Legal Ramifications of Celebrity Endorsements

First lets clarify one thing that is important to understand, unless you think you look good in stripes. This industry is quiet, especially product placement, and there are numerous examples where we think the public is being mislead as to the relationship between the celebrity and the company paying them to endorse their products.

It is very difficult to police and the FTC is stretched thin as it is, but as we know in this great country of ours, ignorance of the law is not an excuse.

This page  from the FTC has some great basic information about the legal framework we are working with but the real nitty gritty is contained here, and we highly suggest you read it an make sure your attorney does as well.

In this PDF from the FTC website there are numerous examples of how to do it right, and how to NOT do it right, and end up in jail.

This section is definitely NOT LEGAL ADVICE as we are not attorneys.

Regardless, we highly recommend to read what the FTC has to say about this. The above links are written in plain english and contain numerous examples as to how it works and what the government is expecting from YOU in terms of how you present the relationship, the celebrity, and the product. Lets go over a few key points with regards to these above documents that are important:

The key points are:

1) “Endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser. Furthermore, an endorsement may not convey any express or implied representation that would be deceptive if made directly by the advertiser”

In other words, if you wouldn’t say it, you can’t have the Celebrity say it for you.

2) “An advertiser may use an endorsement of an expert or celebrity only so long as it has good reason to believe that the endorser continues to subscribe to the views presented”

There are ways to satisfy this requirement, but its important to understand that while you may “have a deal” it does not mean that you own that celebrities likeness to use as you see fit until the end of time. Likewise, if things change in your company or you fail to represent your product or service ethically and truthfully, you can get both yourself AND the celebrity in hot water. 90% of these deals work out just fine, but like any legal contract, there are obligations for both parties, and either party not doing their part not only makes the endorsement not effective for marketing purposes, but can also backfire on both the celebrity and the company.

3) “When the advertisement represents that the endorser uses the endorsed product, the endorser must have been a bona fide user of it at the time the endorsement was given. Additionally, the advertiser may continue to run the advertisement only so long as it has good reason to believe that the endorser remains a bona fide user of the product.”

In other words, If your celebrity says they are a user of the product, they have to actually BE a user of your product. Note that it doesn’t say the celebrity has to pay for it, they just have to actually be a user of the product or service.

4) “Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers. Endorsers also may be liable for statements made in the course of their endorsements”

This last one is a big one. This means that the Celebrity is not “off the hook” if you make untrue claims about your product or service. They are lending their name and their credibility to you, but the way things are presented are important as it is not just the Celebrities reputation that is on the line, but possible legal ramifications for you as well. As you can see, there are risks for both parties here.

These quotes from the FTC website are not here to scare you unduly, but it is important to realize that if you intend to enter into an agreement with a Celebrity, they may be risking more than you realize because in this social media light speed world we live in now, bad news travels extremely fast, and reputations can and have been ruined overnight. Celebrities losing their endorsements are front page news.

In spite of the risks, why do so many of these deals happen, and why is the industry booming? Many of these deals work out just fine for both the celebrity and the brand, and many relationships are decades long. Why? because if all parties do their jobs, the credibility and authority of the celebrity rubs off on your company, which makes it much easier to sell, your claims much more believable, and in general everything goes better. To find out more about which celebrity may be right for your company, please fill out the form below.