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The Federal Trade Commission took steps this week to rein-in bloggers who flog products or accept payments from advertisers for positive reviews by issuing new guidelines that come with fines of up to $11,000.

The revised Guides take aim at what has become a disturbing practice on the Internet. Consumer product manufacturers and advertisers have taken advantage of the increasing popularity of bloggers in certain fields to gain favorable reviews for products by offering freebies or paying for reviews. The so-called “mommy-blogger” sector in particular has taken heat in recent months over its lack of disclosure of payments or gifts received in exchange for blogging about products.

Under the new FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising, bloggers must now disclose any payments or freebies received or face possible fines. The FTC said this is first time the document has been updated since 1980.

In a statement issued concerning the update, the FTC offers the following advisory:

“The revised Guides also add new examples to illustrate the long standing principle that ‘material connections’ (sometimes payments or free products) between advertisers and endorsers--connections that consumers would not expect--must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other ‘word-of-mouth’ marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.”

The new guides will, of course, open a can of worms for bloggers over what is and isn’t a freebie. Must a technology blogger, for example, disclose that he received a free beef-on-a-bun sandwich at the last SAP briefing he attended? (I did and don’t really feel guilty about it). Examples like that aren’t really what the FTC has in mind. However, should a technology blogger attend a briefing on say a new Dell laptop or Apple iPhone, and take one of those products home as a gift, then yes, the guidelines for disclosure absolutely apply.

The FTC is also looking to shed a little more light on the practice of paid-for research. In the statement on the new guides it notes:

“If a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.”

And in one more stab at plugging endorsement loopholes, the FTC has also issued new guides concerning celebrities. The next time a celebrity talks about the hot convertible they’re driving on Oprah, they better be sure to say whether they paid for the car or received it as a gift.

“The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media,” the FTC said in its statement.
 

Comments (2)

	1. 10-07-2009 21:46
	This is a welcome revision to the guidelines, and will impact the business model of more than a few bloggers IF it is effectively enforced. This change has been anticipated/feared for a while in the blogger and performance marketing community. Registered

Fred Kauber

	2. 10-08-2009 09:22
	While I agree with Fred it is "a welcome revision," I'm not so sure I agree with the "feared" part of his statement. Anticipated yes, feared?     As with any kind of new media you will see changes within ProSocial Communities, and no type of social media will be immune to such change. I do think communities, such as this one, police their communal sites and make certain no one is in violation. Ultimately, it isn't in a ProSocial networking site's best interest to work along such deceptive lines. Clearly, vendors are a part of the community, and as a part of the community they are entitled to their voice. When engaging with the community vendors should be pronounced about who they are.     If something is marked as "Sponsored by" (i.e. IBM's sponsorship of the featured video on this site - http://www.ciozone.com/index.php/Sponsored-Videos.html ) the community will view the content knowing it is brought to you by IBM, not too different from a commercial on TV. Why fear what is known?    And just as the author points out… I doubt the FTC’s intent is to go after him for consuming a beef on a bun sandwich. However, where he is typing his blog from his new iPhone or, say, his new Dell laptop he happened to pick-up because he might write about the new product, well, clearly alarms should go off. I’m pretty certain bloggers would not gain much respect from the community should they continue to promote a product in their blogs anyway. So, to that end, the community will enforce its collective will by viewing the blogger as irrelevant and nothing more than a shill for a vendor.    The better vendors understand this and would not view it as in their interest anyway. As suggested in the book Groundswell, the way information is now consummed has changed dramatically.     Recent studies indicate that C-Level Officers, kind of like this audience, now refer to the internet more and more. Over 67% refer to the internet as the most important source of business information (Gartner January 2008 Insight Express study). So I would say it is critical to get it right in terms of reporting and blogging. If it takes laws to enforce ethical and responsible reporting, so be it. It should be a welcome situation since it levels the playing field. Registered

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