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Federal Trade Commission

ADT settles FTC complaint that it misled consumers

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Wednesday, March 12, 2014

ADT misled consumers by paying experts to promote ADT Pulse on NBC’s Today Show and through other media outlets without revealing the experts were paid—giving the impression the experts’ reviews were independent, the Federal Trade Commission alleges.

The administrative complaint is part of the FTC’s “ongoing crackdown on misleading endorsements in advertising,” according to an FTC news release. Now, to resolve that complaint, ADT has reached a settlement with the FTC that prohibits ADT “from misrepresenting paid endorsements as independent reviews in the future,” the March 6 news release said.

I asked Boca Raton, Fla.-based ADT about the matter. The company provided this response: “ADT has a tough disclosure policy that follows the FTC endorsement guidelines. That’s why we are happy to have resolved the matter amicably, and why we are willing to commit publicly to maintain that policy.”

Here’s what happened, according to the FTC:
 

ADT paid three spokespersons, including a child safety expert, a home security expert, and a technology expert, more than $300,000 to promote the ADT Pulse, with one spokesperson receiving more than $200,000. Two of those spokespersons also received a free ADT Pulse security system, valued at approximately $4,000, and free monthly monitoring service, according to the complaint. In exchange, the spokespersons appeared on more than 40 different television and radio programs nationwide and posted blogs and other material online.

ADT set up media interviews for the endorsers through its public relations firms and booking agents – often providing reporters and news anchors with suggested interview questions, and background video, also known as b-roll, according to the complaint. The paid ADT endorsers were introduced by program hosts as experts in child safety, home security, or technology, usually with no mention of any connection to ADT. The endorsers sometimes demonstrated child safety, home security, or technology products other than the ADT Pulse, adding to the impression that they were providing an impartial, expert review of the products.

The settlement is not official yet. The FTC has given unanimous preliminary agreement to it, but the commission won’t take a final vote until a March 6-April 7 public comment period closes.

Here are more specifics of the agreement, according to the FTC’s news release:

             [The order]

-Prohibits ADT from misrepresenting that any discussion or demonstration of a security or monitoring product or service is an independent review provided by an impartial expert.
-Requires ADT to clearly and prominently disclose, in connection with the advertising of a home security or monitoring product or service, a material connection, if one exists, between an endorser and the company.
-Requires the company to promptly remove reviews and endorsements that have been misrepresented as independently provided by an impartial expert or that fail to disclose a material connection between ADT and an endorser.

 

Security system scam moves across the U.S.

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05/28/2013

ESSEX, Mass.—A scam that plagued Arizona earlier in 2013 has crept east, according to an article from the Gloucester Times, a newspaper based in Gloucester, Mass.