One of the hottest topics/stories in the blogosphere yesterday was about the new guidelines implemented by the FTC or Federal Trade Commission regarding blogger and celebrity endorsements, testimonials and disclosures. The FTC Guides were last updated back in 1980 and this is the first time the Guides were amended in 29 years.
Here’s an excerpt from the updated FTC Final Guides Governing Endorsements, Testimonials:
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.
Celebrity endorsers also are addressed in the revised Guides. While the 1980 Guides did not explicitly state that endorsers as well as advertisers could be liable under the FTC Act for statements they make in an endorsement, the revised Guides reflect Commission case law and clearly state that both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement — or for failure to disclose material connections between the advertiser and endorsers. The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.
Read full article here.
So what it basically says is that bloggers or celebrities who do endorsements must properly or fully disclose any payments (cash or in kind) they’ve received from companies or entities in exchange for those endorsements/reviews. Failure to do so could cost the guilty party a penalty of $11,000 per violation. It also means that aside from pay-per-post reviews, any reviews, endorsements or testimonials that involve freebies, are now required to be disclosed. The only thing that’s unclear with these new set of guidelines is where should the blogger post or display the disclosure? Should it be in each individual post or in a disclosure page? Also, should the blogger disclose what compensation they received?
I haven’t done paid reviews in a long time but as a blogger whose done paid reviews/endorsements in the past, I don’t mind having this new guidelines. I believe in creating and developing a trustworthy and honest relationship with my blog readers and visitors. I make sure that I point out that a certain post is a paid review and I also have a Disclosure Policy here on my blog. In the event that I receive compensation for reviews and endorsements, I make it a point that I try out the product/service first and that I publish my honest and personal opinion about the product.
I’m not an expert on legal issues but from what I understand, this new guidelines would only affect bloggers in the US, right? The FTC will surely have a hard time policing the millions of blogs in the Internet. Maybe they’ll start with the A-list bloggers and work their way down to other bloggers. Btw, from what I’ve read in the various articles and from the Guides itself, this new set of guidelines also cover Twitter, Facebook (including Facebook Fan Pages) and other forms of social media.
How about you guys? What do you think about the FTC’s new guidelines regarding blogger and celebrity endorsements, reviews, testimonials and disclosures? For those of you who do paid reviews and receive compensation for product reviews and endorsements, do you like this new guidelines set by the FTC? For the consumers, what type of disclosure do you expect from bloggers who endorse products and services? Do you want it on individual posts or just a one page blog disclosure policy? Please share your thoughts.
@Michael – Yes, but I think that’s the last thing that could happen to your blog. First you could get a letter of warning, then maybe a court hearing, then the fine and then if those preliminary procedures don’t work, then I guess the only thing they can do is to shut down your blog.
wow, it could mean your blog will get closed if ever any violations are committed.
@Jhay – So does that mean you won’t be using/implementing disclosure on your blog? Hehe
The FTC will definitely have a hard time policing the millions of blogs in the world wide web. :D
My webhost has its data center in Malaysia so I guess I’m not covered by these new guidelines as I’m out of US jurisdiction.
Then again, I wonder how the FTC will implement such guidelines.
@Teejay – That’s true. Trust is very important in every relationship and its also holds true between the relationship of blogger and reader.
@Holly – Good thing I don’t do product reviews. I guess that this rule could affect a LOT of bloggers, especially when I think of how agencies could police the web hosts and possibly affect the blogs hosted.
This is a good thing since trust is really important in the blogosphere. This change would enhance that.
@Jena – It definitely will. I’m sure the A-list probloggers have a lot of posts in the past where they got paid or will get some sort of commission/compensation from their product reviews and endorsements but never mentioned anything about it in the post.
I think you’re right. I can see more laws/regulations created to cover blogging, social media and other forms of new media. I just hope that we won’t lose our right to the first amendment.
Thanks for sharing your thoughts. :)
This would affect the probloggers who make a living out of blogging. But for small fries like me, it would not really be a bother. Now people are noticing more and more the vital role that bloggers contribute towards the various aspects of society.
I can predict more and more laws would be created for bloggers in the future and this might restrict the virtual freedom we are enjoying right now. I hope they will still allow us the first amendment…he he he…now that would be an extreme.
@jan – It is a good thing and bloggers should practice it whether its required or not. Yes, implementing this new guidelines is a good start in creating a good environment for advertising. Like I said earlier, this guidelines are not specific in some areas and it includes that part – how and where do you provide/display the disclosure policy.
I just read an article earlier and it said that bloggers shouldn’t be afraid of the 11k fine because it won’t be slapped at you immediately. If you do violate these rules, you could get a cease and desist letter first or a notice about your violation. The fine comes later or maybe if you’re a repeat offender. :)
@Holly – Like I said in the post, I’m not a legal expert so I don’t know what the rules our with regards to that issue.
But I know what you’re talking about and I’m familiar with how it works, like how you can file a DMCA complaint against a blog even if the blogger is not from the US as long as its web host is located in the US.
You’re right about it being the ethical thing to do. So whether you’re covered by this law or not, it is good practice to use full disclosure. This new guidelines are a bit vague in some areas and needs more refinement like in the issues that you pointed out.
Thanks for sharing! Really appreciate you taking the time to stop by and share your thoughts on this topic. :D
Well, disclosure is a good thing as a step toward curbing false advertising. Yeah, that’s a good question – how do you make your disclosure if you do paid posts and endorse products in your blog.
There must be a companion piece to this new guideline. The nuts and bolts, procedures.
But that’s a stiff fine. That’s a paltry sum to celebrities, yes. But for bloggers? Well, I’m not John Chow, mind. Ahehehe
I wouldn’t be too sure about it only affecting bloggers in the U.S.
For one thing, many foreign bloggers have U.S. web or blog hosts. Those hosts must comply with U.S. law, and most countries have treaties that reflect similar laws. Child pornography can be shut down by U.S. Customs; it somehow doesn’t get displayed in this country if they’re alerted to it. So while foreign bloggers may not face the same fines, they are not entirely immune to the effects of the law. And U.S. advertisers may well begin requiring strict compliance before they’ll deal with any blogger.
It’s the ethical thing to do; my main concern is that products for review not be considered “income,” certainly not at full retail value. Many of them are not worth enough to justify the cost of returning them, and should not be treated as “consideration” or “compensation” unless it is at a greatly reduced value (e.g. manufacturer’s cost of goods).