FTC Busts ADT for Failing to Disclose Paid Endorsers

Spokepeople posed as independent experts

ADT's on-air "independent" experts have set off all kinds of alarms at the Federal Trade Commission, which found that the home security company failed to disclose that the experts, which appeared on more than 40 different media outlets, were paid to endorse ADT's products and services.

Viewers to NBC's Today Show and listeners to Daybreak USA on the radio may have thought they were watching or hearing an unbiased news story or review about home security. But what they actually got was a slick sales pitch.

The case once again underscores how important it is for marketers to disclose paid endorsements. Also, it may be the first case where the FTC has prosecuted an advertiser for misleading statements a spokesperson made during a news program.

"Although the FTC has recently been focused largely on transparency in online communications, this case is also a reminder that the FTC is looking at traditional media as well," said Jeff Greenbaum, an advertising attorney with Frankfurt Kurnit Klein & Selz.

According to the FTC's complaint, in 2011 three ADT spokespersons—a child safety expert, a home security expert and a technology expert— promoted ADT's Pulse security system on NBC's Today Show, other TV shows, radio news programs and blogs. In total, ADT, through its public relations firms, booked the spokespeople on more than 40 media outlets.

Although billed as independent experts, they were in fact paid more than $300,000 by ADT. One of the spokespersons received more than $200,000. Two of the three spokespersons also received a free ADT Pulse security system valued at $4,000, along with free monthly monitoring service.

Under the agreed-upon settlement, ADT promised to make it clear if they're paying someone to promote their products. The company must also remove reviews and endorsement that have been misrepresented as independent reviews or that fail to disclose a material connection between ADT and the endorser.