Need to Know Info On the New FTC Rule on Endorsements & Testimonials

Written by National Auto Dealers Association (NADA) | Oct 3, 2024

The FTC has issued a final rule on the Use of Consumer Reviews and Testimonials set to take effect on October 21. The Rule sets strict standards regarding prohibiting fake reviews, clearly disclosing reviews posted by employees (and their families), incentivizing reviews to express a certain view, and suppressing consumer reviews.

For many years, dealerships have relied on the FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides) that were updated as recently as 2023. While the Endorsements Guides are still active and address conduct in all advertising, this Rule more specifically addresses practices regarding reviews and testimonials. Proceeding with a Rule makes it easier for the FTC to claim violations and collect fines. Dealers should closely adhere to the Rule and the Guides.

NADA has developed a Frequently Asked Questions guidance for dealerships to comply with the rule. In addition to reviewing the FAQ and the Rule dealerships should review:

With employees:

Policies and practices you have for engaging employees and their families on whether and how they post reviews or recommendations.
If employees and their families are posting reviews, how you are asking them to disclose that connection?

At the dealership:

Moderation practices—specifically the criteria for posting reviews.
Incentivizing reviews to ensure you are not soliciting or expressly asking to post reviews that express a certain point of view.
Ensure all reviews are treated equally without regard to content.

The FTC discussed the Rule at an open meeting on September 19 and said more guidance would be forthcoming at www.ftc.gov/reviews to assist businesses with compliance. At the time of this writing, no further guidance has been issued. Dealers should educate employees and vendors on the new rule to ensure compliance.

Additional Information:

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