Whether electronics, investments, or the latest product promising dramatic weight loss, product promotion often relies on celebrity endorsement, both to grab attention and to foster trust. Social media only complicates the issue, as celebrities such as Miley Cyrus and Ashton Kutcher take to popular media like Twitter and casually mention brand names, further blurring the lines between information and endorsement. Followers have no way to tell whether postings are spontaneous sharing or a paid advertisement, information that would help them make decisions as consumers.
When a celebrity gets involved in endorsing a product, controversy may arise as to the distribution of liability between the celebrity and the product manufacturer (and possibly the advertising agency) when claims are asserted to be false or misleading. The issue brings in an interesting mix of the purposes and responsibilities of advertising law.
Guiding principles for evaluating endorsements describe an endorsement as “any advertising message 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.” The guidance makes important distinctions between unknown people speaking on behalf of a product and someone using his or her celebrity to add weight to the endorsement. Critical to the determination is whether consumers would believe that the celebrity’s statements or actions indicate a personal view of endorsement of the product.
Case law indicates some responsibility on the part of celebrities to know about the product that is the subject of the endorsement and to refrain from endorsement if aware of any lack of integrity, such as when an actor represented in advertising that a mortgage lender was sound when in fact evidence showed that the actor should have known that his representations were false. In re Diamond Mortg. Corp., 118 B.R. 588 (Bankr. N.D. Ill. 1989). But other case law puts the burden on the Federal Trade Commission to prove that advertising statements are false. Even in a situation where courts determined that promotion for bracelets purporting to cure chronic pain was fraudulent, the Federal Trade Commission Act did not require companies to verify their claims in a placebo-controlled, double-blind study. FTC v. QT, Inc., 512 F.3d 858 (7th Cir. Ill. 2008). Further, the Commission must prove reckless indifference to the truth on the part of the celebrity, as in a case in which a celebrity and his wife took a weight loss product and experienced dramatic results and therefore was not proven to be acting deceitfully. FTC v. Garvey, 383 F.3d 891 (9th Cir. Cal. 2004).
Advertising Law is like Trademark Law, which operates on the premise that it would be an extraordinary expenditure of effort for each consumer to have to independently verify all product claims before purchase, so the functioning of a healthy economy requires veracity and some protection of consumers against fraudulent claims. The efficiency of the marketplace depends critically upon the quality of information available to consumers. The introduction of celebrities into advertisements can impact people’s perceptions of the products endorsed. In seeing familiar faces from television, movies, or sports, people may identify with the endorsers as someone that they trust, possibly lending a weight or credibility to a product that it may not deserve. In that sense, an added measure of responsibility on those celebrities may be warranted. Certainly, we would hope that it is a responsibility that the celebrities would take upon themselves before agreeing to product endorsements and putting their names and personas behind the products.
But the level of responsibility that celebrities carry to independently verify the products that are the subjects of the endorsements remains unclear. Is personal use of and success in using the product enough, or should the celebrity be expected to employ a team of experts to independently verify claims and study results in support of the product? Nobody expects celebrities to turn a blind eye to relevant items of concern brought to their attention. But in the absence of obvious warnings, is anyone expecting celebrities to be scientists or researchers fully immersed in the body of knowledge behind the product?
Similarly, investigations are ongoing into appropriate disclosure of financial relationships. As instances get determined on a case-by-case basis, the basic principles of advertising law remain:
- Advertising must be truthful and not misleading.
- Advertisers must have evidence to back up their claims.
- Advertisements cannot be unfair.