Bloggers, Freebies and the FTC

FTC issues rules to end ‘blogger payola’

Bloggers — particularly “mommy bloggers” — must now disclose freebies or money they receive to review products or risk an $11,000 fine per post, the Federal Trade Commission announced today. It’s the first attempt to regulate what’s known as “blogger payola.”

The rules take effect Dec. 1. Bloggers or advertisers also could face injunctions and be ordered to reimburse consumers for financial losses stemming from product reviews deemed inappropriate.

The FTC said disclosures must be “clear and conspicuous” but did not specifically state how conflicts of interest must be disclosed.

An FTC spokesman said the commission will more likely go after advertisers instead of bloggers, except for those who runs a “substantial” operation that violates FTC rules and already have received a warning.

Here are relevant paragraphs from the FTC’s news release:

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.

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.

The FTC spokesman offered this example of what would not be a violation: someone who gets a free bag of dog food as part of a broad promotion from a pet shop and writes about the product on a blog.

ReadWriteWeb addresses the difficulty in policing unscrupulous bloggers and advertisers:

While the FTC will obviously have a hard time enforcing these regulations, there can be no doubt that marketers regularly approach independent bloggers (and especially mommy bloggers) with freebies. When bloggers accept these exchanges, they may not always disclose them in the posts that result. So, while bloggers who are involved in these schemes often tend to say that they would have reviewed the product anyway or that their reviews are often critical, there can be little doubt that payments and freebies influence these stories.

These new rules and rather large fines should bring some bloggers and marketers into line, though others will surely continue to push the ethical boundaries. And blogging Payola is unlikely to go away completely because of these new rules.

Federal rules already ban deceptive and unfair business practices. It’s the first time since 1980 that the FTC revised the guidelines on endorsements and testimonials.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: