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Bloggers Can (Not?) Be Fined Up to 11K Per Post for Non-Disclosure

FTC Releases Revised Guidelines

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Update 2: The FTC is now saying that the $11,000 fine is not accurate, at least for the first violation. Fast company got some responses from Richard Cleland, assistant director, division of advertising practices at the FTC, who says:

“That $11,000 fine is not true. Worst-case scenario, someone receives a warning, refuses to comply, followed by a serious product defect; we would institute a proceeding with a cease-and-desist order and mandate compliance with the law. To the extent that I have seen and heard, people are not objecting to the disclosure requirements but to the fear of penalty if they inadvertently make a mistake. That’s the thing I don’t think people need to be concerned about. There’s no monetary penalty, in terms of the first violation, even in the worst case. Our approach is going to be educational, particularly with bloggers. We’re focusing on the advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they’re saying is true?” [empahsis added]

Cleland addresses more of the concerns here.

Update:
The new FTC guidelines have come out today. The FTC says:

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.

Bloggers can be fined up to 11,000 per post for not disclosing when they receive payment or free products from a company they’re writing about.

Original Article (05/20): We’ve known for some time that the Federal Trade Commission (FTC) intends to start regulating blogs and social media with regards to word-of-mouth marketing (aka blogs and social media). An article from BusinessWeek this week looks at the FTC’s intentions to regulate advertisers who are paying bloggers to write glowing reviews (whether that be in the form of cash or free stuff).

Dougals Macmillan "The world’s more ambitious bloggers like to call themselves ‘citizen journalists.’ The government is trying to make sure these heralds don’t turn into citizen advertisers," writes BW’s Douglas MacMillan.

Some bloggers are of course taking issue with the idea of such regulation. But there are more than a few points to consider. Carlo Longino at TechDirt writes:

"It’s as if the FTC is trying to mandate credibility, and this raises a couple of interesting points. First, audiences generally seem pretty adept at rooting out when people are being paid to talk nice about a company or product, and there are plenty of examples of company’s payola schemes getting found out and causing a backlash against them. Second, why do bloggers get singled out for special treatment? Plenty of old-media reporters get freebies tossed their way, but the FTC doesn’t seem to think they deserve the same level of attention."

A post from Susan Getgood at Marketing Roadmaps actually looks at official documentation (pdf) from the FTC. It’s quite a lengthy document, and published in 2007, it’s the most recent document from the FTC on the issue. She sums up three main points from the document related to bloggers:

1. Liability for false statements in a sponsored post

2. Disclosure of receipt of free product

3. Anti-astroturfing. Requires disclosure of material interest when making an endorsement.

Susan Getgood

For each of these, she pulls quotes from the official documentation. Keep in mind, this document is a request for public comment. Getgood takes the stance that bloggers are perhaps blowing the effects of such regulation out of proportion.

"So what’s the big deal? Doesn’t this all make sense?" she asks. "It will come as no surprise to readers of this blog, but apparently to some: businesses do not always act in the best interests of consumers. Sometimes they even lie. That’s why we’re in a recession."

So I ask you, what do you think of the FTC’s intentions? Do you think regulation is in order? Comment.

Bloggers Can (Not?) Be Fined Up to 11K Per Post for Non-Disclosure
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  • http://getgood.com/roadmaps Susan Getgood

    I would just add that the FTC has indeed received comments to this request; comments closed in end February I think — there was an extension from the original request.

    The doc I reviewed outlined the direction they were planning to take. We will see this summer if there are any material changes to the based on that last round of comments, which presumably they are digesting now.

    I’d be surprised if there were. FTC is pretty savvy about recognizing self-interest of companies versus the public good.

    • Chris Crum

      Thanks for chiming in Susan. It will be very interesting to see what happens.

      • Guest

        I like your comment… as long as bloggers don t do harm for others we should be tahnkful that somewhere business were still rolling, at least , helpful. FTC should see what are the more important things to see, yes, let’s just see for what happen

    • http://www.roomfurniturechina.com/Bedroom-Furniture/Art-Gallery/index.html wholesale art

      Additionally, connecting business marketing strategies into Twitter for a fee, could in many ways be easily duplicated by competitors who could tie in instant messaging, cell phone text messaging, facebook messaging and even Twitter itself. What would Twitter bring to the table for these corporations that AIM or text messaging does not?

