Five ways to stay legal when customers praise your business
The FTC has rules about testimonials and paid reviews. Here's what you need to do this week.
The Federal Trade Commission has one core rule for testimonials, influencers, and paid reviews: if someone is being paid or given something of value to promote your business, they must say so clearly. The reason is simple. A customer reading a glowing five-star review needs to know whether the reviewer paid for the product themselves or whether you paid them to write it. That information changes how much weight the review deserves. The same rule applies whether the endorsement appears on social media, a blog, a video platform, or anywhere else.
Key facts
- A testimonial must represent what the person making it actually believes and cannot include claims you couldn't legally make yourself.
- Any connection between an endorser and your business that most consumers wouldn't know about must be disclosed clearly and conspicuously.
- If an endorser claims exceptional results, you must have proof that those results represent what most customers will achieve, or the endorsement must state what typical results are.
- Truth in advertising matters in all media, from traditional advertising to social media, blogs, videos, and reviews.
- When the FTC pursues violations, the focus is usually on advertisers and their agencies, though individual endorsers might face action in certain circumstances, such as failing to make required disclosures despite warnings.
What counts as a paid endorsement you must disclose
Start with the basics. If you pay someone money, give them a free product or service, offer them a discount, provide them a trip, or give them anything else of value in exchange for a testimonial or review, that's a paid endorsement. It doesn't matter whether the person is a customer, an influencer, a friend, or a local celebrity. The disclosure rule applies. The only exception is when your audience already understands the relationship. A professional restaurant critic working for a newspaper doesn't need to disclose that the newspaper sent them to review your restaurant, because readers know that's how newspaper critics work. But a random person posting a five-star review on Google or social media does need to disclose if you paid them.
How to disclose a paid endorsement clearly
Make the disclosure impossible to miss. Don't bury it in the fine print or tuck it into a hashtag. If someone is posting on social media, they should use clear language like "I was paid by [your business name] to write this review" or "[Your business name] gave me a free [product or service] in exchange for this testimonial." The disclosure should appear at the top of the post or review, not at the end. On a website or blog, place it near the testimonial itself. The goal is that anyone reading the endorsement will see the disclosure without having to hunt for it. If you're unsure whether your disclosure is clear enough, make it clearer.
What to do before asking for a testimonial
Get the endorsement in writing. Before you pay someone or give them something of value, send them a message spelling out exactly what you're giving them and what you're asking them to do in return. Keep that message. If the FTC ever questions whether a disclosure was required, you'll have proof of what happened. Also, make sure the person understands that they must disclose the relationship. Don't assume they know the rules. Tell them directly: "When you post this review, please include a statement that I gave you [free service/payment/product]." Make it part of the agreement.
How to handle customer reviews you didn't pay for
If a genuine customer leaves a review on their own, without any payment or incentive from you, no disclosure is needed. The customer paid for the product or service themselves, and that's obvious to anyone reading the review. However, if you're running a program where customers get a discount, a gift card, or entry into a drawing in exchange for leaving a review, that's different. In that case, the reviewers must disclose that they received something in exchange. The same rule applies if you're asking employees or friends to post reviews. They must say so.
What to do about claims that sound too good to be true
If someone endorsing your business claims an exceptional result—say, a customer says they gained many new clients in a short time using your marketing service—you need proof that most of your customers achieve similar results. If you don't have that proof, the endorsement must include a statement about what typical results are. For example: "Results vary. Most customers gain 5 to 10 new clients per month." This protects you from FTC action and protects potential customers from being misled. If you don't have data on typical results, don't use the exceptional-results endorsement.
How to check your current testimonials and reviews
Audit what's already out there. Look at your website, your social media pages, and any review sites where your business appears. For each testimonial or positive review, ask yourself: Did I pay for this? Did I give the person a free service or product? Did I offer them a discount or a gift in exchange? If the answer is yes to any of those questions, check whether the disclosure is there. If it's not, reach out to the person and ask them to add it. If you can't reach them or they won't add it, consider taking the testimonial down. It's better to have fewer endorsements with proper disclosures than many endorsements that could get you in trouble.
Why this matters for your business
When concerns about possible violations come to the FTC's attention, they evaluate them case by case. More importantly, customers are skeptical of reviews they suspect are fake or paid for. When you disclose that someone was paid or given something of value, you're being transparent. That honesty builds trust. Customers who see a disclosure are more likely to believe the endorsement is genuine than customers who suspect you're hiding something. The rule isn't a burden; it's a way to make your marketing more credible.
Sources
They did the reporting. The writing and the opinions here are ours.
Questions people ask about this
Do I have to disclose if I gave a customer a free service in exchange for a review?
Yes. Any time you give someone something of value—money, a free product, a discount, a gift, or anything else—in exchange for an endorsement or review, they must disclose that relationship clearly. The disclosure should appear where readers will see it, not hidden in fine print.
What if a real customer leaves a five-star review without me asking?
No disclosure is needed. If the customer paid for your product or service themselves and left a review on their own, without any incentive from you, that's a genuine endorsement. The fact that they paid for it themselves is obvious to anyone reading the review.
Can I ask employees or friends to post positive reviews about my business?
You can, but they must disclose the relationship. If an employee or friend posts a review, they need to say something like "I work for this business" or "This is my friend's business." Without that disclosure, the review is misleading.
What happens if someone I paid to endorse my business doesn't disclose it?
The FTC typically focuses enforcement on the business and its advertising agency when pursuing violations. In some situations, such as when an endorser ignores warnings about required disclosures, the agency might take action against that individual. You're responsible for making sure endorsers understand and follow the rules.
Do these rules apply to social media posts and reviews, or just traditional ads?
The rules apply everywhere: social media, blogs, videos, review sites, and traditional advertising. The medium doesn't matter. What matters is whether the audience understands the relationship between the endorser and your business.
If a customer claims they got amazing results using my service, do I need to prove that?
If the results are exceptional or above average, you need proof that most customers achieve similar results. If you don't have that proof, the endorsement must include a statement about what typical results are. This protects you and prevents misleading claims.
This piece is about FTC's Endorsement Guides: What People Are Asking, published by FTC. Go read the original; the opinions here are ours and the reporting is theirs.
