ADT settles FTC charges that its endorsements deceived customers

(By Andrew Harrer/Bloomberg)
(By Andrew Harrer/Bloomberg)

The Federal Trade Commission said Thursday that it had settled its charges against home security firm ADT for allegedly paying safety and technology experts to endorse its online home monitoring system on NBC’s “Today” show and in other media outlets without disclosing the financial arrangements.

ADT allegedly paid Safetymom.com blogger Alison Rhodes and David Gregg, who runs consumer guide Behindthebuy.com, more than $300,000 to act as spokesmen for an online monitoring system that can be controlled by smartphones and other devices. At no time in their appearance on NBC and during their 40 other radio and television spots did they mention that they were being paid by the Boca Raton, Fla., company to endorse the products.

The company reached a settlement over the alleged consumer deception and agreed with the FTC to disclose its paid endorsements in the future. The FTC’s action is part of a push to monitor advertising practices across various media platforms. In 2009, the agency adopted guidelines for bloggers to disclose their paid affiliations with companies when endorsing products and services of those firms.

ADT allegedly paid three spokesmen to promote its security system on radio, television and online outlets and allegedly used a public relations firm and booking agents to set up media interviews for the endorsers.

Three years ago, Rhodes appeared on “Today” and told hosts Hoda Kotb and Kathie Lee Gifford: “This is truly the virtual babysitter. I travel a lot. I’m on the road. This is the ADT Pulse Monitoring System. I’ve got wireless cameras. I’ve got motion detectors. I’ve got texts that come into my iPhone if my daughter doesn’t walk into the door from school.”

When asked about the price, Rhodes said, “You know, it’s really not that much.” She added, “It’s amazing!”

“It’s hard for consumers to make good buying decisions when they think they’re getting independent expert advice as part of an impartial news segment and have no way of knowing they are actually watching a sales pitch,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “When a paid endorser appears in a news or talk show segment with the host of that program, the relationship with the advertiser much be clearly disclosed.”

Cecilia Kang is a staff writer covering the business of media and entertainment.
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