FTC Debates 'Traditional Media' vs. Blog Reviews; Demands Bloggers Disclose Freebies, Payments

By Chris Faylor, Oct 05, 2009 9:08am PDT The Federal Trade Commission today announced the latest revisions to its "Guides Concerning the Use of Endorsements and Testimonials in Advertising," revealing that "bloggers" and other "word-of-mouth" endorsers must now disclose "connections that consumers would not expect," such as free product or cash in exchange for review.

The announcement did not provide a specific definition of "blogger," leaving it unclear what effect this will have in the arena of video game reviews, news, and professional blogging in general--a field where free review copies and paid trips are commonplace. It was likewise unspecified how writers are to properly disclose "material connections."

However, it was noted that these guidelines do not apply towards "traditional media"--described as "a newspaper, magazine, or television or radio station with independent editorial responsibility"--as the Federal Trade Commission believes the issue lies primarily with "consumer-generated" content and personal postings.

"The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement," declared the FTC. "And a paid endorsement - like any other advertisement - is deceptive if it makes false or misleading claims."

The new policy takes effect on December 1, according to The Associated Press, with those found to be in violation facing a fine of up to $11,000 per instance.

In the words of the Federal Trade Commission:

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.

As for the difference between "traditional media" and blog reviews:

In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e., where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages. Accordingly, such reviews are not "endorsements" within the meaning of the Guides. Under these circumstances, the Commission believes, knowing whether the media entity that published the review paid for the item in question would not affect the weight consumers give to the reviewer's statements. Of course, this view could be different if the reviewer were receiving a benefit directly from the manufacturer (or its agent).

In contrast, if a blogger's statement on his personal blog - i.e., as a sponsored message - due to the blogger's relationship with the advertiser or the value of the merchandise he has received and has been asked to review by that advertiser, knowing these facts might affect the weight consumers give to his review.

The Commission also noted that an "advertiser's lack of control" over the resulting "consumer-generated" content doesn't necessarily factor in:

An advertiser's lack of control over the specific statement made via these new forms of consumer-generated media would not automatically disqualify that statement from being deemed an "endorsement" within the meaning of the Guides. Again, the issue is whether the consumer-generated statement can be considered "sponsored."

Thus, a consumer who purchases a product with his or her own money and praises it on a personal blog or on an electronic message board will not be deemed to be providing an endorsement. In contrast, postings by a blogger who is paid to speak about an advertiser's product will be covered by the Guides, regardless of whether the blogger is paid directly by the marketer itself or by a third party on behalf of the marketer.

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.

And to drive the point home, the following examples were provided:

Example 7: A college student who has earned a reputation as a video game expert maintains a personal weblog or "blog" where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.
Example 8: An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer's product. Knowledge of this poster's employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.

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  • This is actually pretty scary for a blogger.

    What if I fail to disclose something? What if I use an advertising network that decides to host ads for a product that I've "endorsed"--now I am benefiting indirectly from the reviewer.

    On the one hand, I appreciate that they're trying to prevent sneaky, evil, marketing things, but on the second hand it seems a little hard to enforce (how many million blogger/wordpress accounts are there?) and a little scary as far as how far-reaching it is. Bloggers generally aren't incorporated or LLC'd, they're just people. And so, they're a lot more susceptible to penalties than they would if they were a business.

    If we read "word of mouth" to mean just talking in general -- hell, it makes it a little scary to just talk about things. I don't think this is going to go full-crazy-Orwellian, but damn if it doesn't sound like it wants to.

  • This is the most pertinent example from the actual proposal:

    Example 7: A college student who has earned a reputation as a video game expertmaintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video gamehardware and software. As it has done in the past, the manufacturer of a newly releasedvideo game system sends the student a free copy of the system and asks him to writeabout it on his blog. He tests the new gaming system and writes a favorable review. Thereaders of his blog are unlikely to expect that he has received the video game system freeof charge in exchange for his review of the product, and given the value of the video game system, this fact would likely materially affect the credibility they attach to hisendorsement. Accordingly, the blogger should clearly and conspicuously disclose that hereceived the gaming system free of charge.