Fair Trade Commission Disposal Directions (Policy Statements) on the Use of Endorsements and Testimonials in Advertising

Passed by 723rd Commissioner's Meeting on September 15, 2005
Promulgated by Order (94) Kung San Tzu No. 0940008071 on September 23, 2005
Amended by the 807th Commissioner's Meeting on April 25, 2007
Promulgated by Order Kung San Tzu No. 0960004007 on May 11, 2007
Amended by the 973rd Commissioner's Meeting on June 30, 2010
Promulgated by Order Kung San Tzu No. 0990004853 on July 8, 2010
Amended by the 1057th Commissioners' Meeting on February 8, 2012
Promulgated by Order Kung Jing Tzu No. 1011460137 on March 3, 2012
Amended by the 1146th Commissioners' Meeting on October 23, 2013
Promulgated by Order Kung Jing Tzu No. 10214616231 on November 7, 2013
Amended by the 1217th Commissioners' Meeting on March 4, 2015
Promulgated by Order Kung Jing Tzu No. 10414601844 on March 12, 2015
Amended by the 1214th Commissioners' Meeting on January 11, 2017
Promulgated by Order Kung Jing Tzu No. 10614600441 on January 26, 2017

1.Background:

Recently, it is increasingly popular for enterprises to use endorsements and testimonials in their advertisements. In order to increase the sales volume, the popularity or recognition of its products or services, it is reasonable for an enterprise to either hire celebrity, expert (organization) or invite consumers to share their consumption experiences and hence become spokesman for its products or services. However, if the content of such endorsement advertisement is false and misleading, then, it is not only difficult to protect the rights and interests of the general consumers who bought the advertised products or services due to their beliefs in the spokesman's endorsement and testimonials, the other enterprises in the market that have operated properly will faced disadvantageous in market competition. Therefore, regulations must be enacted to further restrain these forms of false testimonial and endorsement advertisements.

Testimonial and endorsement advertisement are also referred to as celebrity spokesman advertisement, recommendation advertisement or testimonial advertisement. In view of the forms of these kinds of advertisements being presented, it is clear that almost all of them have emphasized the images, professionalism or experiences of the spokespersons which then are connected to the advertised products or services. They are conducted in the way of having spokespersons making endorsements upon the products or services after consumption and thus to enhance the persuasiveness of advertisements as well as to successfully win the consumers' confidences in the products or services. Therefore, the so-called words of spokesman in essence is "testimonial and endorsement" for the said advertised product or service. Moreover, the endorser for an advertisement in general is not restricted to celebrity figures. As a matter of fact, it is also common both for an expert (organization) or ordinary consumers to share their consumption experiences in the advertisement. On this ground, we would rather uniformly call this form of advertisement as "testimonial and endorsement advertisement" than spokesperson advertisement since it is more perfect and appropriate.
In consideration of the Fair Trade Law (“the Law”) is enacted with the legislative purposes of maintaining trading order, protecting consumers' interests, ensuring free and fair competition, and promoting economic stability and prosperity, therefore within the current legal framework, the Fair Trade Commission (“the Commission”) has systematically organized how the various conducts and manners of testimonial and endorsement advertisement that may be considered as in violation of the Law. Furthermore, this Policy Statement, formulated with a comparative reference to the relevant regulations and cases of the United States, Japan and German, aims to provide a basis for advertisers, endorsers of advertisements, advertising agents and advertising media to comply with. At the same time, this Policy Statement will serve as a consulting resource for the Commission when it handles testimonial and endorsement advertisement cases.

2.Definitions:

The definitions for terms used in this Policy Statement are defined as follows:
(1) Endorsement and Testimonial Advertisement: it refers to published or broadcasted advertisement, or other means of publicity, in which an endorser provides opinions, beliefs, findings or personal experiences with the products or services.
(2) Endorser: it refers to the party or organization, other than the sponsoring advertiser, that has reflected his/her opinions, beliefs, findings, or experiences about the product or service in the advertising messages as mentioned in the preceding paragraph. The endorser may be a celebrity, an expert (organization) or merely ordinary consumers.
(3) Stake-holding relationship: it refers to the employment, gifting, paid or other remunerating relationship between the endorsers and the advertisers.

