ADT Settles FTC Charges That Endorsements Deceived Consumers

On March 6, 2014 the FTC announced that it has charged the home security company ADT LLC with misrepresenting that paid endorsements from safety and technology experts were independent reviews.

The FTC’s administrative complaint alleges that ADT paid spokespeople to demonstrate and review the ADT Pulse on television and radio news programs and talk shows across the country, and in blogs and other online material. The FTC  alleges, ADT misrepresented that the reviews were independent, and failed to disclose that the experts were being paid by ADT to promote the Pulse system.

ADT paid three spokespersons, including a child safety expert, a home security expert, and a technology expert, more than $300,000 to promote the ADT Pulse. Two of those spokespersons also received a free ADT Pulse security system, valued at approximately $4,000, and free monthly monitoring service, according to the complaint. In exchange, the spokespersons appeared on more than 40 different television and radio programs nationwide and posted blogs and other material online.

ADT set up media interviews for the endorsers through its public relations firms and booking agents. According to the complaint they often provided reporters and news anchors with suggested interview questions, and background video. The paid ADT endorsers were introduced by program hosts as experts in child safety, home security, or technology, usually with no mention of any connection to ADT. The endorsers sometimes demonstrated child safety, home security, or technology products other than the ADT Pulse, adding to the impression that they were providing an impartial, expert review of the products.

The proposed order: 1)  prohibits ADT from misrepresenting that any discussion or demonstration of a security or monitoring product or service is an independent review provided by an impartial expert; 2) requires ADT to clearly and prominently disclose, in connection with the advertising of a home security or monitoring product or service, a material connection, if one exists, between an endorser and the company; and 3) requires the company to promptly remove reviews and endorsements that have been misrepresented as independently provided by an impartial expert or that fail to disclose a material connection between ADT and an endorser.

Endorsements are an important tool for advertisers and they can be persuasive to consumers. But the law says they also have to be truthful and not misleading.This case serves as an important reminder that paid spokespersons must disclosure their connection with the company.

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