testimonial advertising

Here are some of the regulatory developments of significance to broadcasters from this week, with links to where you can go to find more information as to how these actions may affect your operations.

President Biden’s signing of the Continuing Resolution last week (see our discussion here) has kept the federal government open, with the FCC and FTC having money to stay open through March 8.  So the FCC will be open and thus there are February regulatory dates to which broadcasters should be paying attention. 

February 1 is the deadline for radio and television station employment units in Arkansas, Kansas, Louisiana, Mississippi, Nebraska, New Jersey, New York, and Oklahoma with five or more full-time employees to upload their Annual EEO Public File Report to their stations’ online public inspection files (OPIFs).  A station employment unit is a station or cluster of commonly controlled stations serving the same general geographic area having at least one common employee.  For employment units with five or more full-time employees, the annual report covers hiring and employment outreach activities for the prior year.  A link to the uploaded report must also be included on the home page of each station’s website, if the station has a website.  Be timely getting these reports into your public file, as even a single late report can lead to FCC fines (see our article here about a recent $26,000 fine for a single late EEO report).Continue Reading February Regulatory Dates for Broadcasters – Annual EEO Public File Reports, C-Band Transition Reimbursement, Political Windows, and More

Earlier this week, we covered the broadcast issues that the FCC may be facing in 2024.  But the FCC is just one of the many branches of government that regulates the activities of broadcasters.  There are numerous federal agencies, the Courts, Congress, and even state legislatures that all are active in adopting rules, making policies, or issuing decisions that can affect the business of broadcasting and the broader media industry.  What are some of the issues we can expect to see addressed in 2024 by these authorities?

For radio, there are music rights issues galore that will be considered.  Early in the year, the Copyright Royalty Board will be initiating the proceeding to set streaming royalties for webcasters (including broadcasters who stream their programming on the Internet) for 2026-2030.  These proceedings, which occur every five years, are lengthy and include extensive discovery and a trial-like hearing to determine what royalty a “willing buyer and a willing seller” would arrive at for the noninteractive use of sound recordings transmitted through internet-based platforms.  Because of the complexity of the process, the CRB starts the proceeding early in the year before the year in which the current royalty rate expires.  So, as the current rates expire at the end of 2025, parties will need to sign up to participate in the proceeding to determine 2026-2030 rates early this year, even though the proceeding is unlikely to be resolved until late 2025 (unless there is an earlier settlement)(the CRB Notice asking for petitions to participate in the proceeding is expected to be published in the Federal Register tomorrow).  Initial stages of the litigation (including the identification of witnesses, the rate proposals, the evidence supporting those proposals, and the initial discovery) will likely take place this year. Continue Reading Gazing into the Crystal Ball at Legal and Policy Issues for Broadcasters in 2024 – Part II: What to Expect from the Courts and Agencies Other than the FCC

All media companies, including broadcasters, webcasters, podcasters and others, need to consider carefully their advertising production after the big penalties imposed on Google and iHeart for broadcast commercials where local DJs promoted the Pixel 4 phone.  Promotions included statements that clearly implied that the announcers had used the phone, including statements that it was “my favorite camera” and “I’ve been taking studio-like photos” with the phone.  But, according to the announcements of the settlement with the Federal Trade Commission and seven state attorneys general (see the FTC press release and blog article), the announcers had not in fact used the phone.  Google will pay the states penalties  of $9 million, and iHeart will pay about $400,000 (see example of the state Court filings on the settlement, this one for Massachusetts, for Google and iHeart).  Each will enter into consent orders with the FTC (Google order here and iHeart here) requiring 10-year recordkeeping and compliance plans to train employees, maintain records of advertising with endorsements, and reports to be filed periodically with the FTC.

The mission of the FTC is to protect the public from deceptive or unfair business practices and from unfair methods of competition.  In that role, the FTC regulates deceptive advertising practices.  Over a decade ago, we highlighted the FTC’s update of its policies on “testimonial and endorsement advertising” that made clear that the FTC required that any sort of “celebrity” (interpreted broadly) endorser had to have a basis for the claims that they were making in their pitches for a product.  This notice also made clear that any statements made about the experience in using a product had to be accurate and, when making claims about the performance of a product, the endorser had to accurately state performance that users can expect to obtain when they use the product.  Just using a “your results may vary” disclaimer was not enough.  In the 2009 proceeding, the FTC emphasized the applicability of these standards to online promotions, requiring disclosures for not only traditional advertising but also for social media influencers and others who are paid to promote products through online channels.  Such payments (or any other valuable consideration the influencer receives) must be disclosed when pitching a product.
Continue Reading Big FTC Penalties on Google and iHeart for Deceptive Endorsements in Broadcast Commercials Mandate Care in Crafting Your Local Advertising

On December 1, 2009,  FTC revised Guidelines went into effect updating policies dealing with advertising using testimonials and endorsements, specifically affecting celebrity endorsements and sponsorship disclosure.  These revised guidelines directly impact the established practices of broadcasters and new media companies.  These revised endorsement and testimonial guidelines effectively ban the old standard “results not typical” disclaimer so commonly in use in connection with a great deal of testimonial advertising, confirm independent liability for the “endorser” (including celebrities) for false product or service claims, and expand and clarify the need for disclosure of “material connections”, that is consideration (money and other “freebies”) received by new media companies in connection with reviews or other online coverage of products or services.  It is vital that media companies, in particular new media, understand the key provisions of these guidelines to make sure that they don’t become a target of any FTC enforcement action.  The FTC has indicated that for now at least, its focus will be on enforcement in the new media world (bloggers, social media, viral campaigns) and other “non-traditional” advertising (celebrity guests on news and entertainment shows, endorsements by media personnel such as on-air DJ’s).

Like all FTC Guidance concerning advertising, the revised guidelines are specific regulations, but instead they set out standards (in essence a safe harbor) that outline how the FTC will review advertising to determine if it is “false and deceptive” or otherwise misleading to the consumer in violation of Section 5 of the FTC Act.  The revised guidelines provide specific examples as to how they will apply to insure sufficient disclosure so that the listener has all the background necessary to be able to evaluate the strength of the endorsement for him or herself.  For broadcast advertising, the new guidelines make clear that endorsers can themselves be liable for misleading statements made during a product pitch.  So a radio announcer paid to try a diet plan or some other product and to report about its results on the air needs to be sure not only that his statements are truthful, but that the “results” claimed are in line with what the advertiser can actually prove for the product through clinical study and research.  The radio pitchman cannot turn a blind eye to claims that are inherently incredible.  In the past, a simple disclosure that "your results may vary" or "these results are not necessarily typical" was sufficient.  Today, that disclaimer is no longer enough.  Instead, the new guidelines state that any testimonial about the results of using a product be accompanied with a disclosure of the results that a typical user can expect to get from the product.  So the announcer must be informed as to what results can be expected by the typical user, and that these results are objectively verifiable, so that the proper disclosure can be made.  As the announcer (or the station) can now be liable for statements made in such testimonials, stations should take care to be prepared to make the required disclosures. Continue Reading New FTC Guidelines on Endorsements and Sponsorship Disclosure – Broadcasters and New Media Companies Beware