ADT settles with U.S. over paying for endorsements

WASHINGTON Thu Mar 6, 2014 4:35pm EST

WASHINGTON (Reuters) - ADT Corp has settled with U.S. regulators who accused the home security company of paying safety experts to endorse its products without disclosing the arrangement, the Federal Trade Commission said on Thursday.

The commission said in its complaint the Boca Raton, Florida-based company paid three people a total of about $313,000 to publicly endorse their product and gave two of them free security systems.

One of the three, Alison Rhodes, also went on NBC's "Today Show" and other programs to tout ADT Corp's Pulse home monitoring system, without disclosing the company had paid her, according to the FTC.

In the segment, Rhodes, who operates the website "SafetyMom.com," said the ADT system was "truly the virtual babysitter" and could potentially help homeowners save money on insurance.

Rhodes and the others appeared to be impartial reviewers of the ADT system, even though they had been paid, the FTC 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," said Jessica Rich, head of the FTC's Bureau of Consumer Protection.

In the settlement, the FTC required ADT to disclose any financial relationship between the company and those who endorse its products in the future.

ADT said it was "happy to have resolved the matter amicably." NBC spokeswoman Megan Stackhouse said the network was "reviewing the matter." Rhodes did not respond to a request for comment.

ADT shares closed down 1 percent at $30.93 on the New York Stock Exchange.

(Reporting by Diane Bartz; Editing by Ros Krasny, Jeffrey Benkoe and Meredith Mazzilli)

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