New FTC Rules: Biz & Bloggers Beware

Speaking of caveats/warnings, it must be noted that while the writer of this post is an Attorney at Law, the content of this post is general in nature and should not be relied upon as an assessment of the Law/FTC Rules/Guidelines as they may or may not apply to specific circumstances…(Whew! – Needed to get that out of the way!)




So what’s the big deal? Some businesses and bloggers tango together: a company may send a sample product to a blogger and a blogger may blog about it. Who cares?...The FTC does, that’s who -- and so should you.

The FTC? The Federal Trade Commission, an independent agency of the U.S. government created and tasked by Congress with administering a wide variety of consumer protection laws. The Commission is empowered to adopt rules to protect consumers against “unfair and deceptive acts or practices,” most notably in the arena of advertising.

New FTC guidelines, effective December 1, 2009, change the tempo of the tango between businesses and bloggers. Adopting revised “Guides Concerning the Use of Endorsements and Testimonials in Advertising,” 16 CFR 255, the Commission rules include “new forms of consumer-generated media, such as the use of blogs in word of mouth marketing campaigns.”

Elaborating on the change in advertising mediums and expansion of the duty to disclose sponsored endorsements, the Commission noted that when it adopted its Guides in 1980, “endorsements were disseminated by advertisers – not by the endorsers themselves – through such traditional media as television commercials and print advertisements. With such media, the duty to disclose material connections between the advertiser and the endorser naturally fell on the advertiser.” With the advent of consumer-generated content, i.e., “new media,” the rules have changed and burdens have shifted.

This post does not address the obligations imposed on celebrities or experts, but focuses, instead, on the obligations imposed on bloggers and advertisers.

Some Highlights of the New Guidelines

• Whether or not “new media,” “consumer-generated content” falls within the definition of regulated “endorsement” will depend on a “case-by-case” analysis.

What businesses and bloggers may find most troubling about the revised guidelines is the absence of bright-line parameters of conduct: the guidelines are not triggered by a specific dollar value of a gift to a blogger, but by a consideration of a variety of factors. The Commission noted that “the fundamental question is whether, viewed plainly, 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.’”

Factors weighed in determining whether a blog post would be considered “sponsored” include whether the product or service being discussed in the post was provided for free by the advertiser or its agent to the blogger; the terms of any agreement between the blogger and the product or service manufacturer or provider; 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.

The circumstances that determine whether a blog post would be deemed “sponsored” are, according to the Commission, “extremely varied and cannot be fully enumerated.” So how do you know if your post would be considered an “endorsement” requiring the disclosure of any relationship between yourself and the subject of your blog? If the question exists in your mind, chances are you would be obliged to make a disclosure.

Even a single item of merchandise from a marketer may trigger the obligations imposed on “sponsored” endorsements. In such a case, the value of the good or service may be deemed the determining factor.

On the other hand, the Commission also noted under some circumstances, such as where a blogger may receive “a stream of free merchandise,” “disclosure of the the connection between the speaker and the advertiser will likely be warranted regardless of the monetary value of the free product provided by the advertiser.”

• The FTC considers the blogger, “the endorser,” “the party primarily responsible for disclosing material connections with the advertiser.”

The sponsoring entity, in turn, is obliged to: 1) inform the blogger of the blogger’s obligation to disclose the sponsorship, 2) monitor the blogger to ensure that the disclosure is provided by the blogger, and 3) cease future sponsorships if the blogger fails to disclose the sponsorship.

• Businesses may be responsible for the excessive claims of a blogger where the business or marketer initiated contact with the blogger and created a sponsored relationship and review.

Businesses are not free to simply send their products to bloggers and not pay attention to the claims bloggers may make about the products when those claims exceed the actual benefits of the product.

