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The FTC Blog Rules: Overbroad or Overblown?

To read reactions to the Federal Trade Commission's new guidelines announced this week on product testimonials and endorsements, one would conclude that bloggers must now tiptoe through a minefield of disclosures or else face the strong arm of the federal government and penalties of as much as $11,000. Blogs as varied as Fashionista, Wired's Epicenter and CNET's Digital Media warn that any failure by a blog to disclose receipt of a freebie or payment from a company would violate the guidelines and expose the blogger to enforcement action.

Only problem is, the guidelines don't say that. Rather, what they say is that these are among several factors to be weighed in evaluating whether someone who purports to review or endorse a product actually has a "material connection" to the product. The purpose of the guidelines is to require disclosure by reviewers who present themselves as unbiased but who actually are not. This is a laudable purpose.

So if a publisher sends a blogger a review copy of a new book and the blogger posts a review, does that require disclosure under these guidelines? No. If the publisher sends the blogger a book a week and the blogger routinely posts glowing reviews, does that require disclosure? Yes. The guidelines make clear that there is a spectrum of behavior from that which requires no disclosure to that which clearly requires disclosure.

The FTC's overview, published as part of the Federal Register notice, makes this clear. It says that not all product reviews in blogs or other "consumer-generated media" fall under the guidelines:

Rather, in analyzing statements made via these new media, the fundamental question is whether, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement 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? The facts and circumstances that will determine the answer to this question are extremely varied and cannot be fully enumerated here, but would include: whether the speaker is compensated by the advertiser or its agent; whether the product or service in question was provided for free by the advertiser; the terms of any agreement; the length of the relationship; the previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and the value of the items or services received.

At one end of the spectrum, says the FTC, is "a consumer who purchases a product with his or her own money and praises it on a personal blog." At the other extreme is "a blogger who is paid to speak about an advertiser's product ... regardless of whether the blogger is paid directly by the marketer itself or by a third party on behalf of the marketer." Between these two extremes are a range of situations that may or may not require disclosure. But the guidelines make clear that receipt of a single freebie would not fall under the guidelines unless, perhaps, it was of substantial value.

Although other situations between these two ends of the spectrum will depend on the specific facts present, the Commission believes that certain fact patterns are sufficiently clear cut to be addressed here. For example, a blogger could receive merchandise from a marketer with a request to review it, but with no compensation paid other than the value of the product itself. In this situation, whether or not any positive statement the blogger posts would be deemed an "endorsement" within the meaning of the Guides would depend on, among other things, the value of that product, and on whether the blogger routinely receives such requests. If that blogger frequently receives products from manufacturers because he or she is known to have wide readership within a particular demographic group that is the manufacturers’ target market, the blogger’s statements are likely to be deemed to be "endorsements," as are postings by participants in network marketing programs. Similarly, consumers who join word of mouth marketing programs that periodically provide them products to review publicly (as opposed to simply giving feedback to the advertiser) will also likely be viewed as giving sponsored messages.

Put more coarsely, it boils down to a question of whether the blogger is in the business of shilling for corporations. These guidelines are not a heavy-handed government crackdown on innocent bloggers who say nice things about a product. It is meant to expose marketing practices that exploit viral media by paying for favorable reviews -- whether the payment is in cash or goods.

One other point to keep in mind about the guidelines is that the disclosure they require is not onerous. All a blogger needs to do is to add a line to the particular post saying what was received, whether it was a payment, a free sample or something else of value. With or without these guidelines, this is a good practice for bloggers to follow and something they should be doing already.

My point here is that some reactions to the guidelines exaggerate their scope. That is not to say that bloggers who regularly endorse or review products should not exercise caution. David Butler offers a thoughtful analysis of the guidelines' dangers in a post at his Digital Media Lawyer Blog. But bloggers need not panic. Be forthright and transparent and you will not have any trouble.

Posted by Robert J. Ambrogi on October 7, 2009 at 12:52 PM | Permalink | Comments (0)


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