Fair Trade Commission Disposal Directions (Policy Statements) on 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 26, 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

1. Background:
   Recently, there is an increasing popularity and tendency of enterprises using endorsements and testimonials in their advertisements. In order to increase the sale volume, popularity or recognition of its product or service, it is indeed reasonable for an enterprise to either appoint celebrity, expert (organization) or invite consumers to share their experiences and hence become spokesman for its product or service. However, if the content of such endorsed advertisement is false and misleading, then, it is not only difficult to protect consumption rights and interests of the general public that bought the advertised product or service as a result of believing the spokesman's endorsement and testimonials, furthermore, the other counterparts in the market that have operated properly will faced disadvantageous in competition. Therefore, regulations must be enacted to further restrain these forms of false testimonial and endorsement advertisements.
   Testimonial and endorsement advertisement also referred to as celebrity spokesman advertisement, recommendation advertisement or testimonial advertisement. Observing the forms of these kinds of advertisements being presented, almost all of them have emphasized the images, professionalism or experiences of the spokespersons which then are connected to the advertised product or service, or used the manner of spokesperson making endorsement after consumption and thus to enhance the persuasiveness of advertisements as well as to successfully win the consumers' confidences. 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, in practice, it is also common for an expert (organization) or ordinary consumers to share their consumption experiences during 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 (henceforth referred to as This Law) is enacted for the legislative purposes of maintaining trading order, protecting consumers' interests, ensuring fair competition and promoting economic stability and prosperity, therefore within the current legal framework, the Fair Trade Commission has arranged and stated conducts and manners of testimonial and endorsement advertisement that may have violated This Law. And, this Statement is formulated with a reference to the relevant regulations and cases of the United States and Japan, provided as basis for advertisers, endorsers of the advertisement, advertising agents and advertising media to abide by, at the same time, also consulting resources for the Fair Trade Commission in handling the relevant cases.
2. Definitions:
   The definitions for terms used in this Statement are set forth as follows:
   (1) Endorsement and Testimonial Advertisement: refers to any published or broadcasted advertisement that an endorser hasreflected his/her opinion, belief, finding or personal experience towards the product or service.
   (2) Endorser: refers to the party or organization, other than the sponsoring advertiser, that has reflected his/her opinions, beliefs, findings, or experience about the product or service in the advertising messages as mentioned in the preceding paragraph and may be a celebrity, expert (organization) and ordinary consumers. A foreigner who engages in the aforementioned endorsement and testimonial activities is also regarded as an endorser.
   

   Example 1: A restaurant has quoted the comment of a famous television delicacies host for the said restaurant and used it in the restaurant's advertisement, the aforesaid 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 restaurant. Therefore, an advertisement that includes an alteration or garble of the text of the host's statement which further lead to the opinion of the host is not truly reflected, then the said advertisement would have violated the Fair Trade Law. Example 2: A sports company invited a well-known Olympic tennis gold medallist to film a television commercial for its newly-designed tennis shoes, stating in the commercial that the tennis shoes for the said brand are designed to meet ergonomics, not only the shoes are comfortable; they even can increase sport performances and results. In this advertisement, even though the said athlete was only sharing his/her personal experience and findings, nevertheless, the consumers will consider that the athlete was giving endorsement and testimonial for the sports company since they intuitively believe that the Olympic gold medallist possesses professional ability 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 another word, the athlete not only stated on behalf of the advertiser's opinion in this advertisement; at the same time also reflects his/her personal opinion and viewpoint, hence, this case also meets the definition of endorsement and testimonial advertisement Example 3: A television commercial for pots shows a well-known Afro chef used the pressure cooker and other pots of the same brand 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) in the advertisement, he/she is still considered as giving endorsement and testimonial for pots of the said brand in the advertisement, hence, it is an endorsement and testimonial advertisement. Example 4: A television commercial for concentrated laundry detergent depicts two young mothers taking their small daughters, A-Chu and A-Hua to play at a park. A-Chu and A-Hua are wearing clothes of similar pattern and color that their mothers have bought during the last year's bargain sales. The color of A-Chu's clothes fades 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. After hearing the comment, A-Chu's mother right away expressed she will buy and try the said detergent. Any advertisement of which the advertisement content is similar to that of the aforesaid advertisement, that is the materials are obtained from the real life and obviously fictitious, is not considered endorsement and testimonial advertisement as defined in this Statement. Example 5: A television advertisement for a telecommunication company shows an unknown young girl wearing a dark color suit and looks like a professional secretary. She appears in front of the screen and effusively says she can provide 24 hours a day, all year round service, helping boss to screen calls, taking down messages and other tasks; requesting consumers to give her a chance to serve them. As consumers may consider the said strange girl has stated the content of the said company's telecommunication service on behalf of the advertiser and not express her personal opinion, thus the said advertisement is not considered as endorsement and testimonial advertisement.