Example 1:
If some amusement park has quoted the comment of the host of a popular TV program for travel on the park in its advertisement, the advertisement meets the criteria of endorsement and testimonial advertisement since it is viewed by consumers as a statement of the host's own opinion and not those of the owner of amusement park. Therefore, if an advertisement that included an alteration or garble of the text of the host's statement which further led to the result of not truly reflecting the opinion of the host, then the said advertisement would have violated the Fair Trade Law.
Example 2:
A sports company invited a well-known Olympic tennis gold medalist to film a television commercial for its newly-designed tennis shoes. It was stated in the commercial that the tennis shoes of this brand were designed according to ergonomics principles, therefore the shoes are not only comfortable, they even can increase sport performances and results. In this advertisement, although the said athlete was only sharing his/her personal experiences and findings, the consumers will nevertheless consider that the athlete was giving endorsement and testimonial for the sports company since they intuitively believe that the Olympic gold medalist possesses professional abilities in sports which is substantiate for him/her to decide and give the stated opinion, this opinion therefore must be true, reliable and even verifiable. In other words, the athlete not only stated on behalf of the advertiser's opinion in this advertisement, but also his/her personal opinion and viewpoint. As a result, this case also meets the definition of endorsement and testimonial advertisement.
Example 3:
A television commercial for kitchenware featured a well-known Afro chef used the pressure cooker and other pots of the brand promoted in the commercial to cook a table of delicious new year's dishes easily.  Even though the said chef is silent (no verbal statement or opinion was broadcasted) in the advertisement, he/she would still be considered as giving endorsement and testimonial for the kitchenware of the said brand in the advertisement. Therefore, it is an endorsement and testimonial advertisement.
Example 4:
A television commercial for concentrated laundry detergent depicts two young mothers taking their little girls, A-Chu and A-Hua to play at a park. A-Chu and A-Hua were wearing clothes of similar pattern and color that their mothers have bought during a bargain sale last year. The color of A-Chu's clothes has faded a lot whereas A-Hua's clothes still looked colorful and new. A-Hua's mother immediately told A-Chu's mother how can the brand she uses keeping the clothes' colors, making the colors of clothes staying like new ones. A-Chu's mother right away expressed she will buy and try the said detergent after she learned of the information from A-Hau’s mother. Any advertisement of which the advertisement content is similar to that of the aforesaid advertisement where the materials are borrowed from the real life but obviously fictitious, is not considered endorsement and testimonial advertisement as defined in this Policy Statement.
Example 5:
A television advertisement of a telecommunication company shows an unknown young girl wearing a dark-color suit and looks like a professional secretary. She stated in the commercial that she can provide 24 hours a day, all year round services, helping her boss to screen calls, taking down messages and other secretarial tasks, and requested consumers to give her a chance to serve them. As consumers may consider the unknown girl has stated the content of the said company's telecommunication services on behalf of the advertiser and not express her personal opinion, thus the said advertisement is not considered as endorsement and testimonial advertisement.

