FTC Will Fine Bloggers, Advertisers up to $16,000 for Not Disclosing Freebies
The FTC published final guidelines governing endorsements, and testimonials today:
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.
The FTC did not specify exactly how bloggers should disclose the relationships, and it’s important to note that violating the new guidelines does not automatically result in a fine. The guidelines are meant to help advertisers and bloggers avoid breaking Section 5 of the Federal Trade Commission Act, which governs deceptive advertising.
“These are not regulations, these are guidelines,” said Betsy Lordan, a spokeswoman for the FTC. “We are saying, ‘We think it’s a good idea if you do this.’ If you violate the guides, you are not doing yourself any favors because you could have to pay a civil penalty. There are a lot of steps that have to happen.”
Some are saying the top fine is $11,000 but Horowitz quotes Lordan:
In order for a blogger to be fined for not disclosing they were being paid by an advertiser to review a product, there would have to be a complaint, an investigation and ultimately a court ruling mandating a fine. Violations could result in a $16,000 fine, Lordan said. The fine used to be $11,000 but Lordan said it was increased to $16,000 within the past year. All possible violations will be reviewed on a case by case basis.
Jeff Jarvis, not surprisingly, hates the regulations:
[T]he FTC assumes – as media people do – that the internet is a medium. It’s not. It’s a place where people talk. Most people who blog, as Pew found in a survey a few years ago, don’t think they are doing anything remotely connected to journalism. I imagine that virtually no one on Facebook thinks they’re making media. They’re connecting. They’re talking. So for the FTC to go after bloggers and social media – as they explicitly do – is the same as sending a government goon into Denny’s to listen to the conversations in the corner booth and demand that you disclose that your Uncle Vinnie owns the pizzeria whose product you just endorsed.
Insanity and inanity. And danger. …
And what about automated ads, such as those from Google? I have been writing nice things about my treatment at Sloan Kettering. This has caused ads to come up on my blog, via Google, from the hospital. Presuming someone clicked on them, I’ve made money from the hospital. Does that taint what I say or me if I don’t disclose the payment? That’s the level of absurdity this can reach.
I’m not so sure Jeff is right. Let’s watch and see.