FTC Endorsement and Testimonial Rules: What Every Business Must Know

The Federal Trade Commission’s Guides Concerning the Use of Endorsements and Testimonials in Advertising — commonly called the Endorsement Guides — have existed in some form since 1980. But the rise of social media, influencer marketing, and affiliate marketing programs has made them far more relevant to everyday business owners than they were in the pre-internet era. The FTC substantially updated the Endorsement Guides in 2023, and the updated rules apply not just to celebrities and mega-influencers but to any business that uses paid reviews, influencer marketing, affiliate programs, or employee social media promotion.

The Core Principle: Material Connections Must Be Disclosed

The fundamental requirement of the FTC’s Endorsement Guides is that material connections between endorsers and the companies whose products they promote must be clearly and conspicuously disclosed. A material connection is any relationship that would not be reasonably expected by consumers and that might affect how much weight they give to an endorsement. The most obvious material connections include payment (in cash or in products), employment, and family or business relationships. But the definition is broader: free products, discounts, contest entries, and any other benefit that the endorser receives in exchange for the endorsement is a material connection that must be disclosed.

Who the Rules Apply To

The 2023 update to the Endorsement Guides made clear that the rules apply to three parties: endorsers (the individuals making the endorsement), advertisers (the companies whose products are being promoted), and intermediaries (the agencies and other middlemen who facilitate influencer and endorsement relationships). This is significant for business owners because it means that a company is responsible for ensuring that influencers and affiliates it works with are making proper disclosures — not just for making proper disclosures itself.

The advertiser’s responsibility includes having explicit agreements with influencers and affiliates requiring disclosure, monitoring social media posts and promotional content for compliance, and taking corrective action when non-compliant content is identified. A business cannot insulate itself from FTC enforcement by contracting with an agency to manage its influencer program — if the program produces deceptive endorsements, the advertiser faces potential liability.

What Clear and Conspicuous Means

The FTC requires that disclosures be ‘clear and conspicuous,’ meaning they must be difficult to miss and easy to understand. The agency has been increasingly specific about what this means in different media contexts. On social media, a disclosure buried in a string of hashtags, placed after a ‘click more’ truncation, or expressed in vague language (‘sp,’ ‘collab,’ ‘partner’) does not satisfy the requirement. The FTC has stated that terms like ‘#ad’ and ‘#sponsored’ at the beginning of a post, before any ‘read more’ cutoff, are appropriate disclosures when placed where they will be seen.

For video content, the disclosure should be both verbal (stated clearly in the video) and visual (displayed on screen), and should appear at the beginning of the content rather than only at the end. For Instagram and TikTok, platform-specific disclosure tools (the ‘Paid Partnership’ label on Instagram, for example) can be used but may not be sufficient on their own if the disclosure is not prominent enough. The FTC’s position is that platform tools are helpful but that the advertiser and endorser remain responsible for ensuring the disclosure is actually clear and conspicuous.

Testimonials and Consumer Reviews

The 2023 Endorsement Guides also significantly tightened rules around consumer reviews and testimonials. Key new provisions include a prohibition on using fake or fabricated reviews (including reviews generated by AI), a prohibition on using insider reviews (reviews by company employees or officers) without clear disclosure of that relationship, a rule against buying positive reviews or providing incentives in exchange for reviews without disclosure, a prohibition on disseminating reviews with knowledge they are fake or suppressing negative reviews in ways that create a misleadingly positive overall impression, and new rules around the use of social media tags and endorsements in advertising.

The restriction on suppressing negative reviews is noteworthy. A business cannot selectively send review solicitations only to customers it believes are satisfied, use contract terms that prohibit customers from leaving negative reviews (a practice also prohibited by the Consumer Review Fairness Act), or remove negative reviews without a legitimate reason. The overall impression created by the published review corpus must not be misleading.

Typical or Atypical Results

A longstanding element of the Endorsement Guides is the requirement to disclose when a testimonial describes results that are not typical of what consumers generally experience. If an advertisement features a consumer who lost 50 pounds using a product but the typical consumer loses 3 pounds, the advertisement must disclose that the testimonial reflects an exceptional result. The FTC’s updated guidance moved away from the old ‘results not typical’ disclaimer formulation toward a requirement that advertisers have substantiation that the results depicted in a testimonial are generally achievable, or clearly disclose that the depicted results are exceptional.

FTC Enforcement

The FTC enforces the Endorsement Guides through investigations, warning letters, and in some cases civil penalties. The commission has sent warning letters to dozens of companies and influencers regarding disclosure failures, and has brought enforcement actions resulting in consent orders and penalties. Following the 2022 Supreme Court decision in AMG Capital Management v. FTC, which limited the FTC’s ability to seek monetary relief in district court, the agency pursued rulemaking — and the updated Endorsement Guides, as a formal rule, now provide a stronger basis for penalty authority.

Building a Compliant Program

Business owners who use influencer marketing, affiliate programs, or sponsored content should establish written agreements with all endorsers and affiliates that require clear and conspicuous disclosure, monitor published content regularly for compliance, train employees and agencies on disclosure requirements, conduct periodic audits of their review solicitation and management practices, and maintain records of the disclosures made and the monitoring activities conducted. The investment in a compliant program is modest relative to the reputational and legal cost of an FTC investigation.

The Bottom Line

The FTC’s endorsement and testimonial rules apply to any business that uses paid or incentivized marketing — not just large companies with celebrity endorsers. If your business sends products to bloggers, pays for sponsored posts, runs an affiliate marketing program, or encourages employees to post about the company on social media, you have obligations under these rules. Building disclosure requirements into every influencer and affiliate agreement and monitoring for compliance is not optional — it is how you stay on the right side of the FTC.