Introduction

Welcome to the Simplifying Legal podcast, brought to you by Businessese. I’m your host, Danielle Liss.

Many years ago, someone told me I was the least lawyer-y lawyer she’d ever met because I helped make legal easier to understand. To this day, it’s one of the best compliments I’ve received in my professional life.

If you’ve ever felt legal was too scary, too overwhelming, too complicated, or just plain incomprehensible, you’re not alone. The Simplifying Legal podcast was created to help. 

In each episode, we’ll do a deep dive into a legal topic and give you concrete next steps so you can apply it to your business. 

My goal is for you to walk away from each episode thinking, oh, that was easier than I thought it would be.

Let’s get started. 

Episode Content

Hey there, I’m Danielle. Welcome to Episode 45 of Simplifying Legal for Small Business Owners. Today, I’m talking about testimonials and what you need to know when using them in your marketing. 

Disclaimer: As always, before we get into today’s topic, a quick disclaimer. This podcast is meant to provide you with legal information only. It’s not legal advice and does not create any type of attorney-client relationship between us. Please don’t take any action without consulting your lawyer first. 

What is a Testimonial? Understanding Social Proof

Testimonials are everywhere in marketing, and I think it’s important to do some background before we dive into the legal side of this discussion. 

Are you familiar with the phrase social proof? If it’s new to you, it was coined in 1984 by Robert Cialdini in his book Influence: Science and Practice, which investigated how people are influenced by compliance professionals. 

The concept of social proof focuses on how people will adopt the actions of others to reflect correct behavior in a social situation. In other words, if someone is uncertain, they will typically look to the behavior of another person to guide them in what to do. 

Social proof has been demonstrated to help people make decisions when they are uncertain. 

For small business owners, social proof is usually discussed in the realm of marketing. This might be in the form of reviews, case studies, or trust icons, like the “as seen on” banners that you see to show press mentions. 

One of the most common forms of social proof is testimonials. A testimonial is usually a recommendation from a happy customer. It might be a couple of lines or something more in-depth. It will typically talk about the person’s experience using a product or service. 

Here’s a made-up example: I loved working with Jane. She made the process simple to understand and easy to execute. I highly recommend her services if you need help with the same thing. 

So how does a testimonial work as social proof? Simple, if a potential customer is uncertain about a company, if they see a testimonial from someone else in their industry, it may sway them to use the same service provider. 

Using the example above, if you are looking for that service, but it seems difficult to understand and hard to execute, that testimonial will help to overcome those concerns and may make you want to hire Jane. 

Testimonials are effective and common. But, there are also some important things that you need to know if you want to use testimonials in your marketing. First, I’ll start with what you should be aware of when working with testimonials, then I’ll move to getting permission to use them from your clients. 

The FTC and Testimonials

The discussion of using testimonials is really focused again on the FTC. 

In the last episode about FTC disclosures, I talked a lot about the Federal Trade Commission. To recap, the FTC is a government agency with two main goals. One is to promote competition, which involves things like enforcing antitrust laws. The other is to protect consumers, which is done by stopping unfair, deceptive, or fraudulent practices. This includes protecting consumers from unfair or deceptive practices in advertising. 

In an effort to protect consumers from deceptive practices, the FTC provides guidance regarding the use of endorsements and testimonials in advertising. One of the best resources on this is the FTC’s Guide Concerning the Use of Endorsements and Testimonials in Advertising, which I’ve linked in the show notes. This guide gives standards to follow, as well as a lot of examples. 

The Guide defines an endorsement as “any advertising message… that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser.” This means that an endorsement is coming from a third party, not the company itself. 

A testimonial is a customer’s impression of using a company’s products or services. As the definition of an endorsement, it is there to demonstrate what your client’s experience was in working with your company. A testimonial can be in any format, like a written quote or video. 

The Guide specifically states that the FTC treats all testimonials as though they are endorsements. So, if you decide to look at the Guide and you see the word endorsement mentioned frequently, the rules will also apply for a testimonial. 

As a small business owner who wants to take advantage of the power of testimonials as a form of social proof in your marketing, what do you need to know? 

FTC Guide: General Considerations

For the next couple of minutes, I’m going to distill the information provided in the FTC’s Guide so you know what to consider for your business’s use of endorsements and testimonials. 

First, an endorsement or testimonial “must reflect the honest opinions, findings, beliefs, or experience of the endorser.” In other words, don’t lie. If a person had a really bad experience, you shouldn’t include a testimonial from them that said everything was perfect. 

Next, the endorser must be a bona fide user if they are endorsing a particular product or service. For example, if a person has never used your services, you shouldn’t post a testimonial that says they have. 

If you have reason to believe that the endorser’s opinion has changed, you should stop using the testimonial. For example, if someone gave you a testimonial a couple of years ago, but you know they’ve started using a competitor’s product, which they are actively using, then you shouldn’t continue to use the old testimonial. 

Next, the testimonial can’t convey something that wouldn’t be true if the advertiser was saying it. In other words, if you can’t make a claim about your product or service, you can’t use a testimonial to do it for you. 

For example, at Businessese, I can’t say that a template will cover every possible situation and will always prevent someone from being sued. It’s just not true and it would be impossible for a template to offer that type of guarantee. 

So, even if a customer wrote something like, I’m so glad I used a template from Businessese. It’s like an impenetrable fortress for my business because now I know I can never be sued. 

