FTC Guidelines Raise Big Blogging Questions

Update 3: The new FTC Guidelines went into effect this week. A recent WebProNews interview with Wendy Piersall, Founder of the Woo! Jr. Network, looks at some interesting points about them that you may not have considered - some "gray areas" if you will.

Update 2:  Now Cleland says, "If people think that the FTC is going to issue them a citation for $11,000 because they failed to disclose that they got a free box of Pampers, that's not true. That's not going to happen today, not ever." (via)

Update: The FTC is now saying that the $11,000 fine is not accurate, at least for the first violation. Fast company got some responses from Richard Cleland, assistant director, division of advertising practices at the FTC, who says:

“That $11,000 fine is not true. Worst-case scenario, someone receives a warning, refuses to comply, followed by a serious product defect; we would institute a proceeding with a cease-and-desist order and mandate compliance with the law. To the extent that I have seen and heard, people are not objecting to the disclosure requirements but to the fear of penalty if they inadvertently make a mistake. That’s the thing I don’t think people need to be concerned about. There’s no monetary penalty, in terms of the first violation, even in the worst case. Our approach is going to be educational, particularly with bloggers. We’re focusing on the advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they’re saying is true?” [empahsis added]

Cleland addresses more of the concerns here.

Original Article: The Federal Trade Commission has released its revised guidelines concerning the use of endorsements and testimonials in advertising. The revisions include a focus on "bloggers" and social media users, requiring them to properly disclose when they have received payment in the form of either money or product from a company or organization and produce content regarding said company or organization. The word is that bloggers can be fined up to $11,000 per post for not disclosing.

Have you ever mentioned a free product you received online and not disclosed it? Comment here.

The reasoning behind the guidelines seems noble enough - provide transparency and keep consumers safe from hokey information. However, the concept of the government dictating how this happens does not sit well with a lot of people. The revisions (which can be found in this 81 page document [pdf], should you care to peruse them [they start around page 55]) have ruffled quite a few feathers and the conversation has become one about free speech.

Well-known author/editor/publisher Jeff Jarvis makes a really good point. He says the FTC assumes that the Internet is a medium. "It’s not. It’s a place where people talk. Most people who blog, as Pew found in a survey a few years ago, don’t think they are doing anything remotely connected to journalism. I imagine that virtually no one on Facebook thinks they’re making media. They’re connecting. They’re talking," he says. "So for the FTC to go after bloggers and social media – as they explicitly do – is the same as sending a government goon into Denny’s to listen to the conversations in the corner booth and demand that you disclose that your Uncle Vinnie owns the pizzeria whose product you just endorsed."

It's not hard to find echoes of Jarvis's sentiment all over the web. Although, I don't believe I've seen it as eloquently put as with the Denny's analogy. Still, not everyone sees the FTC regulations as a bad thing. In fact, Google's Matt Cutts stepped into the conversation with Jeff Jarvis, expressing a bit more enthusiasm for the guidelines.

"As a Google engineer who has seen the damage done by fake blogs, sock puppets, and endless scams on the internet, I’m happy to take the opposite position: I think the FTC guidelines will make the web more useful and more trustworthy for consumers," he says. "Consumers don’t want to be shilled and they don’t want payola; they want a web that they can trust. The FTC guidelines just say that material connections should be disclosed. From having dealt with these issues over several years, I believe that will be a good thing for the web."

Commenters essentially tell Matt the whole thing would smell a lot better if he were the one regulating it. The reasoning for this is that Matt is involved with the industry. He is not a government worker that has been one his whole life. He's been in the field. He knows the score. The argument coming from most of the opposition is not about the fundamental principle of making content more trustworthy for consumers. At the root of it, it appears that people are much more concerned about a government body of regulators who aren't necessarily involved with online content production telling them how it is, when there are many, many questions about what falls under the criteria.

A number of these questions are nicely placed in an "open letter to the FTC" from Ron Hogan at MediaBistro's GalleyCat. Here are a few of them:

 

- If an unpaid blogger at the Huffington Post "endorses" a consumer product without meeting the FTC guidelines for disclosure of "material connections" to the makers of that consumer product, who's liable: the blogger or the Huffington Post?

