Most folks are talking about the new FTC regulations which require bloggers to disclose any payment or freebee they pocketed for blogging about a product or service.
But there is more to the new guidelines— controversial changes concerning customer testimonials that could affect real estate media sites like Trulia and Zillow, as well as broker and agent websites, that run testimonials as advertising.
Is the testimonial experience representative of what consumers will generally achieve?
According to the new Guidelines concerning the use of testimonials, an 81 page document which takes effect December 1, 2009, :
You cannot use customer testimonials or endorsements that are atypical— like the chisel chested Kens and bodacious Barbies who pitch the latest weight loss systems. While the old regs said it was OK for Ken and Barbie testimonials, so long as you added a disclaimer like “results may vary“, the new rules remove that disclaimer loophole. The advertiser should disclose what results consumers of the product or service will generally achieve.
Here is an excerpt from the FTC Release of October 5, 2009:
Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor. FTC source (emphasis added)
Will Trulia Testimonials Run Afoul of New FTC Guidelines?
Trulia publishes (features) agent testimonials on its blog. But are these success story testimonials typical or atypical of agents listing on Trulia, answering questions on Trulia Voices, or Trulia Pro advertisers? Or are they featuring the Ken and Barbie poster agents to get other agents to sip truly a Kool Ade? Who knows if these are truly typical results? Does Trulia? Tell us Sami.
It has always been my opinion the MLS is the best ROI and real estate media sites like Trulia or Zillow are only of incremental value– not a bad thing– but, for example, given the thousands of Q&As, perhaps only a small percentage of agents are getting clients from the Advice & Voices forums– small enough to be “atypical”. Perhaps an agent would like to know the answer to this question, before they spend hours answering questions.
Given that there are thousands of answers given by agents, could the odds of success be truly a waste of time? Who knows? Maybe the real estate media sites will have to reveal it to agents under the new FTC rules if the testimonials are considered advertising.
According to the FTC:
…..although the literal words of an individual testimonial may be truthful, those words cannot be viewed in isolation..A secondary message understood by reasonable consumers is actionable if deceptive, even though the primary message is accurate…
The critical question for determining whether an ad is deceptive under Section 5 of the FTC Act – for all advertising, whether or not testimonials are involved – is what is the net impression consumers take away from the ad as a whole . (p. 27-28) (emphasis added)
The effect of the revision at issue is to treat ads that use testimonials the same as all other ads. (p.35)
So, if a testimonial on Trulia blog is truthful (as it should be) but the secondary message understood by real estate agents (the takeaway) is “you can typically get clients using Voices”, and that is not the case, then what?
Where’s the Beef?
Another interesting point was that advertisers must substantiate the claims of the endorsement:
“The advertiser must have substantiation, however, for any performance claims conveyed by the endorsement.” (p.52)
“Advertisers are subject to liability for false or unsubstantiated statements made through endorsements…” (p. 61) (emphasis added)
An advertisement containing an endorsement relating the experience of one or more consumers on a central or key attribute of the product or service also will likely be interpreted as representing that the endorser’s experience is representative of what consumers will generally achieve with the advertised product or service in actual, albeit variable, conditions of use. Therefore, an advertiser should possess and rely upon adequate substantiation for this representation. (p. 64-65) (emphasis added)
I wonder if Trulia ever received proof of any testimonial’s performance other than the say-so of the endorser. Hmm…. that’s a sticky one.
Also, in order to continue using an endorsement (keep an endorsement on a blog?), the FTC says: “Prior to continued use of the [person's]endorsement, the advertiser must contact the [person] in order to determine whether the
[person] would continue to specify the [product/service] and to subscribe to the views presented previously.” (p. 61-62) (emphasis added)
Has Trulia done this? Sounds like a pain in the Trullian butt.
It is important to point out that even if the odds of agents getting business by spilling their guts on TruliaVoices is equivalent to getting hit by lightening , the publishing of the agent testimonial on the Trulia blog and social media must be considered advertising by the FTC. Is it? If they are unsolicited, are they still considered ads if put on the blog and promoted? Must they still be substantiated? But what if Trulia or Zillow are encouraging agents to send in testimonials, well then, that’s another can of green worms. (Any Deep Throat out there know whether TruZilla asks for testimonials.)
Personally, I think the new FTC rules may have a chilling effect on testimonials on real estate agents websites and media sites like Trulia and Zillow (Z has its own problem with inaccurate zestimates, which Zillow COO Spencer Rascoff says can be misleading. Oh brother). I think a larger disclaimer that lasted more a split second would be sufficient. Trulia, to the best of my knowledge, never even had a disclaimer on its published testimonials.
Will have to keep an eye on what headaches these new guidelines cause.
Copies of the new regulations are available from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.
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