U.S. Regulations on Testimonials and Reviews - dummies

By Andrea Vahl, John Haydon, Jan Zimmerman

Businesses often use their Facebook Pages to sell their own products or possibly to market other people’s products and get a commission on the sale of those products. Using testimonials and reviews can help sales because people like to see social proof of a product: That is, if one person likes it or gets good results, maybe you will, too.

Testimonials and reviews are good marketing tools. But you do need to be aware of some of the Federal Trade Commission (FTC) regulations concerning reviews and testimonials if you intend to use them in your marketing efforts. The FTC’s job is to protect consumers from fraudulent business practices and general marketing sliminess.

In October 2009, the FTC released updated guidelines for how advertisers are allowed to show testimonials and reviews.

This document gives examples that can help you decide how to phrase any testimonials or advertisements you may put on your website or on social media.

One of the big unknowns in all these regulations is how they’ll be enforced. The FTC can’t monitor every Facebook Page, website, and e-mail sent out, of course. But as with every rule, law, or terms set forth by a governing body, it’s best to try to comply from the beginning.

All it takes is one disgruntled customer to bring infractions to light. You don’t want to end up with some hefty fines from the FTC.

The first change that may affect you is the disclosure of material connections between you and a company whose product you’re promoting. If you’re familiar with affiliate marketing, this change can affect what you might post on your Page.

In affiliate marketing, a business compensates someone for sales brought in by that person’s marketing efforts. The person promoting the company’s products is typically compensated with a percentage of each sale, like a commission. Many companies, including Amazon, have affiliate programs to encourage sales through this independent sales force.

But the FTC guidelines, noted here, state that you need to disclose a material connection between you and a business that may compensate you for promoting its product:

255.1 Consumer endorsements

(d) Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers. Endorsers also may be liable for statements made in the course of their endorsements.

Many people comply with this regulation by stating that the link is an “affiliate link” when they promote a product or program. This practice is compliant with the FTC guideline.

Here’s another way to be compliant: Post an explanation of the product being promoted, as well as a link to a site where someone could buy the product, and make a statement such as, “This is an affiliate link, but I don’t promote anything I don’t believe in wholeheartedly.” (Grandma Mary states her case in her own unique way.)

If you're getting paid to endorse a product on Facebook, you have to disclose that.

Your audience will understand that sometimes you bring them products that fit their needs, much as you do your own products. As long as you aren’t continually selling to them, they don’t mind. Some people disclose that a link they’re posting isn’t an affiliate link, so that it’s clear that they aren’t making any money by promoting this product.

Many people “endorse” a product with which they’re affiliated. Be careful what you say about a product as you post about it.

255.2 Consumer endorsements

(b) An advertisement containing an endorsement relating the experience of one or more consumers on a central or key attribute of the product or service will likely be interpreted as representing the endorser’s experience is representative of what consumers will generally achieve with the advertised product or service in actual, albeit variable, conditions of use. Therefore, an advertiser should possess and rely upon adequate substantiation for this representation. If the advertiser does not have substantiation that the endorser’s experience is representative of what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.

This means that you need to be careful about making claims relating to your product. If you have a weight-loss or health product, you can no longer say something like this: “Tim lost 100 pounds in his first 2 weeks with our product. Results not typical.” Even if this claim were true, the FTC would like a clearer representation of expectations for your product.

The reasoning is that consumers tend to ignore the “Results not typical” warning, and the FTC’s job is to protect consumers. A good addition to the preceding statement would be something like this: “Typically, our clients lose an average of x pounds over x time.”