-  If a blogger prints out a series of blog posts and distributes those printed copies, is he now the publisher of a newspaper or magazine? If so, the Village Voice is distributed for free, so can a blogger/publisher distribute his newspaper or magazine for free, too?

-  What if a blogger confines herself to stating demonstrably proven facts about a book, its author, its contents, and the matter of its publication? Does the FTC consider that an endorsement? What if she confines herself to stating such facts and includes links to an ecommerce site? Has her writing somehow been transformed from a statement of fact to an endorsement? 

There are plenty more where that came from. The list goes on. You can probably think of a few yourself. It may be hard for the guidelines to be enforced. The FTC does acknowledge that its guidelines aren't exactly the law themselves. The FTC says:

The Guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.

It should also be noted that the rules presumably apply to publications beyond bloggers and social media users, but for some reason it appears that "bloggers" are the ones with whom the FTC had on its collective mind when drafting these guidelines. You have to wonder if they are able to come up with a definition for "blogging" (others have had trouble in the past. Even those directly involved in the online content industry). The rules are scheduled to take effect on December 1st.

What questions do you have about the FTC's guidelines? Share them here.

Bloggers Can (Not?) Be Fined Up to 11K Per Post for Non-Disclosure

Update 2: The FTC is now saying that the $11,000 fine is not accurate, at least for the first violation. Fast company got some responses from Richard Cleland, assistant director, division of advertising practices at the FTC, who says:

“That $11,000 fine is not true. Worst-case scenario, someone receives a warning, refuses to comply, followed by a serious product defect; we would institute a proceeding with a cease-and-desist order and mandate compliance with the law. To the extent that I have seen and heard, people are not objecting to the disclosure requirements but to the fear of penalty if they inadvertently make a mistake. That’s the thing I don’t think people need to be concerned about. There’s no monetary penalty, in terms of the first violation, even in the worst case. Our approach is going to be educational, particularly with bloggers. We’re focusing on the advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they’re saying is true?” [empahsis added]

Cleland addresses more of the concerns here.

Update: The new FTC guidelines have come out today. The FTC says:

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. Likewise, 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.

Bloggers can be fined up to 11,000 per post for not disclosing when they receive payment or free products from a company they're writing about.

Original Article (05/20): We've known for some time that the Federal Trade Commission (FTC) intends to start regulating blogs and social media with regards to word-of-mouth marketing (aka blogs and social media). An article from BusinessWeek this week looks at the FTC's intentions to regulate advertisers who are paying bloggers to write glowing reviews (whether that be in the form of cash or free stuff).

"The world's more ambitious bloggers like to call themselves 'citizen journalists.' The government is trying to make sure these heralds don't turn into citizen advertisers," writes BW's Douglas MacMillan.

Some bloggers are of course taking issue with the idea of such regulation. But there are more than a few points to consider. Carlo Longino at TechDirt writes:

"It's as if the FTC is trying to mandate credibility, and this raises a couple of interesting points. First, audiences generally seem pretty adept at rooting out when people are being paid to talk nice about a company or product, and there are plenty of examples of company's payola schemes getting found out and causing a backlash against them. Second, why do bloggers get singled out for special treatment? Plenty of old-media reporters get freebies tossed their way, but the FTC doesn't seem to think they deserve the same level of attention."

A post from Susan Getgood at Marketing Roadmaps actually looks at official documentation (pdf) from the FTC. It's quite a lengthy document, and published in 2007, it's the most recent document from the FTC on the issue. She sums up three main points from the document related to bloggers:

1. Liability for false statements in a sponsored post

2. Disclosure of receipt of free product

3. Anti-astroturfing. Requires disclosure of material interest when making an endorsement.

For each of these, she pulls quotes from the official documentation. Keep in mind, this document is a request for public comment. Getgood takes the stance that bloggers are perhaps blowing the effects of such regulation out of proportion.

"So what’s the big deal? Doesn’t this all make sense?" she asks. "It will come as no surprise to readers of this blog, but apparently to some: businesses do not always act in the best interests of consumers. Sometimes they even lie. That’s why we’re in a recession."

So I ask you, what do you think of the FTC's intentions? Do you think regulation is in order? Comment.