  • http://www.guccihandbagsale.com guccilo

    Thanks for chiming in Susan. It will be very interesting to see what happens.

  • Aaron M.Norcia

    In my interview with Claire McCaskill she told me she supports this legislation. I should have my “blog” interview up by tomorrow. www.LeftOfCenter44.com

  • http://www.glenwoodfin.com Glen Woodfin

    Ridiculous legislation. It won’t help at all.

  • http://myradicalblogs.com Les

    I wonder whether the FTC’s actions will simply drive paid reviews offshore. It is apparent that these regulations cannot be enforced offshore except by prosecuting the advertiser and I am sure it would not take them long to work their way around that.

    I wrote on my blog when this first arose that the FTC could turn humble mom and dad bloggers into criminals – at least that won’t happen now.

    Blogs have made the world so much smaller. I am in Australia writing to a dot com blog hosted in the US – readers will only know that I ma Australian if I tell them – otherwise, I can claim that XYZ is the best deal in NYC (or wherever), get paid for it, and no one is the wiser.

    Sometimes rules and regulations look good, have a good intention (which I believe this does) but in reality, and in practice, become toothless.

  • http://www.ganeshagro.com/ Sandeep Goyal

    It is apparent that these regulations cannot be enforced offshore except by prosecuting the advertiser. Thanks for sharing.

    • Guest

      The land of the free… the home of the offshore business…

  • http://deck-boards.com toni

    I think this is great news. Can we take this honesty thing a bit further and make the same rule for the bigger offenders:

    • newspapers
    • TV “News” (faux and not) shows
    • Radio talk shows

    And can get this to include pre-made “news” video segments that come from the government that looks like real news segments ((huge penalties here please!).

    There’s nothing wrong with more honesty and you should never trust anyone who wants to reserve the right to lie and deceive. I’m a BIG fan of business, but as citizens we have to realize the businesses aren’t even people, thus have NO rights other than the ones we give them. Why should we give them the right to lie to us?

  • http://www.rankontoponline.com Rank on Top

    “Quote”
    I think this is great news. Can we take this honesty thing a bit further and make the same rule for the bigger offenders:

    newspapers
    TV “News” (faux and not) shows
    Radio talk shows

    Definitely Agree

  • Guest

    Those of us that advertisers pay for a honest review have no need to worry.

  • VancouverDave

    …as long as it applies equally to politicians and political parties.

  • http://classifieds.findyoursiteonline.com Tarrah Conaire

    Maybe this will hit that loser Perez Hilton where it hurts most! That much in fines will stop this idiot’s rantings long enough for Hollywood to realise there is this whole other world beyond the Hollywood city limits.

  • Guest

    How about the government stays out of this. I’m sorry, I guess this isn’t a free country anymore. Freedom of speech does not exist.

    • Elisa

      THere are times when the FTC needs to get involved and other times when I worry about government attempts at internet censureship for free speech. I do not think we need obsenity or offesnive language on the internet.

      If a blog is totally unrelated to the subject being blogged, it might be clue it’s an advertisement.
      Ifi the opinion expressed in a blog is financially based, it m ighit be a clue it’s an advertisement.
      If the opinion is totally impartial, it might be a clue it’s a paid opinion or advertisement, but not necessarily.

      I think it’s unenforceable. If bloggers go overseas or come from foreign countries, there is no way that this can be enforced by the US government. This is what will happen if they try to enforce the disclosure on advertisements.

      I think the FTC should just provide guidelines. They already have a website where people can make comments and request information or write complaints. In situtations where one m ight not be able to discern this, then maybe one’s caretaker needs to be alerted about ways to discern bloggers from commercial and paid bloggers. Also the news media can provide warnings as well.
      I think the nature of the subject and content can be a clue about whether the blog is free or paid.
      One is told to question everything on the internet already.

    • Guest

      so you like being deceived by businesses? Hmmm, how about if the electric company just lies about how much electricity you use each month? You ok with that? How about a cell phone company saying the price is less than what it actually is and you don’t find out until the bill comes? you ok with that?