This is not a testimonial I can use as it’s written in my marketing because of that claim. If something like this happens to you, go back to your client and ask if it would be accurate to say that it feels like an impenetrable fortress for the business since you feel more protected? And then you can work on using the testimonial in a different way, without the incorrect claim. 

Keep in mind, both you and the endorser can be liable for false or unsubstantiated statements made in a testimonial. So make sure you are cautious about the claims in the testimonial. And, for a sneak peek, I’ll be talking about avoiding false claims in the next episode.

In a testimonial, you don’t need to use the endorser’s exact words, unless you are including quotes. But, you can’t present it out of context or reword it in a way that changes the meaning. 

For example, if your client said, Sam made the process easy and I can’t wait to work with her again. You could potentially change this to the client is excited for her next project with us. 

If, however, your client said, “While Sam made this process easy, I don’t know that we will hire her again because the deliverables were not exactly what we were hoping for”, you can’t change this to something like, Our customer was thrilled with the easy process and the project deliverables. 

Remember, if you are going to paraphrase, the meaning needs to be the same. And, if you are paraphrasing, don’t use quotes or any other formatting that might make it look like quotes. 

FTC Guide: Consumer Endorsements

Testimonials are considered as “representing that the product or service is effective for the purpose depicted in the advertisement.” This means that if you are using a testimonial for marketing purposes, it will be considered that what it says is true about your product or service. 

The easiest example here is with weight loss programs. How many times have you seen a testimonial that says, “I lost 10 pounds in 2 weeks.” Is this an accurate depiction of your product or is it a testimonial from a client who had atypical results? 

If you own that business, to make a claim like that, you would need to have substantiation that this is the same experience that most users have with the product. If you don’t have that, you need to make clear that this was the one person’s experience and it is not necessarily representative of the average person. 

Depending on your products or services, I think it’s important to exercise caution with any testimonials related to results if they aren’t typical. 

In the world of online business, a very common example is the usage of income claims in testimonials by program owners. For example, I increased my revenue by 300% using the methods in the program. While that may be accurate for one individual, if they are an unusual example, be clear about that in your marketing. Own that the results aren’t typical. Otherwise, it could be a deceptive advertisement. 

The best guidance I can offer is, to be honest whenever it comes to results. If there are claims in a testimonial, make sure they are substantiated. If you don’t have substantiation or the results aren’t typical, make sure you have a strong disclaimer about the information you are presenting. 

If you are using testimonials for marketing purposes, remember: 

• Be honest
• Don’t make false or unsubstantiated claims, and
• Don’t treat atypical results as typical

Getting Permission to Use a Testimonial

Now that you have a better idea of what’s permissible in your testimonials, let’s consider what you need to do to add them to your marketing. 

The most important rule to remember is to get permission from the endorser. 

If you regularly solicit testimonials from your customers or clients, you may want to consider adding something to your client agreement or terms regarding testimonials. 

Often, this type of clause will state what you can do with a testimonial if the client provides one. Common things to include are how it would be used, like on your website or social media. You may also want to say what will be included, like full name, a link to their website, or an image. If you want it to include their logo, make sure you have permission to use it. And, if you give them approval rights before it is live, you can mention those in this clause. 

If you don’t have something in your contract or terms, you can directly ask and obtain authorization. For example, it can be something as simple as: I’d like to include this as a testimonial on my website and I’d like to include your name and a small photo of you, is that okay? 

Ideally, you can also obtain a signed release to ensure that there are no future claims that there was no permission to use the content. However, some businesses rely solely on the email with permission. 

One thing to note: If a client doesn’t want to have their testimonial shared, please respect that. Be focused on giving them a good experience, not solely on your own marketing.

Some of my clients run online programs and they have a forum or Facebook group for the participants. I’m often asked if it is permissible to share screenshots of their comments and wins. That depends on what your clients have agreed to. 

Many online programs will contain something in the terms or program agreement that state that certain content may be treated as a testimonial and used for marketing purposes. 

For example, the terms could state that screenshots may be taken and posted on social media, but they are anonymized. For example, they may use a first name, but no other identifying details. If you are a business using this type of testimonial, make sure you stay within your own boundaries. If you state that you are only posting things without identifying details, don’t post a testimonial with their name or photo without getting additional permissions.  

What if you had permission to post a testimonial and now the endorser is asking for you to remove it? If that happens, have a discussion with them about why. Is it that they don’t like the phrasing and want to make an update? If so, see what they’d like to change and if it makes sense to modify it in your marketing. 

If they tell you that they no longer feel it reflects their views, then you need to remove it to ensure that you are staying FTC compliant. Remember, a testimonial has to reflect their experience and opinions. If it is no longer timely or accurate, you shouldn’t be using it. Honor their request to take it down.

Action Steps

This wraps up my tips on using testimonials in your marketing. Now let’s talk about today’s action steps.

1. If you are using testimonials, have you reviewed them to ensure that they are FTC compliant? If you haven’t, definitely do this. If you find something that isn’t compliant, consider removing or revising your usage. 
2. If you currently use testimonials or plan to in the future, how are you obtaining permission to display them? If it is in your contract, are you obtaining permission to use the client’s likeness? Is there anything you need to modify in your agreement? If so, make those changes. 
3. Last, as always, if you have questions about proper usage of testimonials, please contact your lawyer. I regularly work with clients on this through my law firm, Liss Legal, and I’d be happy to discuss to see if we would be a good fit to work together. If you’d like to learn more, visit LissLegal.com.  

I’d love to connect with you outside of the show. Visit Businessese at businessese.com. To find show notes for today’s episode, visit businessese.com/podcast.

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