The Brand Trophy Paradox: How To Market Brand Recognition And Avoid Legal Risk – Advertising, Marketing & Branding

Brands are delighted to receive an award or a seal of approval.
Marketing those trophies requires careful consideration of
intellectual property and advertising law principles.

Types of Awards

Third-party industry watchdogs may reward a brand with an award,
seal of approval, or beneficial ranking on a comparison website or
through an independent certification program. In other instances, a
company might self-certify that its product meets certain industry
standards or requirements. Brands will often deploy these awards,
designations, or certifications in marketing materials to help
drive sales, build consumer trust, and elevate brand
recognition.

Intellectual Property Considerations

When using logos or seals from a third party, businesses need to
secure the necessary permissions to avoid potential infringement
claims. Unauthorized use of a third-party seal that is a service
mark or certification mark (whether or not registered) can lead to
accusations of infringement, dilution, or false association,
damaging the relationship between the brand and the certifying
organization.

Similarly, businesses should ensure that they have authorization
to use in marketing materials any copyrighted materials associated
with the award, such as detailed written reviews, proprietary
logos, or guidelines associated with the award.

FTC Guidelines on Endorsements

While brands may quickly realize that there are intellectual
property considerations in referring to third-party awards, they
should also consider the issue from an advertising law perspective.
Lack of disclosure, unsubstantiated claims, or improper
self-certification may lead to false advertising charges from the
FTC or a challenge from a competitor.

First, a brand should develop its marketing materials
considering the Federal Trade Commission’s (FTC) 2023 Endorsement and Testimonial Guides and
associated guidance (“FTC Guidelines”). The FTC
Guidelines emphasize the necessity to disclose to consumers
“material connections” between the brand and an endorser.
If a brand is incentivizing a third party—whether through
payment, discounts, or other perks—to grant an award, the
brand must disclose this relationship clearly and conspicuously in
all marketing materials. The FTC highlights that this requirement
is particularly crucial when a substantial portion of the audience
may not be aware of or expect such a connection.

Second, brand endorsements from expert organizations must be
supported by expertise. Brands should consider the background of a
third party giving an award or certification to ensure there are
sufficient objective standards or expert evaluations to support the
award. Without such substantiation, the brand award may be seen as
deceptive or unfair advertising. For example, a seal from an
environmental group should be supported by recognized industry
environmental standards, not merely a favorable assessment with no
evidentiary support (16 CFR Part 260.2). Similarly, if a
chiropractic association endorses a product, that endorsement
should be based on a genuine chiropractic assessment, not just a
paid promotion (16 CFR Part 255.4).

Third, marketers need to be aware of possible “dark
pattern” accusations by a regulator or a consumer class action
related to the third-party award. In recent years, the FTC and
other state regulators have decried such deceptive practices that
subtly influence or manipulate consumer behavior. These tactics can
include using misleading visuals or confusing language to
exaggerate the importance or meaning of a third-party award or to
obscure the financial relationships behind an endorsement or
certification. In particular, the basis for the third-party award
should be commercially relevant to the consumer’s use of the
product in its typical use. Depending on how the award is used in
marketing materials, the third-party award could be seen as a type
of superiority claim relative to competitors. If the award or seal
is relevant to a product attribute that does not demonstrate itself
in typical consumer use, it may fail as substantiation for any
implied superiority claim and create a valid claim of dark pattern
marketing.

Third-Party Ranking Services and Comparison Websites

Another area of concern for businesses involves third-party
ranking services and comparison websites, especially when financial
incentives are at play. The FTC’s guidelines provide detailed
instructions on how to handle these scenarios.

If a business is paying a third-party ranking site for favorable
placement, it must not create the impression that the rankings are
unbiased or objective. The FTC requires that consumers be informed
about any financial ties that could affect the ranking of products
or services.

In May 2020, the FTC issued an order against LendEDU, a website that compares
financial products such as student loans, personal loans, and
credit cards. LendEDU presented itself as an objective resource,
but it was discovered that the company accepted payments from
lenders, which led to higher rankings and ratings for those lenders
on the company’s website. The FTC’s order prohibited
LendEDU from misrepresenting the objectivity of its rankings and
failing to disclose compensation-related influences.