      No?

      Then you support legislation like this. It sounds like you would like to be the only one with the right to deceive people and everyone else should be honest!

  • http://www.LenderLister.com Jack

    It would be great if Lobbyist and politicians had to do the same before they opened thier mouths.
    Maybe Chaney should have worn a Halliburton T-shirt when ever he spoke of war.

    “This Politician has been lobbyed by Halliburton and will receive 25% of all funds produced by wars he can start within his term.”

    It’s a 2 way street or it is dictatorship.
    Better Run!

  • http://www.foxbaron.blogspot.com Guest

    How about if all bloggers put a disclaimer on their sites that says something like this, would that meet the FTC guidelines?

    DISCLAIMER
    Anything you read on this site, see on this site, smell on this site or consume in any manner from this site, whatsoever, quite possibly resulted in my being paid or getting a free product from somebody somewhere, somehow.

    The opinions expressed here may be my own opinions or opinions written on behalf of someone else in exchange for some type of renumeration to me.

    For your own protection you should assume that whatever I wrote, posted or conveyed to you in any manner whatsoever probably resulted in some type of renumeration to me so take everything you see or read here with a grain of salt as I may not really know what I am blogging about; then again, maybe I do. It is up to you to make that determination I don’t have the time or inclination to take you by the hand, I am too busy blogging about whatever it is I blog about.

    For all you know this entire site could be a shame, a ruse, and/or a cover up. Eneter at your own risk.

    If you even remotely suspect that I got paid somehow for what I have posted than it would be best to assume I have been or will be, so believing anything you read here is totally up to you as I have no control over your mind.

    • http://deck-boards.com/blog/ texxs

      Wouldn’t just destroy your traffic?

  • http://blogadmonkey.com/blog/ Dragan Mestrovic

    I think an easy solution to solve this and to avoid any penalties could be to mark every sponsored post as it what it is a sponsored post!

    Simply include a ‘This is a sponsored post form XXX Inc.’ and a description in your blog on a special page what does a sponsored post or advertisement mean and there will be no misunderstanding in the future and you avoid penalties.

    Example for a explaination:
    Example for an explanation: A sponsored post is a post on a website or blog which is paid for by an advertiser.

  • shelley

    I am livid. The question of whether it is right or wrong is not the issue. It is not about splitting hairs about what counts as an endorsement. The issue is that it is the gateway excuse for government to start prosecuting people based on crazy police monitoring. They now have an $11,000 motivation to monitor everything you get in the mail. It is just outrageous. The implications of how much this is going to create a police internet – where you’re scared to type a single word for fear of some cop banging on your door, and for $11,000 believe me, they will. And the amount of monitoring. I don’t know how much there is now, but there will be even more. Huge agencies will be funded by these $11,000 busts. It is just the governments foot in the door to monetize the internet for themselves, not to make sites “more believable… oh that acai juice, how could I have lived before not knowing those people who said they liked it were also selling it! The horrors!” I knew the government would monetize it… be it through taxes on broadband, picture downloads, whatever… but free speech… mother fricker!!!

  • Guest

    does this rule apply to the UK aswell?

  • http://groups.to/socialmediamonetization Andrew Ballenthin

    This would be a non-issue if bloggers had practiced the core rule of transparency. Industries that self-regulate to a high standard seldom need government intervention if there is no issue of misleading consumers. Or as they say, one bad apple spoils the barrel. Perhaps a few bloggers stepping out of line may have spoiled it for the rest.

    Businesses should be happy to seen as paying sponsors if the product is as good as they say it is. We know in any other media that a paid endorsement is just that. Why is social media somehow in a vacuum that good business sense and regulations shouldn’t govern them too?

  • http://www.goforth-andy.com/specialoffer Andy

    FTC and Blog Posts. It’s Big Brother trying to take over the internet.
    Restrictions, Restrictions, Restrictions
    OH! To be FREE to be FREE To be FREE.

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  • Guest

    tinstead of trying to bring down the actual criminals who’ve driven our economy into the fucking toilet, big brother ( fucking red commies in disguise) will now go after people who can’t defend themselves.

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