ADT Settles FTC Charges That Endorsements Deceived Consumers

(RTTNews) - The Federal Trade Commission has charged the home security company ADT LLC (ADT) with misrepresenting that paid endorsements from safety and technology experts were independent reviews.

Under an agreed-upon settlement, ADT is prohibited from misrepresenting paid endorsements as independent reviews in the future.

ADT manufactures the ADT Pulse home security and monitoring system and some other security products and services.

The FTC's administrative complaint alleges that ADT paid spokespeople to demonstrate and review the ADT Pulse on NBC's Today Show, as well as some other television and radio news programs and talk shows, and in blogs and other online material.

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, and one spokesperson received more than $200,000. In exchange, the spokespersons appeared on over 40 television and radio programs and posted blogs and other material online.

ADT misrepresented that the reviews were independent, and failed to disclose that the experts were being paid by ADT to promote the Pulse system, the FTC alleged.

Jessica Rich, Director of the Federal Trade Commission's Bureau of Consumer Protection, said, "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."

The FTC's proposed order requires ADT to clearly and prominently disclose a material connection between an endorser and the company if that exists, in connection with the advertising of a home security or monitoring product or service.

It also wants the company to promptly remove reviews and endorsements that have been misrepresented.

ADT closed down 1 percent on Thursday at $30.93.