3.Truthful Representations Principle

With respect to the action of running endorsement and testimonial advertisements, to avoid the risk of violating the provisions of this Law, an advertiser must comply with the following principles:
(1) The advertisement content must truly reflect the honest opinions, beliefs, findings or experiences of the endorser, may not contain any false or misleading representation.
(2) For advertiser that uses an endorsement of celebrity or an expert (organization), when the content or quality of the advertised product or service for the endorsement is being altered, the advertiser must have proper reasons to believe that the endorser continues to subscribe to the views presented during the advertisement's publication and broadcasting period.
(3) For an advertisement that uses the endorsement and testimonial of an expert (organization), or in the case that the content of an endorsement and testimonial advertisement has either directly or implicitly indicated that the endorser is the expert for the product and service in the advertisement, the endorser must in deed possess the expertise with respect to his/her endorsement. Moreover, the opinion offered in the endorsement and testimonial also must be consistent with the verifications conducted by other experts of the same professional or technical background in this field.
(4) An advertisement that employs consumer's personal experiences as testimonial and endorsement must satisfy the following qualifications:
a. The said consumer must be a bona fide user of the endorsed product or service at the time giving his/her testimonial and endorsement. Whenever an advertisement has used the testimonial and endorsement of a non-bona fide user, it must be mentioned clearly in the advertisement that the said endorser is not the bona fide user of the advertised product or service.
b. Unless the content of a testimonial and endorsement has scientific theory or experimental basis, it has to be pointed out clearly in the advertisement with respect to the result that consumer may reach from using the advertised product or service under the advertised circumstances, or certain conditions under which consumer may reach the results as disclosed in the said endorsement and testimonial advertisement.
(5) If there is a stake-holding relationship between the endorser and the advertiser that is not within the reasonable expectations of the general public, it should be fully disclosed in the advertisements.

Example 1:
A currently well-known model appeared in a television commercial and stated that the dehumidifying result of a particular brand of dehumidifier is very good, giving her great assistance in keeping her branded clothing, leather shoes and leather products in good conditions. Under this situation, the aforesaid famous model can only give such endorsement in the advertisement if only she indeed has used the dehumidifier of the said brand. Later, whenever the composition of the said dehumidifier is altered (such as a more effective anti-mold formula is added and therefore leads to different scent), the advertiser must consult the aforesaid model to ascertain that she still uses the said dehumidifier and as well agrees with the endorsed content presented in the prior advertisement, only then the advertiser may continue to air the aforesaid advertisement.
Example 2:
A television advertisement portrays an expert of plumbing and electricity to renovate a house, along with a host introduces that "Master A-Lu is an expert and he has more than thirty years of experience in installing and fixing plumbing and electricity. Now, we will invite him to try these seven light bulbs of which the brands are not disclosed and tell us which one gives us the best lighting performance." The advertisement portrays the said expert of plumbing and electricity trying each light bulb and then picking the advertiser's light bulb. Immediately, the host interviewed him for the reasons of making his selection. This circumstance is an expert endorsement as defined in this Statement.
Example 3:
An endorser who is portrayed as a "dietician" appears in the advertisement of a chain store specializing in body slimming. The advertisement represents, directly or by implication, that the endorser has gone through professional training and possesses relevant experiences that are sufficient to assist and guide others to effectively body-shaping and beauty treatment. If the said endorser is not a qualified "dietician", the aforesaid advertisement may be considered as false.
Example 4:
When a health care equipment company states in an advertisement that a professional association has given testimonial for the company's products, this advertisement then can be regarded as one form of testimonial and endorsement advertisement by an organization. Since there is a great possibility that consumers will regard the said association as an expert that is able to determine whether certain health care equipment is a good product or not, the endorsement made by the said association must meet the requirement of being supported by the evaluation results of experts recognized by the said association (more than one expert) or meet the standards established earlier by the said association for assessing health care equipment. Any provisional and specific standards tailor-designed for the purpose of endorsing the advertiser should definitely not be quoted.
Example 5:
A famous movie star endorses a certain product in an advertisement, and mentions the quality of the product and his/her personal preferences. Such an endorsement advertisement must reflect his/her true opinions or experiences. However, the compensation obtained by the movie star as a result of speaking for and endorsing the product, and the stake-holding relationship between the movie star and the advertiser are not required to be disclosed, because such a remuneration and stake-holding relationship is within the reasonable expectations of the general public.
Example 6:
A college student, who is a well-known video game guru, posts articles with regard to his video game playing experiences on his personal web site or "blog", where many blog readers follow and read his published opinions relating to the software and hardware of video games. As a usual practice, a manufacturer of a new video game system sent a copy of the new system to the said student free of charge, and asked him to write a review article on his blog. The student tested the new game system and wrote a favorable review. Because his review is published and disseminated through a medium that is managed by consumers, his relationship with the advertiser is therefore not obvious under this context. Readers are not likely to have reasonable expectations that he has obtained the video game system at no cost as an exchange for his writing a favorable product review. Considering the price of the said video game system, this fact can significantly affect readers' perceptions or evaluations on the credibility of the endorsement content. Therefore, the said blog must have clearly stated the fact that the author received the video game system free of charge. The manufacturer must also remind of the author and monitor him in disclosing such a relationship when providing the game system. 

