FTC rules nix secret pay-for-post deals

The Federal Trade Commission has finally ruled on endorsements in blogs, podcasts, Facebook, and other social media. There's threats of big fines for hidden advertisements and opaque endorsements. In IT Blogwatch, bloggers get all a-twitter.

By Richi Jennings. October 5, 2009.

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Etan Horowitz reports:

Bloggers who receive payments or free merchandise in exchange for reviewing a product or service must disclose that relationship, the Federal Trade Commission ruled today. ... The guidelines apply to Twitter, Facebook and other forms of new media advertising. ... The FTC did not specify exactly how bloggers should disclose the relationships.
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In order for a blogger to be fined for not disclosing they were being paid by an advertiser to review a product, there would have to be a complaint, an investigation and ultimately a court ruling mandating a fine. Violations could result in a $16,000 fine.

Brian Solis adds:

Today, the Federal Trade Commission made good on its ... promise by releasing its final revisions to the guidance it gives advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act. This amendment marks 27 years since The Guides were last updated in 1980.
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For those of us contributing to the new media landscape, there is a dire warning that we must heed. ... Paid endorsement is no longer limited to monetary compensation and this is why things will get interesting moving forward. ... “Material connections” between advertisers and endorsers – connections that consumers would not expect – must be disclosed. This is true whether its a payment or free products that change hands.

Andy Beal would be truly valiant, see:

The next time a celebrity or A-list blogger raves about the latest camera or computer, they’d better disclose any relationship they have–or dig deep into their pockets. ... [It] appears to close the loophole I see used the most. “Brand X didn’t actually pay for the post, so we didn’t need to disclose anything.”
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If you post a glowing endorsement about the new Nikon camera, but fail to mention that you also “consult” with the company on its social media initiatives, that would count as a “material connection” and could result in a fine.

But David Risley thinks it's unnecessary:

I think the free market takes care of this problem far faster and far more efficiently than a government bureaucracy. The moment one discovers a quid pro quo for a review, the entire reputation of a blogger is cast into question. Those kinds of people don’t usually last long, and the backlash can be severe in the social media circles.
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The government is about the most inefficient and unsuccessful group – EVER. Pretty much everything they do turns to ****. Do we really want the FTC using blunt (and ill-informed) force to inject itself into a constantly evolving new media that it is pretty much guaranteed not to understand? Are we going to see forms and reports that bloggers are forced to fill out on threat of jail?

While Michelle Lentz just sees the guidelines as embodying good practice:

I don’t see that this will be too much of a problem. Most of the bloggers I know (and myself included) always reveal when we receive free samples, whether technology or wine. Those of us who review technology often have to give the technology back. With wine and food, that’s not possible, but most wine bloggers reveal complimentary samples without a second thought.
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This will have more impact on bloggers who accept payment in cash or merchandise for reviewing a product.

moogsynth waxes cynical:

They'll probably try and portray the freebies themselves as positive endorsements for Company X. "Luckily for me they even included a stylish bag to carry it around in! These will be sold separately and I must say they look super stylish!!!!1".

Roger W Moore raises one eyebrow:

The FTC rules only apply to people in the US. Once again this is an example of how one country's laws are meaningless on the Internet. They will simply pay non-Americans to astroturf. You cannot tell whether someone is typing with an American accent on the net - although cultural references can sometimes give it away.

So what's your take?
Get involved: leave a comment.
 
 
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Richi Jennings is an independent analyst/consultant, specializing in blogging, email, and security. A cross-functional IT geek since 1985, he is also an analyst at Ferris Research. You can follow him as @richi on Twitter, or richij on FriendFeed, pretend to be richij's friend on Facebook, or just use good old email: itblogwatch@richij.com.

 
 
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