Endorsements and Testimonials in Advertising - in the Perspective of Competition Law

INTRODUCTION Advertising is a common enterprise marketing strategy, and the personal experiences of celebrities, experts, professional organizations, and general consumers are common promotional approaches used by enterprises. In the internet era, all kinds of word-of-mouth marketing, articles posted on social websites (e.g. Facebook and Twitter), and blog writers have particularly become the best advertising media and have affected the life of all the people. This type of advertisement is generally called endorsement and testimonial advertising. Because this form of advertisement is made through the opinion expression and recommendation of a third party, it is different from the advertising marketing approach of traditional advertisers. In terms of the influence on consumers, endorsement and testimonial advertising can more easily gain the trust of consumers than traditional advertising, and can further facilitate consumers' decision on purchasing products and services. Therefore, the legal systems of various countries around the world usually impose restrictions on this type of advertisement. As endorsement and testimonial advertising is still advertising in nature, various countries have formulated applicable advertising laws and regulations to impose restrictions. Due to the restrictions on False or Misleading Advertising in Competition Law, to date, many countries around the world have developed well-designed Competition Law systems, competent competition authorities, or Competition Law courts, and have accumulated abundant experiences in handling common unfair competition approaches and false or misleading advertising used by enterprises. Legal endorsement and testimonial advertising regarding products or services is a channel that increases positive information sources to consumers, and is beneficial to improving enterprises' profits and turnover. However, if the content of endorsement and testimonial advertising is false, or fails to display information independently or objectively, enterprises may violate Competition Law by using false or misleading advertising. The following sections of this study investigated how the legal system of Taiwan, the U.S., Canada, Mainland China, and Germany stipulate endorsement and testimonial advertising. The main issues are, as follows: (1) principle of disclosure of material connection--if a certain material connection exists between people engaging in endorsement and testimonial advertising and advertisers, the independence and reliability of endorsement and testimonial advertising will be affected, and such a material connection should be disclosed; (2) whether the material connection of endorsement and testimonial advertising is reasonably expected by general consumers should be disclosed in advertisement; (3) disclosure methods--material connections are legally required to be disclosed, what are the specific disclosure methods, what are the requirements, and how to disclose a relationship for consumers to recognize? (4) definitions and identifiability of endorsement and testimonial advertising--what kind of the opinion expression of third parties online are pure information provision and feedback sharing, or whether they are substantial advertisement and should be stipulated by law; (5) regulations of online endorsement and testimonial advertising--the spreading speed and dimensions of endorsement and testimonial advertising of all kinds of online word-of-mouth marketing, articles posted on social websites, blogs, internet forums, BBS, etc. are different from those of traditional media, such as TV, broadcasting, newspapers. How to regulate it is a common question? In the last section, this study takes a specific case in Taiwan as the example to explain how the competent competition authority--the Fair Trade Commission, imposes punishments on a foreign company engaging in online endorsement and testimonial advertising in compliance with the Fair Trade Act in Taiwan. …

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