4.Types of Violations

Product or service that uses testimonial and endorsement in its advertisement has violated Article 21 of the Law if the said advertisement has made or used false or misleading representations or symbols listed as follows:

  1. The quality or outcome stated by the advertisement is not found.
  2. The outcome stated by the advertisement is in lack of scientific theory or experimental bases, or is inconsistent with the outcomes of medical theory or clinical trials.
  3. The expected result cannot be reached within the period claimed by the advertisement.
  4. The advertisement's content has any circumstances stated in Article 17 of "Fair Trade Commission Disposition Guidelines on Handling Cases Governed by Article 21 of the Fair Trade Law ".
  5. The industry competent authority determines that the advertisement is exaggerate and false.
  6. Other false or misleading representations or symbols on the product or service.

Example 1:
An international professional beauty company claims that it is "the first scientific weight-loss" brand in the company's advertisement, and uses the testimonials of a nursing school dean, a chairperson of a nutrition and health department at a medical school, a city councilor, a well-known anchorwoman and a writer in the advertisement. Regardless of the professional backgrounds, knowledge and expertise of the above persons, or whether such endorsements are appropriate and credible, the company, failing to provide concrete evidences for the so-called "the first", has claimed, as its business target and the first company to do so in the field of healthy weight-loss, "the first weight -loss" in the advertisement, such a conduct is sufficient to cause the general public and consumers to have misunderstandings and thereby making erroneous decisions. Therefore, the claim is obviously false.
Example 2:
A dentist stated in an interview given in a television commercial, "I only recommend a certain brand of toothpaste now." This statement was associated with the continuous presentation of the content of the advertisement in question to give average consumers the impression that far more than fifty percent of the dentists have stopped endorsing other brands of toothpaste and have been endorsing the said brand of toothpaste instead. The dentist appearing in the said advertisement also claimed that "most dentists are endorsing the said brand of toothpaste”. If the advertiser cannot offer evidences of such a claim, it    is therefore false.
Example 3:
A well-known TV shopping channel sells "XX Body Massager", and claims "......burning fat......lets you reduce from size L to size M or size S......" in its advertisement. Later in the advertisement the endorser demonstrates how to operate the machine and shows off her slender body. If the advertiser cannot offer evidences to support such a claim, the claim is false.

5.Disclosure of Stake-holding Relationship

When the endorsement and advertisement is implemented by writing endorsement articles on social network websites, if there is a stake-holding relationship, not within the reasonable expectations of the general public, between the endorser and the advertiser, which is not fully disclosed in the advertisement, and such a relationship is sufficient to affect trading order, the advertisement is in violation with Article 25 of the Law. 
The endorsement articles of online social networks, as mentioned in the preceding paragraph, include using endorsement articles in a blog and comments on a forum.

Example:
An online message board offers users of MP3 players a platform to discuss new music download technologies, where they exchange information on various new products, new applications, and new functionalities relating to music playing devices. An employee of a leading manufacturer in the field of music playing devices, without disclosing users of the message board community his identity, posts messages on the message board that promote the products of the said manufacturer. If his employment with the manufacturer is publically known to the community, it may affect the credibility of his endorsement statement. Therefore, the person posting the messages must explicitly disclose his relationship with the manufacturer to the members of the message board and other readers. The manufacturer must remind the person who posts the messages of the requirement, and make sure that he is disclosing such a relationship.

