Three Views of the Proposed FTC Rule Changes

The interwebs are alive with discussion about changes proposed by the Federal Trade Commission that will affect product reviews and testimonials found in social media.

There is some real fear bubbling up here and there among bloggers and everyday social media users.  The idea that something they write their opinion about could get them in legal trouble is unsettling. As both a blogger and an affiliate and information marketer, I’m paying close attention.   I’ll admit I’m concerend about how all this will affect my business.

This past week I asked several of the Sparkplugging Interns to dig in and explore the topic.

What’s published below will give you a better understanding of the proposed changes and get you thinking about how it may or may not have an impact on you in the future.

Why I’m Not Worried About the New FTC Guidelines

From Traci Feit Love (@TraciLove)

A lot of people seem to be concerned about the FTC’s new proposed guidelines, which cover bloggers who endorse or review products in exchange for money or free stuff.

I’ve read through the entire text of the FTC’s notice of proposed changes (I don’t recommend this unless you’re really into dense legal writing), and concluded that there’s really not much to worry about.

The Guidelines Mainly Require Honesty and Full Disclosure

The main idea of the guidelines is to make sure that consumers aren’t deceived by bloggers’ product recommendations. That means bloggers have to disclose their financial interests and be honest in their reviews.

So, for example, if a blogger writes a review of a product in exchange for compensation (money, a free product, or some other benefit), the blogger should disclose that he is being compensated for the review. That seems fair. When I’m reading a review, I like to know whether the reviewer stands to benefit from promoting a particular product. So if I’m doing the review, I don’t have a problem with the reader knowing that information.

When it comes to the particular claims a reviewer makes about a product, the FTC guidelines mainly require that the reviewer be honest. You can’t say that a pill cures cancer, for example, if it doesn’t actually cure cancer. And if the product manufacturer isn’t making a particular claim, you shouldn’t make the claim. Makes sense.

They Could Lead To Less Free Stuff for Bloggers

When it comes to the guidelines, I think advertisers/sellers have more to worry about than bloggers. In some situations, advertisers can be held legally responsible for claims and statements made about their products by compensated bloggers – and that may mean less free stuff for bloggers in the long run.

Big brands tend to be risk-averse and may decide that the risks outweigh the benefits of providing free stuff in exchange for reviews. I guess we’ll have to wait and see.

Recommended Reading:

• Official Notice of Proposed Changes - This is a downloadable PDF published by the FTC.
• What brands and bloggers need to know – by Latoicha Givens. This article is written by an attorney and has a good list of things advertisers and bloggers can do to avoid liability under the new FTC rules.
• Advertisers brace for online viral marketing curbs -  David Gelles, Financial Times. This article focuses on how advertisers may be held liable for untruthful statements made by bloggers about their product, and points out that it may be difficult to determine when a blogger is acting as an “agent” of the advertiser.
• Blogola: The FTC Takes On Paid Posts-  Douglas MacMillan, BusinessWeek.com. This article explains how the new FTC guidelines will affect both paid reviews by bloggers and reviews prompted by free products sent to bloggers. It has some good examples from the blogosphere and explains how Google’s rules and restrictions may actually have a greater impact than FTC regulations.

Social Media Readers Have a Right

From Leigh Anne Wilkes (@homebasedmom)

This summer the FTC is expected to issue new advertising guidelines that will require bloggers to disclose when they’re writing about a sponsor’s product and voicing opinions that aren’t their own. The new FTC guidelines say that blog authors should disclose when they’re being compensated by an advertiser to discuss a product.

The practice of product manufacturers using blogs to advertise their product for them by giving them free product to review has proved to be an inexpensive marketing technique and a perk to bloggers. In these times of reduced marketing budgets it is a good use of advertisers money to give bloggers free product in exchange for an endorsement.

If the FTC proposed legislation is passed this will become more difficult. Bloggers will be required to disclose if they are writing about a sponsor’s product and if the opinions are not their own. Bloggers would also need to disclose if they are being compensated to discuss a product.

The blogosphere has become a popular place for people to look to for product suggestions and endorsements. As bloggers build relationships with their viewers their opinions and recommendations become like that of a good friend. “If Scribbit likes it, I would probably like it too.” This type of product endorsement carries more weight than one you see on TV or radio paid for advertising.

From what I have observed, the majority of bloggers do disclose in the review of the product when the advertiser has donated the product to them although not if they are being paid for the advertisement. As a reader that would make a difference to me. Are they being paid, have they themselves personally used the product? When I know a blogger is being paid for promotion a product the credibility of the review is diminished for me.

I recently did a review and a giveaway of a cookbook that was sent to me by the publisher. In the post where I shared one of the recipes I had tried, I let my readers know that I had been sent the cookbook by the publisher and that I had personal experience with the item.

Should a blog reader have the right to know that an opinion he is reading and taking at face value was paid for by an advertiser? I believe so.

It is my opinion, just as we know when we watch an advertisement on TV or hear one on the radio we know that it is being paid for by the advertiser. if a product endorsement is being paid for on a blog that information should also be disclosed. In order to trust and have confidence in marketing/advertising in the blogosphere there should be disclosure.

Recommended Reading:

• FTC Expected to Crack Down – The Huffington Post
• FTC Bloggers Regulation – Ideas that Spread
• Well known blogger Scribbit has definite opinions on how she handles product endorsements and reviews.
• Although, some feel that bloggers are being “targeted’ by this legislation and that mainstream media journalists are given “freebies” all the time with no regulation or legislation.

We Guarantee Our Product Will…

From Christopher Johnston (@chrisjohnston)

There has been a story bouncing around in the blogosphere since the FTC proposed rule changes in December 2008 relating to endorsements, where bloggers and other site owners may be held liable for claims made about a product or service.

The issue isn’t just with deceptive claims, but also with atypical results.

Marketers have used “results may vary” and “results not typical” to cover themselves in the past but apparently this will no longer be sufficient as a disclaimer. The FTC now wants us to use typical results only.

I imagine that the FTC is acting because of incredible weight loss claims from Acai berry, P90X or something similar.  Also there are many online tools claiming that you can make tens of thousands of dollars if you buy their report for $47, $97, or $197.

I see several problems with this rationale by the FTC. There are no magic pills when it comes to losing weight or making money. They all require action on the part of the purchaser. The 80/20 rule is always in effect and most people who purchase these things think that by simply purchasing them something magical will happen. They skies will open, light will shine down, and they will lose 100 pounds or money will start flowing into their checking accounts.

Some of us know better and realize that for any of that to happen there is a secret. It’s called WORK. If the FTC requires that you ONLY use typical results there will be no claim of results. Your only claim with a weight loss product that could be called typical will be that your wallet will be lighter or your credit card bill bigger.

There are many post that deal with the endorsements issue and they are much more eloquent than I on that issue.  I will put links to them at the bottom of this post. My stand on that issue is “full disclosure”. If you get paid to write about a product, say that you were paid. If they gave you the product, say that they gave it to you.

Recommended Reading:

• FTC To Shut Down Pay For Posts – Will Bloggers Become Criminals?
• Federal Regulations and Full Disclosure about Advertising
• FTC Considers Extending Ad Jurisdiction to Blogs and Bloggers

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