Newsletter
DRAFT GUIDELINES ON TES-TIMONIAL ADVERTISING
The Fair Trade Commission recently approved a draft of its proposed Guidelines on the Regula-tion of Testimonial Advertising. The Guidelines are intended to maintain the orderly conduct of trade, safeguard consumers’ interests, and re-solve the various types of dispute currently oc-curring over testimonial advertising.
The draft defines a testimonial advertisement as any advertisement in which a person other than the advertiser reflects, through language or other means, his or her opinion of, trust in, insights into, or personal experience of the advertised goods or services. An endorser is defined as a person who expresses such opinions of, trust in, insights into, or personal experience of a product or service in an advertisement (for example, an endorser might be a public personality such as a performing artist, an expert or professional, or an ordinary consumer).
Persons subject to regulation include: businesses that produce advertisements to promote the sale of their products or services advertisers, endors-ers, advertising agencies that produce or design such advertisements, and advertising media such as TV stations or newspapers that broadcast or publish such advertisements.
A testimonial advertisement must be based on the genuine opinion or personal experience of the endorser. If the endorsement is made by a public personality or by a professional or expert, the advertiser must ascertain that throughout the pe-riod over which the advertisement is broadcast, the endorser has not changed his or her opinion of the product or service concerned. If an ad-vertisement implies that an endorser is an expert with regard to the goods or service concerned, the endorser must indeed possess relevant spe-cialist knowledge or skills. If a consumer makes an endorsement based on his or her own personal experience, the consumer must be a genuine user of the recommended product or service at the time when the endorsement is made and throughout the period during which the adver-tisement is broadcast; or if this is not the case, it must be clearly stated in the advertisement.
The advertisement should also state the condi-tions under which the effects claimed in the ad-vertisement can be achieved. If there is an im-portant relationship between the endorser and the advertiser that may affect the credibility of the endorsement, such as a commission or invest-ment relationship, this should also be stated in the advertisement.
On determining that an advertiser has made false or misleading representations, the FTC may re-quire the advertiser to cease broadcasting the advertisement, or to make necessary corrections, and may impose an administrative fine of NT$50,000 to NT$25 million. If it can be de-termined from the specific circumstances of the production, design, broadcasting, or publication of a testimonial advertisement that the advertis-ing agency that produces or designs the adver-tisement, or the advertising medium that broad-casts or publishes the advertisement, is also of the nature of an advertiser, then the advertising agency or medium will bear the same liability as the advertiser.
The most noteworthy provision in the draft is that an endorser may bear the same liability as an advertiser. An endorser whose main business activity is product endorsement, and who fre-quently makes endorsements, or is himself a supplier of the endorsed product or service, and who makes a false or misleading endorsement in an advertisement despite having had the oppor-tunity to ascertain the facts, bears the same li-ability as the advertiser.
Though currently only a draft, the Guidelines are expected to be finalized in the near future after the FTC holds public hearings.