Blogging

Thoughts on the FTC investigation of Ann Taylor LOFT blogger event

April 29, 2010 by Susan Getgood

So many things queued up to write about, including last week’s New Comm Forum, a slew of bad pitches that folks have forwarded over the past few months (Douches, Snakes and Brand Ambassadors) and a great visit to the Dana Farber Cancer Institute yesterday to learn more about the Jimmy Fund.

But the FTC went public this week with the results of its first investigation under the new endorsements and testimonials guidelines, and that news trumps the other (more evergreen) topics.

As reported in Ad Age, the FTC investigated an event held by Ann Taylor LOFT in January to launch its summer collection. The company invited bloggers to attend a special preview of the collection; those that posted about the event within 24 hours were entered into “mystery gift-card drawing” with a value between $50 and $500. (More about the event on Jezebel: February 3, April 28)

Reported Ad Age:

The event and the unusual request for posts to be submitted for a prize received media scrutiny and caught the eye of the FTC. “We were concerned that bloggers who attended a preview on January 26, 2010 failed to disclose that they received gifts for posting blog content about that event,” Mary Engle, the FTC’s associate director-advertising practices, wrote in a letter dated April 20 to Ann Taylor’s legal representation.

According to the article, the FTC decided not to take further action because it was a single event, only a small number of bloggers participated (and some disclosed) and Ann Taylor subsequently adopted a written policy for blogger outreach.

This is exactly what the FTC said it planned to do all along. Its focus would be on advertisers, not individual bloggers, and the initial investigations would likely result in warnings, not indictments.

Taking the step of pursuing an action in the courts is a long expensive process. The harm to the public has to be pretty significant to merit the cost, especially if satisfaction can be obtained more efficiently, as it was here. I suspect an uncooperative Ann Taylor might have resulted in a different outcome.

What can we learn from this?

The guidelines are intended to prevent deceptive advertising practices. The media may love the (erroneous) idea that the FTC is “cracking down on bloggers,” as Ad Age repeated again in this week’s article, but reality is, the larger burden is on the companies, not the individuals. The FTC expects the company — the advertiser — to provide guidance to its WOM agents about the requirements. In the Ann Taylor case, there wasn’t much guidance.

While it isn’t covered in the Ad Age article, there was also an element of confusion in the event that probably concerned the FTC. This is entirely speculation on my part, but it’s a fairly informed one.

Basically, if you write about a company or product and subsequently get a gift, you aren’t required to disclose the gift. Unless of course you write about the company again. Further, if you win a sweepstakes or get a product in a swag bag, you don’t really have a material relationship with the advertiser. Your receipt of the product is random. Best practices may dictate disclosure but the endorsement guidelines do not.

Here we have a gift contigent upon a post. That’s compensation, albeit a little ugly. Not a gift. Disclosure required. But confusing.

This is compounded by the contest-like element of the mystery gift card drawing, which makes it look a bit like a sweepstakes. Except not really. Everyone who wrote a post got a gift card, and you had to get the initial invitiation to participate. Relationship and compensation. Disclosure definitely required.

Bottom line, just a messy confusing campaign all around. Confusion for bloggers about whether they need to disclose, and little guidance from the company on the requirement. Confusion for consumers, because they don’t have the information they need to evaluate the blog posts.

The lesson for companies: Keep blogger outreach programs simple and easy to understand. Provide guidance and training to your word-of-mouth agents. And your employees, especially the ones charged with developing and executing social media programs.

The lesson for bloggers: Think twice about working with companies that don’t inform you that you need to disclose. Push back if you aren’t getting the information or support you need. Also, unrelated to this case specifically, but general advice: read agreements carefully. While I do not think companies can push their liability onto you, I wouldn’t be at all surprised if some tried. That’s just a mess you don’t want to get into.

What I highly advise you to NOT take away from the Ad Age article

A lawyer interviewed in the Ad Age article speculated:

“They’re [the FTC] probably throwing a little fire-starter into it, sending some messages out. The message this time is somewhere between $50 and $500 requires a disclosure.”

My head about to explode. I can just see this quote spawning a new urban legend that there is a minimum and maximum value that the FTC will look at, vis disclosure and enforcement. No no no no no. Compensation is compensation. $5 or $5000. Products or cash.

When in doubt, disclose. There’s never too much information when it comes to informing the consumer. You know. Us.

Friday’s Today Show

April 12, 2010 by Susan Getgood

Visit msnbc.com for breaking news, world news, and news about the economy

I was on the Today show last Friday in a segment about negativity in the parenting blogosphere. My thoughts on the show are over at Snapshot Chronicles.

