The FTC has issued guidelines, last updated in 1980, telling businesses the appropriate way to utilize client testimonials in their advertisements.  Read it here:

http://www.ftc.gov/opa/2009/10/endortest.shtm

Here is a highlight:

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.

With regards to Propadoo’s client testimonials service the FTC guidelines do not clarify any conflicts it might have with the Digital Millennium Copyright Act (DMCA) of 1996.  Under Title II of DMCA internet service providers and other intermediaries (such as online forums) are not liable for the content posted using their services.  Web sites that allow customers to post their own testimonials (such as when using customer testimonials software) are likely exempted due to the safe harbor provided by Title II of DMCA however we advise readers to seek legal counsel regarding this issue.