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Daily Business Report — Oct. 8, 2009

FTC revises guide for endorsements and testimonial ads

The Federal Trade Commission has approved final revisions to the guidance it gives to advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act. The Guides were last updated in 1980.

Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor.

The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.

Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.

Celebrity endorsers also are addressed in the revised Guides. While the 1980 Guides did not explicitly state that endorsers as well as advertisers could be liable under the FTC Act for statements they make in an endorsement, the revised Guides reflect Commission case law and clearly state that both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement – or for failure to disclose material connections between the advertiser and endorsers. The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.

The revised Guides are available on the FTC’s Website:

Poway’s Del Norte High School completed

The Poway Unified School District and contractor Barnhart Inc. marked the completion of the new $104.5-million Del Norte High School. Construction of the school in the San Diego suburb of Del Sur/4S Ranch was started in May 2007 and was delivered under budget and ahead of schedule, allowing the school to prepare facilities and operations to open in time for the current school year.  Encompassing over 212,000 square feet on 63 acres, the school will serve 2,250 students in grades 9 through 12. The school was designed by NTD Architects of San Diego. The school has 48 standard classrooms, 12 science labs, five art labs, two music classrooms, five special education classrooms, one drama classroom, 11 vocational education classrooms and labs, one ASB classroom and six physical education classrooms.  In addition to classroom spaces, the school features state-of-the-art sports facilities including a stadium with running track, baseball and soccer fields, a swimming pool and a gymnasium.  A library, research center, performing arts complex, two-story administration facility, food services and support facilities complete the campus.

Foundations announce more than $3 million in grants

The San Diego Foundation and the Alliance Healthcare Foundation announced that more than $3 million has been awarded to nonprofit organizations serving the health care needs of residents in the Paradise Valley Hospital service area. Of the $3 million, nearly $2.8 million came from the Paradise Valley Hospital Community Health Fund, which was created when the hospital was sold to Prime Healthcare Services in 2007. Additionally, more than $270,000 was granted directly from The San Diego Foundation.

Grantee organizations are:

• California Dental Association Foundation: $289,776

• Metro-CASBIRT: $500,000

• San Ysidro Health Centers: $400,000

• SAY San Diego: $382,500

• Scripps Whittier Diabetes Institute: $384,948

• Sharp Healthcare Foundation: $415,650

• South Bay Community Services: $500,000

• UCSD Student Fun Free Clinic: $198,800

Total: $3,071,674

BAE Systems executive named to nonprofit board

Douglas D. Stewart, vice president for legislative affairs at BAE Systems, Land & Armaments, has been elected to the board of trustees of United Through Reading, a San Diego-based nonprofit organization that helps separated families connect through reading aloud to their children via DVD. Prior to joining BAE Systems in January 2007, Stewart worked as a consultant for Robison International, managing defense programs for 14 clients.  He is a retired Army officer, having served more than 20 years as an engineer and a budget officer working with members of Congress and their staffs.  Prior to his Army career, Stewart was a high school teacher and coach. He holds a bachelor’s degree in history from the University of Bridgeport in Connecticut and a master’s degree in education from the State University of New York. Stewart is also a graduate of the Army’s basic and advanced engineer courses and the Army Command and General Staff College.

Knight & Carver names national director of service

Knight & Carver Wind Group has named Nizar Yaghi as its new national director of service. Formerly with GE Wind, Yaghi will oversee Knight & Carver’s service operations as well as its expansion into West Texas. Over a period of 11 years, Yaghi held a number of high-ranking positions with GE, including the roles of lead design engineer, new product engineering leader and quality manager.

Systran Software signs long-term lease in Sunroad Corporate Centre

Systran Software Inc., has signed an 89-month, $2,564,098 lease for 9,860 square feet of office space at Sunroad Corporate Centre, 4445 Eastgate Mall, Suite 310, in San Diego. Systran Software will begin occupying the space in November. The lessee was represented by Jeff Saywitz of the Saywitz Company. Eric Vann, Steve Wolf and Brunson Howard of Cushman & Wakefield represented the lessor, Sunroad Enterprises.

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