Eleven Urban Myths about the FTC Guidelines for Endorsements & Testimonials

April 2, 2010 by Susan Getgood

There’s still a great deal of misinformation about the Federal Trade Commission (FTC) Guidelines for Endorsements and Testimonials (FTC Guides or Guidelines) wafting around on the Internet, and from time to time, it makes its way into mainstream media stories.

We’re trying to chip away at it. Blog With Integrity did the two free Disclosure webinars last year. My colleagues and I leave comments with accurate information when we find posts and articles with errors. Just about every blogging conference since the beginning of the year has had a session about the Guides, and we’re doing the Bridging Brands and Bloggers webinar for PR, marketing and advertising professionals next Tuesday.

But the misinformation persists. So, it seems like the time is now for a little debunking of the urban myths about the FTC Guidelines.

MYTH: There’s an $11,000 fine for violations of the Guidelines.

FACT: The Guidelines explain how the FTC would apply Section 5* of the FTC Act to endorsements and testimonials. They are not rules or regulations, and there are no fines. Any penalties would be assessed by the courts as the result of a legal enforcement process during which the FTC would have to make its case for deceptive advertising.

* Section 5 broadly prohibits “unfair or deceptive acts or practices in commerce.”

MYTH: The FTC dictates how you should disclose.

FACT: There’s no checklist of “approved” ways to disclose. The Guidelines simply require “clear and conspicuous” disclosure of material relationships between sellers and endorsers when those relationships would not otherwise be clear to the consumer. The FTC Guidelines do include examples to illustrate the conditions under which disclosure would be required. However, there are no specific prescriptions as to how the disclosure should be done.

If you are interested in best practices for disclosure, take a look at the slides from the general session I did at BlissDom in February.

MYTH: The Guidelines were revised because bloggers are unethical.

FACT: They were revised because it had been 30 years since they were first published. It was time for an update. Initially because it had become clear that the way disclosure was being handled in traditional media for certain types of products (like weight loss) wasn’t working as it should. In the process, it became clear that changes in the the media landscape, and specifically, the rise of social media, needed to be addressed.

MYTH: Mom blogs have been singled out for special scrutiny.

FACT: Absolutely not. This was confirmed by Mary Engle, the FTC’s Associate Director for Advertising Practices, during the Blog With Integrity webinar on November 10, 2009.

The FTC Guidelines apply to endorsements and testimonials in all types of marketing including viral, WOM, blogs, TV, radio and print.

MYTH: Bloggers are being held to a higher standard than journalists.

FACT: The issue at hand isn’t standards or even ethics. The Guidelines are all about making sure that the consumer has enough information to evaluate the endorsement or testimonial. If she would not reasonably expect a material relationship to exist or would not understand it without the disclosure, the endorser should disclose. If the context is clear, disclosure is not required.

In the case of the mainstream media, consumers generally understand that the reporter didn’t buy the item or choose his own topic, and can evaluate the report accordingly. We make different assumptions about people “just like us,” thus disclosure is necessary. A blog or website that operates just like a magazine would be treated like a mainstream magazine because the consumer, or reader, would have the proper expectation. More on this topic in this post.

MYTH: Celebrities are not subject to the guides.

FACT: There are specific examples about celebrity endorsements. The litmus test is the consumer’s expectation. If we would understand the relationship — for example a celebrity athlete wearing logo gear — no disclosure is necessary. We assume a compensated relationship. If the consumer wouldn’t understand the paid relationship, disclosure is required. More on this topic in this post.

MYTH: The FTC said that X was (or was not) a violation.

FACT: The FTC does not speak about specific cases. This could compromise ongoing investigations. More importantly, if it were you, or your company, would you want the FTC passing comment before a full investigation had been completed? I wouldn’t.

MYTH: The FTC is gunning for bloggers.

FACT: The FTC has stated on more than one occasion that its enforcement attention is focused on advertisers and companies, not on individual bloggers.

MYTH: The FTC guidelines violate the 1st amendment.

FACT: The FTC guidelines apply to commercial speech. Compensated, material relationships. They do not apply to opinions where there is no material relationship. If you are paid for your opinion — even if you can say whatever you want — it’s commercial speech. Commercial speech is paid speech. Not free speech.

Free speech is still free. And protected.

MYTH: All you need is a disclosure policy.

FACT: A disclosure (or editorial) policy is a best practice. You still must disclose within the post or tweet if you have a material relationship with a seller.

MYTH: The FTC guidelines will destroy the blogosphere.

FACT: So far, not so much.

Disclaimer: I am not a lawyer and do not play one on the Internet. This post is my opinion based upon analysis of public records, including the FTC Guidelines.

This post also appears on BlogHer.