If payments are influencing the rankings or recommendations,
disclosing this information is mandatory. Such disclosures,
however, even if clear and conspicuous, may not protect a business
from accusations of deceptive practices. For instance, if a
headphone review website accepts payments from headphone
manufacturers to raise their products’ rankings, the
website’s practices would be considered deceptive, even if the
payment relationship is disclosed (16 CFR Part 255.4, Example 3).
By contrast, for example, if a website operator receives payments
from manufacturers for affiliate link referrals, such practices
would not be considered deceptive provided the website operator
clearly and conspicuously discloses that it receives payment when
such link is used.

Self-Certifications: A Word of Caution

Self-certifications, namely company-created seals or awards, are
another area where businesses must tread carefully. Unlike
third-party certifications, self-certifications involve the company
evaluating its own products. This practice can lead to regulatory
scrutiny based on bias and accuracy concerns.

The FTC Guidelines underscore the importance of substantiation
for self-certifications to avoid allegations of deceptive
advertising if the company overstates the benefits or attributes of
its products. Self-certifications and related marketing claims
related to health, safety, or environmental impact are likely to
face a high level of scrutiny. For instance, if a business
advertises its product as “eco-friendly” or
“organic” based on its own criteria, it must have
concrete, scientific evidence to substantiate these statements.

The FTC’s complaint against Moonlight Slumber, a baby
mattress manufacturer in Illinois, highlights this problem. In
December 2017, the FTC alleged that Moonlight Slumber’s
“Green Safety Shield” certification—a self-awarded
label—was misleading. FTC asserted that the company’s
claims about the mattresses being organic and plant-based were
unsupported. In addition, FTC highlighted that Moonlight Slumber
had failed to disclose that the seal was the brand’s own
designation. Moonlight Slumber settled the charges and agreed to
prohibitions against misleading representations. The settlement
also required the brand to have competent and reliable evidence
supporting its claims and to avoid misrepresenting any tests or
study results. Finally, the settlement prohibited the company from
disseminating misleading certifications or failing to disclose any
material connection to an endorser. Accompanying these
prohibitions, the brand agreed to five years of record-keeping and
future investigation compliance.

By contrast, in November 2024, the Southern District of New York
interpreted generously the FTC’s “clear and
conspicuous” standard for disclosures relating to a
certification process for a green claim. Dorris et al. v. Danone Waters of
America. The Court found that Danone Waters of America
(“Danone”), the producer of Evian water bottles, had not
engaged in false advertising by labeling Evian water as
“carbon neutral.” Danone’s back label of Evian water
bottles included a reference to Evian’s website with
information about carbon neutrality and the standards and
certification processes for its claim. The Court reasoned that
those website disclosures were sufficient to mitigate concerns that
consumers could have been misled at the point of sale. The case was
fact-specific. Brands should not rely on website disclosures to
clarify marketing claims on certifications.

Best Practices

Awards, rankings, and certifications can be powerful marketing
tools, but businesses must exercise caution to ensure compliance
with legal requirements and consumer expectations.

• Obtain permission: Ensure that any use of
  intellectual property is authorized or appropriately licensed.




• Be clear and conspicuous: Dark patterns can
  lead to significant penalties for a business, so clear and honest
  marketing is critical. Avoid using confusing language or otherwise
  misleading consumers.




• Disclose material connections: If the brand
  has a material connection to the issuer of the award (or has
  self-certified), such connection must be disclosed clearly and
  conspicuously. The FTC is particularly interested in material
  connections to third-party ranking services.




• Support claim: Ensure that any claims included
  in marketing materials can be supported with adequate evidence. In
  addition, all awards or certifications should relate to normal
  consumer use of a product.




• Review for compliance: Regularly review all
  marketing materials that include awards, rankings, or
  self-certifications to ensure compliance with FTC Guidelines.
  Additionally, ensure that employees who focus on marketing
  materials are trained on FTC requirements and the importance of
  clear and conspicuous disclosures.

By understanding the legal landscape and avoiding common
pitfalls, companies can use third-party awards and
self-certifications to their advantage without risking legal
repercussions.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.