“This product is positively the best around and can do incredible things! It’ll make you happier, stronger, more alert, more alluring, etc., etc.” Such a ringing endorsement from a blogger might have, in the past, brought broad smiles to the faces of business representatives who supplied free goods or services to the blogger. Under the new FTC guidelines, exaggerated claims of “sponsored” bloggers may not merely impose liabilities upon the blogger, but also upon the advertiser, i.e., the manufacturer of the goods or provider of the services or its agents.

Specifically, the Commission noted, “if the advertiser initiated the process that led to these endorsements being made, e.g., by providing products to well-known bloggers or endorsers enrolled in a word of mouth marketing programs – it potentially is liable for misleading statements made by those consumers.”

Businesses are well advised to not to blanket bloggers with free samples or services. Care should be exercised in determining which bloggers to approach with such initiatives and care should equally be exercised in explicitly informing the blogger of the requirement of disclosure of the sponsorship (and, possibly, parameters regarding claims about the product or service).

Where a blogger fails to disclose the sponsorship of the blog post, the Commission offered that it would, “in the exercise of its prosecutorial discretion,” “consider the advertiser’s efforts to advise the endorsers of their responsibilities and to monitor their online behavior in determining what action, if any, would be warranted.”

Without directly stating so, the Commission even seems to suggest some action being taken by an advertiser, something other than simply not continuing a relationship with the blogger, where a blogger fails to disclose the sponsored relationship. What action that might be is left unanswered, though it would be reasonable to consider efforts by the advertiser to reach the blogger’s audience to communicate the omission or excessive claims.

Citing an example of college student blogger who receives a free video game system to review, the Commission observed that in such an instance readers are unlikely to know that the reviewer received the gaming system free of charge, a factor that “likely would materially affect the credibility they attach to his endorsement.” In such an instance, the blogger “should clearly and conspicuously disclose that he received the gaming system free of charge.” An independent obligation exists with the manufacturer who is obliged to advise the blogger “at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try and monitor his postings for compliance.”

Some Takeaways for Bloggers and Businesses

The obligation to disclose a connection between a blogger and an advertiser falls “primarily” on the blogger, but is also shared by the advertiser.

The determination of whether a blog post is deemed an “endorsement” and, therefore, regulated commercial speech, creating unique liabilities on a blogger and advertiser, depends on a variety of factors, resting on a case-by-case analysis.

There are no bright-line borders for determining whether a blog would be deemed an endorsement: a series of free products to a blogger might trigger it or even a single item or service, depending on the value of it – or other factors - could trigger it.

Both the advertiser and blogger are “subject to liability for misleading or unsubstantiated representations made in the course of the [sponsored] blogger’s endorsement.”

Where a blogger’s representations were misleading, the FTC would consider the advertiser’s efforts to advise the endorsers of their responsibilities.

A blogger “is also liable if she fails to disclose clearly and conspicuously that she is being paid for her services.”

Advertisers who initiate contact with a blogger with the aim of obtaining a blog about a product or service are obliged to inform the blogger at the time of the giving of the product or service of the blogger’s obligation to disclose the connection between the blogger and the advertiser (i.e., the free gift or service or compensation) AND the advertiser is obliged to monitor the blogger for compliance with the disclosure requirements and representations made concerning the characteristics of the product or service.

• The FTC noted that while traditional media ads are typically inherently obvious to viewers as being sponsored endorsements, the same is not true of new media, where the failure of a blogger to disclose a relationship with the advertiser could leave the reader without the ability to discern a connection that would otherwise reasonably weigh in the weight a reader might give to a blog if that connection had been disclosed.

Advertisers who sponsor bloggers should establish procedures to advise bloggers of their responsibility to make disclosure and to monitor the blog to ensure compliance with this obligation.

• The FTC has not specified the procedures advertiser should put into place to monitor compliance with the Guides, leaving that responsibility to advertisers.

The full text of the Code revisions may be found at:  

http://bit.ly/78d50a

The FTC website may be visited at:

http://www.ftc.gov/

To file a complaint with the FTC under the new guidelines, consumers may visit:

https://www.ftccomplaintassistant.gov/
Post a Comment