WASHINGTON, D.C. - The U.S. Senate Committee on Commerce, Science, and Transportation held a subcommittee hearing today on Advertising Trends and Consumer Protection.

 

 

Mr. David Vladeck, Director, Bureau of Consumer Protection, Federal Trade Commission

         

Ms. Sally Greenberg, Executive Director, National Consumers League

 

Dr. Urvashi Rangan, Director for Technical Policy, Consumers Union

         

Mr. C. Lee Peeler, President and CEO, National Advertising Review Council

         

Mr. Greg Renker, Co-Chairman, Guthy-Renker LLC

 

Mr. Jon Congdon, President, Product Partners, LLC

 

 

“Unfortunately, there is no limit to the tricks and ploys that deceptive advertisers may use to rope consumers into bogus opportunities and dangerous investments: elaborate “bait and switch” techniques, advertisements masquerading as news articles, advertisers paying bloggers to endorse certain products, false or deceptive testimonial advertising, “free” product advertising and false or deceptive marketing of “green” products.  With each false claim or inflated promise, consumers lose faith in the marketplace, the information they use to make decisions and the government they expect to keep these scam artists in check.”

“Over and over again, consumers purchase products from companies that claim to make us a little trimmer, stronger or healthier.  If these advertising claims were just about eliminating pimples or fat, it would be one thing.  However, many of the deceptive practices employed are increasingly putting safety at risk so a company can make a quick buck.  My goal with today’s hearing is to find out what resources and authority are necessary to help consumers make informed decisions and preserve the integrity of our marketplace.”

“Developments in science and technology, as well as in marketing strategies, have led to a proliferation of products and services and a parallel burgeoning of advertising claims about how these products will make us thinner, better looking, and healthier; improve the quality of our lives; make us richer; and even improve our environment.  The substantiation of advertising claims has itself become a business opportunity, with a variety of labs and testing facilities – some legitimate and others less so – offering this service.”

“Now more than ever, consumers need to be assured that products and services advertised to them deliver on what they promise.  Where extreme results are promoted, typical results should be clearly disclosed. When an “expert” unequivocally stakes her or his reputation on an endorsement of a product, consumers should be informed whether that person is qualified to make the statement.  Readers of a product review on a blog or Facebook page deserve to know if the reviewer’s opinion may have been swayed by a free gift or a hefty check.  Finally, citizens of a democratic society should have confidence that the media is not passing off advertisements as hard news.”         

“Consumers are currently faced with a huge learning task that better guidance and regulation could reduce.  Requirements for transparency in standards and product information, such as ingredient lists, should be standard for all products being sold with green claims.  Government regulation and guidance would be helpful in maintaining universal requirements for credible green marketing practices.”

“The advertising industry has a strong, longstanding commitment to self-regulation as a tool to foster high standards of truth and accuracy in national advertising.  These CBBB-administered programs provide an expert, fast and effective mechanism to address concerns about a wide range of advertising claims, and are supplemented by the work of BBBs to promote truthful advertising in their communities.  The system represents a substantial benefit to consumers and it has earned the support of the advertising industry and the FTC.  We work every day to assure, through the quality of our decisions and clarity of our guidance, that we continue to deserve that support.”        

“The success and ongoing growth of the direct response industry and broader advertising industry is due in large part to the effectiveness of consumer testimonials and endorsements.  Testimonials by users of our products and services are a very powerful form of communication, and studies have found that consumers find statements by other consumers to be, in many cases, more credible than direct statements about products by the advertiser.”         

“Although we share common goals with the Federal Trade Commission, we have concerns regarding the Commission’s proposed modifications to its guidelines on the use of testimonials in advertising.  In particular, as the Subcommittee knows, the Commission proposes to require companies that use testimonials in advertising to disclose the average result experienced by consumers that use a given product or service.  I am certain that the Commission acted with the best of intentions in suggesting modifications to its longstanding guidelines.  However, I fear that the Commission’s proposal will have significant unintended and negative consequences for marketers and consumers.”

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