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Introduction
On occasion, artists and musicians will be hired by companies as celebrity endorsers of the products or services the company sells. There are strict federal regulations (ex., FTC guidelines) that govern these endorsements, and failure to follow these regulations can potentially subject the violating companies or endorsers to liability.
Title 16 of the United States Code of Federal Regulations (CFR) contains the rules and regulations issued by federal agencies regarding commercial practices. It is important for artists and musicians to be aware of these regulations to not accidentally subject themselves to otherwise avoidable liability. We will talk about some of these issues below. Please also make sure to view the video above to get a general background.
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Celebrity Endorser Guidelines
FTC Part 255 can be found here. Here are some general guidelines
Endorsements Must Be Honest
The first rule for musicians and artists to know before endorsing a product is that the endorsement must be honest. 16 CFR § 255.1(a) states that endorsements “must reflect the honest opinions, findings, beliefs, or experience of the endorser.” Any musician or artist that is endorsing a product should be sure to not make any statements that contradict the artist's honest beliefs. Even if the artist is simply reading from a script, they must be sure that they believe in what they are endorsing.
This subsection also states that the endorser may not make any representation that would be deceptive if made directly by the advertiser. Any advertiser that is providing copy to a celebrity endorser to read during an advertisement should ensure that it does not contain any falsities or misrepresentations. Failure to adhere to these guidelines may result in liability for the advertiser or the artist.
Endorser Must Be a Bona Fide User
A second rule for celebrity endorsements is that the celebrity must actually use the product. According to 16 CFR § 255.1(c), a celebrity endorser must have been a “bona fide user” of the product at the time the endorsement was given. The advertiser may continue to run the celebrity-endorsed advertisement only so long as it has good reason to believe that the endorser continues to have the beliefs presented in the advertisement.
16 CFR § 255.1(b) sets out the proper procedures for advertising companies to satisfy this obligation. It is the advertiser's responsibility to secure the endorsing celebrity's views at reasonable intervals. Reasonableness of these intervals will be determined by factors such as “new information on the performance or effectiveness of the product, a material alteration in the product, changes in the performance of competitors' products, and the advertisers' contract commitments.”
Essentially, § 255.1(b) requires, upon any changes in circumstance that could reasonably lead an endorser to change their opinion on the advertised product itself, or upon any changes that affect its relative strength in comparison to competitive products, that the advertiser confirm with the celebrity endorser that their views have not changed in relation to the endorsement presented.
Endorser Liability
Endorsers may be liable for statements made in the course of their endorsements. 16 CFR § 255.1(d) states that if the celebrity endorser knows or has reason to know that the endorsement is misleading or deceptive, the celebrity endorser can be subject to liability for that false or misleading statement.
For example, if guitar company Fender was promoting one of its newest guitars, and world famous guitarist Eric Clapton stated in an advertisement that it was the best guitar he has ever played and he played it every day, when in fact both of those statements are untrue, he would be subject to liability. Consumers would likely be harmed by reliance on Clapton's hypothetical statement that he knew to be false and misleading.
Expert Endorsements
- 255.3(a) covers expert endorsements. If an advertisement represents that the endorser is an expert, the endorser's qualifications must in fact give the endorser expertise in that area. This section could be relevant for a musician if they are endorsing a product for which their musical expertise could be trusted.
Following the Fender/Clapton example above, Eric Clapton would be a reliable expert for a guitar endorsement under § 255.3(a) as his expertise in the world of guitars is renowned and his expertise can reasonably be relied upon. Alternatively, a paid actor with the on-screen label of “World Famous Guitar Expert,” who in fact has no such expertise, would subject the company running the advertisement, and potentially the endorser, to liability.
Disclosure of Material Connections
In certain situations, there may be a connection between the endorser and the advertiser that would not reasonably be expected by the audience. 16 CFR § 255.5 requires disclosure of material connections. A common example of this is when a celebrity endorser who is relatively unknown to those who do not closely follow the celebrity's industry is paid to endorse a product or service.
An endorsement for a product that is purely opinion-based, like a celebrity's preference for a particular wine, is an endorsement for which viewers can reasonably expect the celebrity is being compensated financially. However, an endorsement of a medical procedure that a celebrity endorser claims has significantly improved their performance in their field is one that likely would require disclosure of any payment in exchange for the endorsement. Without disclosure in this instance, viewers could reasonably not understand that this was a paid endorsement and take the celebrity endorser's word at face value. Additionally, the celebrity endorser should disclose this contractual relationship in any subsequent social media posts or television interviews in which they tout the benefits of the product or service.
Top reasons to have a IP lawyer review your influencer agreements
Here are some great reasons to hire Vondran Legal® to assist you in your digital dominance:
1. Comprehensive Review: A law firm can provide a comprehensive review of a celebrity endorsement contract to ensure that all terms and conditions are in the best interest of the endorser.
2. Professional Negotiation: A law firm can provide professional negotiation services to ensure that the endorser gets the best possible deal from the agreement.
3. Legal Protection: A law firm can provide legal protection to the endorser by ensuring that all terms and conditions of the agreement are legally binding.
4. Expert Advice: A law firm can provide expert advice to the endorser on how to best protect their interests and maximize the value of the endorsement.
5. Professional Representation: A law firm can provide professional representation to the endorser in the event of a dispute.
Attorney Steve® Snubbed Again? Can I at least get an honorable mention? LOL
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Conclusion
Musicians or artists who are offered endorsement deals should be aware of these federal regulations, as failure to follow them can result in liability that could have been avoided. Consultation with an experienced attorney can help musicians, influencers, California college athletes, olympic athletes, actors, singers, YouTubers, and others avoid these common mistakes that lead to unnecessary liability.
If you are a musician, athlete, artist or online celebrity, or social media influencer in need of legal assistance or guidance, call us at (877) 276-5084. We have been helping our clients succeed since 2004!
This blog post was written in part by Arizona State University law student Justin DeLuca.
