FTC Rules Against Product Placement Disclosure

CHICAGO Consumers do not need to be informed that product placement in television shows may have been paid for and could constitute an “advertisement,” according to a Federal Trade Commission ruling issued Thursday.

The ruling came in response to a request for investigation filed by watchdog group Commercial Alert. The group asserted product placement blurs the lines between advertising and programming, and such placement could be implicated in diseases such as obesity and diabetes in children. The group also said failing to disclose paid placements was in violation of the Federal Trade Commission Act.

“There may be instances in which the line between advertising and programming may be blurred,” wrote Mary K. Engle, FTC associate director of advertising practices in a response. “However, we believe that the existing statutory and regulatory framework provides sufficient tools for challenging any such deceptive acts or practices.”

The FTC determined product placements such as Coca-Cola cups on American Idol or a Snapple logo on The Best Damn Sports Show Period do not “give more credence to objective claims about the product’s attributes.” Furthermore, product placement seen by children is “no different from ordinary advertising” and does not constitute a violation of the FTC Act.

“Today, the FTC has essentially endorsed the deceptive and dishonest practices of the product placement industry, and turned its back on children who are suffering from an epidemic of marketing-related diseases like obesity and type 2 diabetes,” said Commercial Alert executive director Gary Ruskin in a statement.

Association of National Advertisers evp Dan Jaffe said, “The ANA strongly endorsed the FTC actions. We believe it strongly and correctly reaffirms the existing rules in regards to product placement. Commercial Alert’s proposals were radical and misguided. The FTC already has all the power it needs to stop false or deceptive product placement.”