3. The advertiser follows the principle of truth in providing the endorser's information
   With regard to information that is related to the endorser's identity or endorsement and testimonial given by him/her, the advertiser shall handle such information according to the following principles, otherwise, there is a possibility of violating the provisions of this Law:
   (1) The advertisement content must truly reflect the honest opinions, beliefs, findings or experience of the endorser, may not contain any representation or indication which would be deceptive and without scientific basis or empirical evidence.
   (2) For advertiser that uses an endorsement of celebrity or 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 expertise with respect to his/her endorsement. Moreover, the opinion given in the endorsement and testimonial also must consistent with the verifications conducted by other experts in this aspect.
   (4) An advertisement that employs consumer's personal experience as testimonial and endorsement must satisfy the following important conditions:
   a. The said consumer must be a bona fide user of the endorsed product or service at the time giving 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 that the content of a testimonial and endorsement has scientific basis or empirical evidence,it must point out clearly in the advertisement with respect to the result that consumer may achieve from using the advertised product or service under the advertised circumstances, or certain conditions under which consumer may achieve results as disclosed in the said endorsement and testimonial advertisement.
   
   

   Example 1: A currently well-known model appears in a television commercial and states 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 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 lead 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 working to renovate a house, along with a host introduces that "Master A-Lu is an expert and he has thirty years and more 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 revealed 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 has met expert endorsement as defined in this Statement. Example 3 :An endorser who is portrayed as a "dietician" appears in the advertisement of a chain body slimming institution. 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: A drinking water dispenser company states in the advertisement that its product has passed the testing of "Industry Technology Research Institute" and a certificate was issued to the said product. The company guarantees that there is no possibility for its consumers to drink tap water from the said drinking water dispenser. Since most consumers have regarded the "Industry Technology Research Institute" as a fair and independent testing institution, thus it certainly possesses professional knowledge to determine the drinking water dispenser's efficiency, also, the Institute will not issue certificate to a product that has not passed valid scientific testing. This circumstance meets endorsement by organization as defined in this Statement. Therefore, unless the "Industry Technology Research Institute" has ever carried out a valid scientific testing on the advertised drinking water dispenser and the results of testing can support the message conveyed by the said endorsed advertisement, otherwise, there is a possibility of the said advertisement in violating the Fair Trade Law. Example 5: A health care equipment company states in the advertisement that a medical 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 organization. Since there is a great possibility that consumers will regard the said association as an expert that is able to determine whether a health care equipment is a good product, therefore, the endorsement made by the said association must have been supported by the evaluation results of experts recognized by the said association (more than one expert) or meets the standards established earlier by the said association for assessing health care equipments. The provisional and specific standards tailor-designed for the purpose of endorsing the advertiser is definitely cannot be quoted. Example 6: A shampoo advertisement air the scene of a girl dormitory at a particular university that was shot with "hidden camera". A salesperson asks the girl undergraduates at the site to state their findings of the advertiser's recently marketed double action shampoo, together with some questions. Even though the advertisement has not clearly specified the true identity of these girl undergraduates and the words "hidden camera" are not displayed on the screen, however, the ways of advertisement being presented and the messages that are being conveyed have caused consumers to believe that the girl undergraduates appear in the advertisement are actual consumers, and not actress. In this situation, if the advertiser has employed actresses to play the roles of girl undergraduates in this advertisement, this message should be disclosed in the advertisement.

4. Unlawful conducts and manners used in product's or service's testimonial and endorsement advertisement
   (1) Product or service that uses testimonial and endorsement in its advertisement has violated the provision of Article 21 of this 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 lacks of scientific basis, support and empirical evidence, or inconsistent with the outcome of medical theory or clinical trial.
   3. Unable to achieve the expected result within the period stated in the advertisement.
   4. The advertisement's content has any circumstances stated in Chapter 3 of "Fair Trade Commission's Principles for Handling Cases Governed by Article 21 of the Fair Trade Law".
   5. The industry competent authority determines the advertisement is exaggerate and false.
   6. Other false or misleading representation or symbol on the product or service itself.
   

   Example 1: An international professional beauty company states "the first scientific slimming" in the company's advertisement, and uses the testimonials of a nursing school president, a medical college's health care and diet department head, a city councilor, a well-known anchorwoman and a writer in the advertisement. Regardless of the professional backgrounds, knowledge and expertise of these persons, or whether such endorsements is appropriate and credible, the company, failing to provide concrete evidence for the so-called "first", has merely stated "the first slimming" in the advertisement on the basis of its business target and the first in the circle of healthy slimming, such conduct is sufficient to cause the general public and consumers to have mistaken understandings and then make wrong decisions, the statement is obviously not true. Example 2: An international beauty company states "a rapid increase in breast size, from 30A to 32B to 34C to 36D" in the company's advertisement, Evidence 1 through 4 in the advertisement presented the actual outcome of elaborate service. However, the investigation finds that the evidence presented by the company was unable to prove that the enlargement of breast sizes of the four users from sizes of A cup to D cup were actually the results of their participation in the breast enlargement class. Furthermore, witness A and witness B were originally wearing B cup and C cup underwear respectively prior to joining the class, neither were wearing A cup underwear at the time joining the breast enlargement class. Obviously, there is a great discrepancy with the meaning of from A cup to D cup wordings as stated in the advertisement. Example 3: An international beauty company printed a real-person advertisement using testimonials of five witnesses, but without explaining the basis of hot compress, massage and blood circulation promotion to attain the results of breast enlargement. The breast enlargement experiences of the five witnesses alone are insufficient to prove that the course and the relevant products can attain the result of breast enlargement. Moreover, the course records cannot prove the changes of breasts' sizes during the process. The advertisement is obviously false and misleading. Example 4: A company has used the testimonies of attorney A and physician B in its advertisement, both subjects of real-person empirical evidence testified that the sizes of her breasts changed from A cup to D cup within one week after using the product. But the company is unable to provide information of attorney A and physician B; furthermore, actresses have played the roles of subjects in real-person empirical evidence. The advertisement is obviously false and misleading. Example 5: A beauty company used the photos of a model before and after the breast enlargement, statements "personally experience success" and "strongly recommended" in the company's printed advertisement. The advertisement also exhibits "the price is only $12,200 for 12 lessons now (including the product)". However, the investigation found that consumers are obviously unable to achieve the result of breast enlargement as stated in the advertisement at issue if they only participate in the courses of 12 lessons for $12,000 as printed in the advertisement at issue, they must keep paying a considerable amount of other expenses which lead to the actual consumer's spending different from their original understanding or expectation.

   
   (2) The endorsement and testimonial advertisement that uses the manner of comparative advertisement, if the advertisement is true for its own product or service but provides false or misleading representation with respect to the other party's product or service, then in accordance with the concrete circumstance, the advertisement may have violated Article 19, Subparagraph 3, Article 22 or Article 24 of the Fair Trade Law.
   (3) The endorsement and testimonial advertisement, if having any deceptive or obviously unfair conduct that is able to affect trading order, has violated the Article 24 of the Fair Trade Law.
5. Penalty for the Fair Trade Law violations and legal liability
   (1) Advertiser:
   a. In accordance with the Article 41 of the Fair Trade Law, the Fair Trade Commission may order any enterprise that violates any of the provisions of the Fair Trade 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 enterprise an administrative penalty of not less than fifty thousand nor more than twenty-five million New Taiwan Dollars. Shall such enterprise fails to cease therefrom, rectify the conduct or take any necessary corrective action after the lapse of the prescribed period, the Fair Trade Commission may continue to order such enterprise to cease therefrom, rectify the conduct or take any necessary corrective action within the time prescribed in the order, and each time may successively impose thereupon an administrative penalty of not less than one hundred thousand nor more than fifty million New Taiwan Dollars until its ceasing therefrom, rectifying its conduct or taking the necessary corrective action.
   b. In addition to the administrative liability or other criminal liability as stated in the preceding paragraph, consumers may request compensation for damages from enterprise that violates any of the provisions of the Fair Trade Law according to the provisions set forth in Chapter 5 of the Fair Trade Law.
   (2) Endorser:
   a. The endorser, who purposely carry out with the advertiser together and violate the Law, may be condemned in accordance with the concrete circumstance of it's endorsing behavior according to the advertiser's violation of the Law, though the endorser may not meet the definition of "enterprise "stated in the Subparagraph 4 of Article 2 of the Law.
   b. In accordance with the latter part of Article 21, Paragraph 4 of the Fair Trade Law, Where any endorser provides any testimonials that he/she knows or is able to know is misleading; he/she shall be jointly and severally liable with the principal of such advertisement for damages arising therefrom.
   c. The endorser who, due to the aforesaid circumstance of 5(2) a. or b. violates the provisions of other laws shall be jointly and severally liable with the advertiser for other criminal liability
   (3) Advertising Agency:
   a. According to the real situation of taking part in the production or design of the testimonial and endorsement advertisement, the advertising agency that is regarded as also having the property of an advertiser shall be punished according to the Fair Trade Law's regulations for advertiser.
   b. In accordance with the forepart of Article 21, Paragraph 4 of the Fair Trade Law, where any advertising agency makes or designs any advertisement that it knows or is able to know is misleading, it shall be jointly and severally liable with the principal of such advertisement for damages arising therefrom.
   (4) Advertising Medium:
   a. According to the real situation 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 property of an advertiser shall be punished according to the Fair Trade Law's regulations for advertiser.
   b. In accordance with the posterior part of Article 21, the middle part of Paragraph 4 of the Fair Trade Law, where any advertising medium communicates or publishes any advertisement that it knows or is able to know is likely to mislead the public, it shall be jointly and severally liable with the principal of such advertisement for the damages arising therefrom.
6. Coopetition and handling of laws related to testimonial and endorsement advertisement
   In addition to the Fair Trade Law, when there is any other law governing the false and misleading advertisement, the competent authority of the other law shall legally investigate the case according to the principle of special law prevails over general law. According to the relevant provisions of the Fair Trade Law, the Fair Trade Commission shall handle matters that are not covered by the other law and in the category governed by the Fair Trade Law.
7. This policy statement only states the Fair Trade Commission's evaluations and causes of regular violations for endorsement and testimonial advertisement, several such advertisements of which the conducts and manners frequently found to have violated the Fair Trade Law are exemplified in the Statement. As for the handling of each individual case, the concrete fact in practice is looked at for separate decision.