6.Legal Liability

The penalties and legal liabilities are as follows:

(1) Advertiser:

    1. In accordance with the Article 42 of the Law, the Commission may order any enterprise that violates any of the provisions of the Law to cease therefrom, rectify its conduct or take necessary corrective action within the time prescribed in the order. In addition, it may impose upon such an enterprise an administrative penalty of not less than fifty thousand and nor more than twenty-five million New Taiwan Dollars. Shall such an enterprise fails to cease therefrom, rectify the conduct or take any necessary corrective action after the lapse of the prescribed period, the Commission may continue to order such an enterprise to cease therefrom, rectify the conduct or take any necessary corrective action within the time prescribed in the order, and for each time the Commission may impose thereupon an administrative penalty of not less than one hundred thousand and nor more than fifty million New Taiwan Dollars until its ceasing therefrom, rectifying its conduct or taking the necessary corrective action.
    2. In addition to the administrative liability or other criminal liability as stated in the preceding paragraph, consumers may request compensation for damages from the enterprise that violates any of the provisions of the Law according to the provisions set forth in Chapter 5 of the Law.

(2) Endorser:

  1. If the endorser is the supplier or seller of the products or services, the endorser is the advertiser as described in this Policy Statement. All the provisions relating to the advertiser shall apply to the endorser.
  2. When the endorser intentionally violate the Law by jointly taking the action with the advertiser, he/she may be condemned, in accordance with the actual circumstance of his/her endorsing behavior, by the provisions of the Law that applies to the advertiser's.
  3. In accordance with the latter part of Paragraph 5, Article 21 of the Law, when an endorser provides any testimonials that he/she knows or should be able to know is misleading, he/she shall be jointly and severally liable with the advertiser of such an advertisement for the damages arising therefrom. However, in accordance with the proviso of Paragraph 5, Article 21 of the Law, endorsers who are not celebrities, specialists or organizations shall be held jointly and severally liable with the advertiser for no more than 10 times of the reward they have received from the advertiser.
  4. When the endorser, due to the aforesaid circumstances of b. or c., violates other laws, it is possible that he or she will be jointly and severally liable with the advertiser for other criminal liabilities.
(3) Advertising Agency:
  1. Depending on the actual circumstance of taking part in the production or design of the testimonial and endorsement advertisement, the advertising agency that is regarded as  having the properties of an advertiser shall be punished according to the Law's regulations for advertisers.
  2. In accordance with the forepart of Paragraph 4, Article 21 of the Law, when an advertising agency makes or designs an advertisement that it knows or should be able to know is misleading, it shall be jointly and severally liable with the advertiser of such advertisement for the damages arising therefrom.
(4) Advertising Medium:
  1. According to the actual circumstance of taking part in the production, design, communication or publication of the testimonial and endorsement advertisement, the advertising medium that is regarded as also having the properties of an advertiser shall be punished according to the Law's regulations for advertisers.
  2. In accordance with the middle part of Paragraph 4, Article 21 of the Law, when an advertising medium communicates or publishes an advertisement that it knows or should be able to know is likely to mislead the public, it shall be jointly and severally liable with the advertiser of such an advertisement for the damages arising therefrom.

 

7.Concurrence of Laws

When the Law and other laws both govern the false and misleading advertisement, the competent authority of the other law shall investigate the case according to the principle of special law prevails over general law. The Commission shall, according to the relevant provisions of the Law, handle matters that are not covered by the other law but falls into the category of the Law.

8.Supplementary Provisions

Except for the principles mentioned above, testimonial and endorsement advertisements are still subject to the Article 21, Article 24 and Article 25 of the Law and relevant disposition guidelines.

 This Policy Statement is merely a statement on how the Commission evaluates and reviews the regular causes for the violations with respect to endorsement and testimonial advertisement. Several such advertisements of which the conducts and manners frequently found to have violated the Law are exemplified in the Statement. As for the handling of individual cases, the facts are reviewed by the Commission on a case-by-case basis before any conclusions are reached.