Designer Endorsements and the FTC
In light of the Academy Awards and countless stars naming who dressed them for the red carpet, it is natural to wonder about the legality of designer endorsements. Paid-for deals between celebrities and fashion brands are common in the entertainment/fashion industry. Without them numerous dresses would not make it to the highly-televised red carpet, and celebrities would not have the opportunity to wear such gowns. While these deals have historically been legal, they may be implicated by the Federal Trade Commission’s (“FCT”) impact on advertising laws.
The FTC is charged with protecting consumers and promoting competition. Section 5 of the FTC Act provides that “unfair or deceptive acts or practices in or affecting commerce are declared unlawful. An act or practice is deceptive if there is a material misrepresentation or omission of information that is likely to mislead consumers.”1 The FTC Guidelines state that “endorsements that have come about as a result of a connection between the endorser and the underlying brand, without proper disclosure, are violations of the FTC Act.”2 This rule is rationalized by the notion that “consumers have the right to have access to the information they need to make informed purchasing choices, and sellers deserve the opportunity to compete in a marketplace free of deception and unfair practices.”3
IP Lawyer Ted Roe4 mentions that “right now that you will not find any restrictions in the Guidelines on the type of fashion a celebrity wears whether it is an endorsement or not or any requirement to disclose any payments to wear outfits.” Ted remarks that “While some [actresses] may be paid by the designer to wear [a specific] dress, I don’t know a single actress that would wear something on the red carpet of the Academy Awards that they don’t personally like.”
Most are familiar with how this idea of “proper disclosure” has impacted social media influencers and bloggers who wear and support certain fashion brands without disclosing that they are being paid to do so. These individuals have pushed back against disclosure, believing that because they would not insincerely support these brands, the endorsements are not misleading. They nevertheless have adopted the use of #ad as a temporary solution.
But what does this mean for red carpet endorsements? Most in the entertainment industry believe that “if a dress looks gorgeous and this is the dress we were going to pick anyway, why not be paid?”5 But this is the same thought process of social media influencers and bloggers, which poses the question: does an actress being paid to wear a dress on the red carpet serve as an endorsement in the same way that a social media influencer being paid to wear a dress on their social media account serves as an endorsement? Or are they more like actresses in television commercials where the consumer is expected to know that the actress is being compensated and so disclosure is not required? The issue of whether consumers are expected to know that celebrities are paid for their endorsements on the red carpet is further complicated by the fact that there is no uniformity in the entertainment/fashion industry: some red carpet looks are paid-for and others are not. Therefore, even if consumers are aware of this practice, they may not be aware of exactly when it is taking place.
There is no clear solution to the problem of paid-for red carpet endorsements, especially because celebrities do not have the luxury of posting a quick #ad. But whether consumers are likely to be misled and whether proper disclosure is necessary is something celebrities and fashion brands should be conscious of. Steven Thayer, Partner at Handler Thayer, LLP stated that “If the FTC decides to take on the issue of dresses at the Oscars, we should shut down the FTC.”