Archives for 2009

Monday,  the FTC published the final guidelines  for endorsements and testimonials. Nothing terribly surprising, although I was pleased to see some additions to the examples about blogging and word of mouth marketing that made things much clearer. [Full text of the changes to the guidelines (pdf) as submitted to the Federal Register.

I’m updating my May analysis of the proposed guidelines in two parts. First, in this post, some general comments about the final guidelines. Next — either Friday or Saturday– a detailed analysis of the sections relevant to blogging and social media.

General observations

The two keys to the FTC guidelines are the reasonable person standard and the degree of  the relationship between the company and the endorser.

“The Guides have always defined endorsements by focusing on the message consumers take from the speech at issue. Indeed this focus on consumer takeaway is completely consistent with the approach the Commission uses to determine whether a practice is deceptive,and thus in violation of the FTC Act.” (page 5)

“…in determining whether a representation, omission or practice is deceptive, ‘we examine the practice from the perspective of a consumer acting reasonably in the circumstances.'” (footnote, page 5)

“…the fundamental question is whether, viewed objectively,the relationship between the advertiser and the speaker is such that the speaker’s statements can be considered ‘sponsored’ by the advertiser and therefore an advertising message. In other words, in disseminating positive statements about a product or service, is the speaker: (1) acting solely independently, in which case there is no endorsement, or (2) acting on behalf of the advertiser or its agent, such that the speaker’s statement is an ‘endorsement’ that is part of an overall marketing campaign?” (page 8 )

Some critics of the FTC’s decision to apply the guidelines to blogs and new media focus on the fact that they will not be applied to similar content like product and entertainment reviews in mainstream media. Why do bloggers require regulation and journalists don’t, the argument goes.

There is some merit to this line of thinking, but I would argue that the issue isn’t that the guidelines shouldn’t apply to blogs. Instead, we need to separate the technological form used to publish a site — blogging software  — and focus on the type of site. Does it operate like a magazine — with editors, contributors, and editorial policies?

“In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e. where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages.” (page 47)

Under these circumstances, the FTC doesn’t believe knowing whether the reviewer paid for the item would affect the weight consumers give to the review, however, it does leave room for a different interpretation if the reviewer receives a benefit directly from the manufacturer. Mainstream media have editorial policies that govern their review practices to prevent potential abuses.

Applying the reasonable person standard, if the consumer would understand that the online site is acting as an independent review site, and like the traditional media, gets its review products for free from manufacturers, I doubt whether the FTC will vigorously apply the commercial endorsement guidelines. If the product value is low, it may not even matter if the reviewer keeps the product.  This is just my opinion based on the documents and the fact that the FTC investigates on a case by case basis. It just does not have the resources to pursue weak cases.

Does that mean such a review site shouldn’t practice strong disclosure? Absolutely not. It should have an editorial policy as airtight and as clear as the mainstream publications that provide a similar service. If you wanna be a duck, you gotta quack, and walk,  like one.

The FTC guidelines are NOT about compensation; compensation is simply one measure that determines how the consumer might interpret the blogger’s recommendation. The important test is whether the reasonable consumer would understand that a relationship exists (or doesn’t) between the reviewer and the company without disclosure. We know that the movie reviewer at the local paper or an entertainment website doesn’t pay for his ticket. We know that review sites like Cool Mom Picks get free products from manufacturers for review. We don’t however expect that people “like us”  — personal bloggers — get truckloads of free stuff from companies. So, that needs to be disclosed.

What about the argument that my readers know me? Why should I have to disclose?  Not all readers are regular readers who already understand your perspective and perhaps your business relationships. All blogs get some traffic from search engines, and those folks don’t know you from Adam (or Eve). You need to disclose your material relationships so all readers can properly evaluate your words.

Then there’s the assertion that journalists aren’t required to disclose. True, they don’t have to have a disclaimer on every post, but the publication they work for has an editorial policy that separates the editorial content from the commercial speech. The advertising. The very reason we assume that journalists are objective is because their employers have these policies. The reasonable consumer understands that the traditional media she reads makes a clear delineation between editorial and advertising.

Are the guidelines a violation of free speech? Jeff Jarvis and Dan Gillmor think perhaps. JD Lasica disagrees. So do I. You can write whatever you like. You just have to be clear about your interests and material relationships that might impact your opinion. The fact that you got paid or got a new living room set for free may not influence your opinion one little bit. The FTC just wants your reader to have the information so she can decide.

Take a minute and read through some of the comments the FTC received to the initial proposal, and some of the ways companies/advertisers try to shirk their responsibility and liability for commercial speech. Trust me, you will have a better appreciation for why it is so important for the FTC to take action.

Yes, we are bloggers, and these guidelines may impact how we do “our thing.” We are also consumers, and I for one am grateful that the FTC is watching out for deceptive advertising. These guidelines aren’t just about spelling out the blogger liability. They put the advertiser squarely on notice as well.

Lastly – this is not new law. Deceptive advertising is already against the law. The FTC guidelines merely inform as to how the agency intends to apply the law. Nor is there a prescribed fine associated with the guidelines. Penalties will be assessed in the enforcement – legal – process. The legal process is also where these guidelines will be tested. The FTC has to prove its case, and the courts have to agree – on both its interpretation of the law and whether the advertiser or endorser was deceptive.  The burden of proof is on the FTC. Admittedly, it can cost a lot to be the subject of a federal agency investigation, so it behooves us all to put our house in  order, just in case.

But the FTC hasn’t added additional resources to investigate commercial endorsement claims. It has said many times that it will continue to investigate complaints based on where it perceives the greatest potential harm to consumers, and specifically to the revised guidelines, Rich Cleland has commented in numerous media this week that the Commission plans to focus on advertisers, not bloggers:

“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?” (Source: FastCompany)

My opinion – the first stop on the FTC enforcement train will be the large blog networks. The FTC will be checking that they are advising the bloggers working with them to properly disclose and  ensuring that blog posts are not deceptive as to facts about products.

What should bloggers do? I consider disclosure a best practice, and recommend that all bloggers publish a clear editorial policy on their blogs. At a minimum, even if you don’t engage with marketers and none of the FTC guidelines apply, you probably have a policy about comments. You may also want to disclose other general principles that guide your blogging and shape your point of view. Not because it is required. Simply because you want to help your reader — whether she visits once or a hundred times — understand what your blog is all about.

I do not however recommend using generic policies like the ones at disclosurepolicy.org. They are okay as a starting point, but they are often more about protecting the advertisers than the bloggers. Take the time to customize your policy. Be specific about your policies and practices. Ditch the legal mumbo-jumbo that’s generally designed to obfuscate, and speak to your reader in the same human voice you use on your blog.

Next post: Detailed analysis of the new examples relevant to blogging.

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Additional Reading:

New FTC guidelines call for greater blogger disclosure (CNN)

Yes, new FTC guidelines extend to Facebook fan pages (C|net)

FTC Responds to Blogger Fears: “That $11,000 Fine is Not True” (FastCompany)

Hey Bloggers! Let’s Hear It For Government Regulation! (MediaPost)

The new FTC guidelines and what they mean to you (BlogHer)

The WORST coverage of the new FTC guidelines? Hands down, ABC, which once again decided that this is all about mommy bloggers, even though the word “mom” does not appear even ONCE in the entire FTC document — Mommy Bloggers Could Be Held Liable for Product Reviews

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Disclaimer: I am not a lawyer and do not play one on the Internet. This post is my opinion based on published FTC documents and statements.