims.

The review was spurred in part by TV ads such as those by NutriSystem which feature fat, old football players claiming they lost 50 pounds on the diet. The FTC has suggested that those claims be accompanied by a disclaimer that would say what the average result would be. Comments were submitted by the American Association of Advertising Agencies, the American Advertising Federation, the Council for Responsible Nutrition, the Direct Marketing Association, the Direct Selling Association, the Electronic Retailing Association, the Interactive Advertising Bureau, the Promotion Marketing Association and the U.S. Chamber of Commerce. (Click here to download a copy.) Among the comments:

... determining the "generally expected results" of an aerobic exercise device or regimen can be very difficult for advertisers because the extent of those benefits will vary widely depending on individual factors beyond the advertiser's control.
The Electronic Retailing Association and Council for Responsible Nutrition, (whose members are responsible for some of the more outlandish claims for diet supplements and exercize regimens, per the industry's own self-regulatory body) went further. They asserted that it was impossible to measure the typical results of a product (Click here to download a copy):
A good example is a treadmill, a product utilized by many consumers for weight loss purposes. The substantiation for claims that a treadmill will allow a user to boost caloric expenditure is relatively well understood. How much the caloric expenditure will be boosted in the case of any consumer depends on such facts as the weight and sex of the consumer, as well as such variables as the frequency, length of time, and intensity with which the consumer uses the treadmill.
Of particular concern is the "integrity" of TV home shopping channels:
... the proposed disclosure requirement is likely to effectively eliminate the ability of a live TV shopping channel from taking testimonial calls for a substantial number of products because of the unworkability of the proposed requirement.
They end up arguing, essentially, that advertisers should be allowed to lie as long as consumers don't believe their lies:
... many of the people who said that the ads suggested a particular result did not believe that the suggested result would actually be achieved... An advertising claim that you don't believe can't hurt you.
UPDATE: The ERA doesn't see it this way. See the comments section below. Separately, the advertisers also argue that they should be allowed to continue showering journalists and bloggers with free products in return for their "objective" reviews. Free products have long been a problem among reviewers. (Try finding a negative travel review of the Bahamas in a major newspaper, for instance; there aren't any, because resorts pick up the cost.) The FTC wants to enforce disclosure among bloggers -- a new move that threatens to change what bloggers have until now regarded as free speech:
... it is a longstanding and common practice among marketers to provide free products or services â€" including items of high value â€" to experts or professional critics who, in turn, give reviews of the products and services. If the blogger who has become a video game expert must disclose that he received the video game system for free, then is every critic required to disclose that a reviewed item was provided for free? Reviewers in traditional media do not have to disclose this information ...
The advertisers' best argument comes at the end of their position paper, where they suggest that marketers cannot be expected to police the endorsements of their own employees. In companies that have tens of thousands of workers, some of whom are fiercely loyal (think Google), how can a company "disclose" that one of their own has made an anonymous comment on a blog?
It is virtually impossible for marketers to make certain that employees and other individuals compensated by the marketer disclose their connections to the marketer when making favorable statements about the marketer's products through blogs and other new media. Marketers cannot completely control what employees say on online discussion boards, or what street team members say to their friends.
(Here's a good example: Sources tell BNET that the commenter "Duhki" is, in fact, associated with Valassis, a direct mail company which s/he is defending.)

Read more comments to the FTC here.