Monday, October 5, 2009

New FTC guidelines on advertising affects bloggers

The U.S. Fair Trade Commission has recently released new rules on advertising that appears in the form of endorsements and testimonials. This is one of those "the times they are a changing" moments given that these guidelines were last updated in 1980, my how the world has changed since then. There are many ways endorsements & testimonials show up which aren't so clearly ethical and the new technologies being developed offer new ways for us to communicate with each other. If the FTC were to remain limited by the old rules written before the Web was invented how would the FTC be able to regulate this new medium?

Let's think a moment about bloggers and endorsements.

Obviously some bloggers spend their blogging time writing about products and either tracking product press releases or doing reviews about products. There's nothing new about that and many magazines revolve around a similar vein of writing.

For decades there has been concern about slanted magazine reviews. That's why the original FTC guidelines came into being, right?

If the principle is "Caveat Emptor" it is up to the customer to decide whether or not to believe a given product review, right? But if payments or freebies provided by the manufacturer are not disclosed then how is the customer to know whether to take the review with a grain of salt? Requiring the reviewer to disclose stuff provided by the manufacturer makes for transparency.

For bloggers the FTC press release has this to say:

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.

Some examples about online payola:-

Belkin’s Online Review Payola Plot Thickens: "A Belkin employee was recently busted offering payment for positive reviews of a Belkin network router—whether or not the reviewer had even seen one"

NBC Analyst Admits Receiving Tech Payola: About a 2005 "payola scheme by NBC tech analyst Cory Greenberg surfaced Wednesday, in which he was receiving upwards of $15,000 a piece from technology companies to positively promote their products on NBC's Today Show."