FTC Drops the Banhammer on Undisclosed Reviews

bahammer FTC Drops the Banhammer on Undisclosed ReviewsThe FTC has been relatively busy and dialed into the needs of consumers and has issued pretty strong mandates this year. Not long ago, the FTC prohibited sales-oriented robocalls and now, they require bloggers to disclose their relationships with companies they endorse. There’s many concerns in among the marketing industry in the blogosphere from both advertisers and bloggers. I’ll share some thoughts on it to help you make sense of it all.

Warning: Long blog post ahead. Proceed with caution. icon smile FTC Drops the Banhammer on Undisclosed Reviews

Yesterday, the Federal Trade Commission (FTC) announced new guidelines for bloggers and celebrities when endorsing brands, products or services. That is, they have officially regulated any endorsements made via bloggers (content publishers, for sake of argument) on reviews they have been compensated for. While this covers product reviews fairly extensively, consumer-driven blog posts with no compensation are excluded from this guideline.

The substantial — rather, controversial part of the new law, 16 C.F.R. Part 255 [pdf], requires that bloggers publish their material relationship with companies they write about. This would include “This post was sponsored by Acme Co.” Even if no monetary exchange occurs, it’s their responsibility to provide how they received a product (free or discounted, for example).

As a consumer advocate, I applaud the FTC for taking action around a demonstrated need. I respect their insight and authority in helping to keep businesses honest and ethical during their practices and leveling the playing field between advertisers, marketers, businesses and customers so everyone can work together fairly and equitably.

But, I have a few points to throw out there:

  • Not all bloggers are U.S.-based. As we know, the jurisdiction of the FTC extends to just the United States. Isn’t the Internet global? I know many well-respected international bloggers who regularly review products on a professional-basis. Unlike moving money to an offshore bank account to evade taxes, engaging with international bloggers isn’t questionable — it’s a healthy practice.
  • Bloggers are a double-standard from Journalists. As many journalists have turned to blogging, many newspapers and agencies have provided (and the trend supports this) to a blog-format. The media is afforded additional immunities and privileges in reviewing products (provided at no charge by companies). Reporters are permitted to not disclose their material relationships; bloggers will need to.
  • Broad definitions, vague examples. The FTC made ambiguous examples of what a blogger should or shouldn’t do and which content classifies as advertising and the examples of a clear violation. This is done to establish spirit on this legislation. This leaves the opportunity open for the FTC to pick out a prominent example and slap them with $11,000 in fines.
  • Enforceability. Thousands of blogs appear every day. How could the FTC sanction one blogger, but not all of them. What kind of resources will the FTC dedicate to reviewing cases to ensure equal and fair enforcement? Again, just like the first point on this, not all blogs are hosted in the U.S.

Again, I support the goal of this law, but I find that it was premature to release these guidelines without input from actual bloggers about what the best course of action to take. The FTC seems to be obsessed with five-digit fines. I don’t know any blogger who makes five-figures on a single blog post from an advertiser. It’s evident the fines are merely punitive than actual damages.

What does this mean for you, as a Marketer?

I must disclose, that I am not an attorney, and I would advise you to consult with an attorney who has expertise in these matters. But, here’s what it means in my expertise as a professional blogger and a consumer advocate:

  • Be Honest. Advertisers should work out attractive relationships with bloggers where the information and access to it is valuable for the blogger. Blogging is much like the news industry where the value is in the first-breaking, best-reported news. Any unwritten false statements, or behind-the-scene payment schemes mean you’re not honest with your readers about what you’re writing.
  • Disclose Tactfully. Not every disclosure has to be fine-print or in a way that turns people off. Editorialize it and put it into your content. An example might include, “So, I was given a free copy of this widget by Acme Co. so I could really examine the product on it’s merit…” In addition, you could consider adding a Disclosure Policy statement to your Website to make it clear to anyone who wishes to investigate your affiliations with companies.
  • Affiliate Marketers Must Market Responsibly. Not all affiliate marketers are guilty, but a few love to game the system to attract people to click through their content, click more links and purchase. Sometimes, their content is biased and their affiliate relationship isn’t necessarily made clear to visitors. This isn’t cool, and could very well result in regulatory action. Keeping close tabs on your affiliates (and their blogs) will help you run an affiliate program with integrity.

The bottom line here is that the FTC has raised the importance of disclosure as consumers research products on the Web. Their interest is in making sure consumers are given accurate and authentic results as they investigate a potential purchase. It’s important to always consider the end-user experience. It’s expected that through self-regulation, that government involvement is unlikely to occur. As advertisers who engage with bloggers, make sure bloggers make it clear about how and why they are writing about your product. This builds credibility for both the blogger and the brand that they advertise with integrity.

It’s not just blogs that are affected. It’s endorsements in marketing general. Infusionsoft user and successful marketer, Frank Kern, goes into the impact among Internet Marketers on his blog post titled, New FTC Thing Is A Bigger Deal Than You Might Think. It’s a good read and should help guide you into the chilling effects of this legislation (and the intent of it).

While not required for blogs that have an obvious relationship to a business (like this one), I have a disclosure in our Blog Guidelines. It’s a best practice to let readers know about where your interests lay. I don’t regularly write about portfolio companies that either of our private investors invest in. Should there be a conflict of interest in any of our content, or even sponsored content, I’ll make it clear to you. I encourage bloggers to do the same in the interest of your readers, not the law.

I’m sorry for the lengthy, tangential blog post, but I wanted to share a few points and counterpoints on the topic of this recent news in the industry of marketing and advertising. If you have questions, I’ll be happy to answer them. icon smile FTC Drops the Banhammer on Undisclosed Reviews

Geek note: The “Banhammer” is a term used among forum administrators (or games, lately) when an admin bans someone permanently.

[Image by ManifoldRamification on Flickr]

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  • paullevinson

    Here's my take on this issue http://paullevinson.blogspot.com/2009/10/ftc-wr

  • dragonblogger

    As a professional part time blogger I think this is a good thing for readers who want honest reviews of products and to know if the reviews are sponsored which can clearly affect how someone promotes and talks about a product. I mean you know when Tiger Woods sponsors a product, that he is compensated, you shouldn't wonder when a blogger talks about a product if it is sponsored or not.

    That being said, companies like anonymity of reviews, and this could slant companies to favor giving paid opportunities to international bloggers that don't have to disclose which could hurt blog revenues nationally perhaps. There are many companies already compliant with the FTC standard like IZEA SocialSpark, PayPerPost and SponsoredTweets. But some need to adopt new policies and systems of mention.

    Also, it states that each product review must be clearly stated that it was sponsored it seems, this would mean Site Wide Disclosures are not sufficient to be in compliance.

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