Advertising & Marketing Law
FTC Rejects Heightened Disclosure Requirements
for Product Placements
By Robert
J. Driscoll
[February 2005]
On February 10, 2005, the Federal Trade Commission
(FTC) rejected a call for heightened disclosure requirements in
connection with product placements in television programming.
The FTC’s action was in response to a petition
filed in September 2003 by Commercial Alert, an advocacy organization,
asking the FTC to require that product placements on television
be disclosed “in a conspicuous and unmistakable manner.”
Specifically, Commercial Alert argued that the FTC should require
a prominent superscript disclosure both at the outset of the programming
(such as “This program contains paid advertising for…”)
and at the time the placement occurs. (Although Federal Communications
Commission regulations require disclosure when broadcasters, or
cable operators engaged in originating cablecasting, transmit programming
for which valuable consideration has been received or promised,
such disclosures typically appear in the credits at the conclusion
of the programming.) Without such prominent disclosure, Commercial
Alert contended, product placements constitute “stealth”
advertisements that are inherently misleading.
The FTC’s response was based on the premise
that “[t]he principal reason for [requiring disclosures] identifying
an advertisement as such is that consumers may give more credence
to objective representations about a product’s performance
or other attributes if made by an independent third party than if
made by the advertiser itself.” Because the appearance of
a product in television programming generally does not involve the
communication to viewers of any particular objective claim about
the product, the FTC argued, the rationale for disclosure in most
cases is absent. The FTC noted that in the event a particular placement
were to convey false or misleading claims about a product, it could
then take action pursuant to its enforcement powers under Section
5 of the FTC Act, which generally prohibits unfair and deceptive
trade practices. In this regard, Commercial Alert and the FTC were
like ships passing in the night: Underlying Commercial Alert’s
petition was a fundamental objection to the steady blurring of boundaries
between marketing and entertainment, whereas the FTC took a relatively
narrow view of the issue, focusing only on whether product placements
cause the type of deception traditionally remedied under Section
5 of the FTC Act. In its focus on Section 5, the FTC also did not
address arguments made by advertising industry members that the
burdens imposed by Commercial Alert’s proposed disclosure
requirements would amount to a ban on certain forms of commercial
speech, in violation of the First Amendment.
The FTC also responded to Commercial Alert’s
concern that product placements present a particular threat to children,
whom the petitioner described as “suffering from an epidemic
of marketing-related diseases.” While acknowledging the particular
vulnerabilities of children, the FTC reiterated its view that because
product placements, whether in adult-directed programming or child-directed
programming, tend not to result in objective claims about the product,
evaluating advertising methods on a case-by-case basis is sufficient
to protect young viewers from deception.
In its response, the FTC left open the possibility
of further action with respect to the use of paid celebrity endorsers
in television programming. This issue is already addressed with
respect to traditional advertising in the FTC’s Guides Concerning
Use of Endorsements and Testimonials in Advertisements, 16 C.F.R.
Part 255, which require disclosure in situations where there is
a connection between the endorser and seller that “might materially
affect the weight or credibility of the endorsement (i.e. the connection
is not reasonably expected by the audience).” In its response
to Commercial Alert’s petition, the FTC said in its upcoming
review of the Guides it would consider whether advertisers should
disclose if a celebrity has been paid to endorse a product in news
or entertainment programming. This is an area of great interest
in light of recent controversies concerning the appearance of paid
spokespersons in news programming, including two cases in which
it was reported that purportedly independent journalists were paid
to promote Bush administration policies.
Commercial Alert filed a similar petition with the
FCC on September 30, 2003, seeking an FCC rule-making to require
prominent disclosure of product placements, arguing that the FCC’s
current sponsorship identification regulations are not adequate
in light of the recent explosion of product placements. The FCC
has not yet responded to the petition.
Commercial Alert’s FTC petition may be viewed
at www.commercialalert.org/ftc.pdf.
The FTC’s response may be viewed at www.ftc.gov/os/closings/staff/050210productplacemen.pdf.
For more information, please contact:
This Advisory is a publication of
the Advertising & Marketing Law Department of Davis Wright Tremaine
LLP. Our purpose in publishing this Advisory is to inform our clients
and friends of recent developments in advertising & marketing
law. It is not intended, nor should it be used, as a substitute
for specific legal advice as legal counsel may only be given in
response to inquiries regarding particular situations.
Copyright © 2005, Davis Wright Tremaine
LLP.
return to Advisory Bulletins
main page
|
