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False Endorsements in Ads: What Can Happen to a Business?

Endorsements, particularly those by celebrities, athletes, or other well-known figures, are a classic form of marketing.

But what if your marketing budget doesn't allow for extravagant spending on celebrity endorsements, or your product is too little known or too new to have garnered organic positive customer feedback? For some business owners -- such as the California lawyer recently suspended for Photoshopping herself into pictures with celebrities and posting the pics on her website -- the plan seems to be: fake it until you make it.

Unfortunately, the only thing that using false endorsements in your business tends to make is trouble.

Right to Publicity Lawsuits

When it comes to using celebrities (or any person, for that matter) for false endorsements, you risk a lawsuit for infringing on that person's right to publicity. A form of invasion of privacy, the right to publicity allows an individual to sue for damages when another person or party uses that individual's likeness without permission for a commercial purpose.

Case in point: Actress Jennifer Love Hewitt recently filed a right to publicity lawsuit against the makers of a weight-loss spray; the company allegedly used a picture of the actress holding the product for commercial purposes, without her knowledge or permission.

State laws spell out the potential consequences of right-to-publicity violations. For example, in California, violators can be made to pay actual damages plus give up any profits derived from the unauthorized endorsement.

FTC Violations

The use of false endorsements or testimonials, even those purported to be from everyday people, can also be a violation of Federal Trade Commission rules. According to the FTC's Revised Endorsement Guidelines, all customer testimonials must be truthful, meaning that you can't just make up fake customers and put fake words in their mouths.

In addition, FTC guidelines generally prohibit giving customers payment or other compensation for their endorsement or testimonial without disclosing that fact in the advertisement. FTC violations can potentially lead to monetary penalties.

Bad Publicity

The ultimate irony in the use of a false endorsement for your business as an attempt to market your business in a positive way is that it can often lead to the exact opposite in the form of bad publicity for your company or product.

Drug store chain Duane Reade found this out when it posted a paparazzi photo of actress Katherine Heigl leaving one of its stores on its social media accounts. Heigl filed a $6 million lawsuit against the company claiming not only invasion of privacy for using her likeness without her permission but also for violations of the Lanham Act, federal rules that cover trademark law, but also prohibit false or deceptive advertising.

False endorsements may certainly help your business get attention. It just might not be the kind of attention you want.

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