FTC Revamps Endorsement Regulations and Puts Bloggers on Thin Ice

Article ImageSome internet scams are easy to spot—pop-ups boasting miracle weight loss or emails claiming you’ve won the lottery—but other, more subtle scams aren’t as easy to identify. With the rise of Web 2.0 tools, advertisers have a plethora of new opportunities to promote products and, unfortunately, dupe online users. For this reason, the Federal Trade Commission (FTC) has proposed new regulations regarding misleading online endorsements, which could hinder online advertisers’ ability to use social networking sites and blogs to promote products.

“Testimonials that do not describe typical consumer experiences should be accompanied by clear and conspicuous disclosure of the results consumers can generally expect to achieve from the advertised product or program,” says a press release issued by the FTC regarding the proposed revisions. The last time the FTC updated the Guides Concerning the Use of Endorsements and Testimonials in Advertising was 1980. “The guidelines with respect to endorsements predate all of this online marketing, social networking sites, and a whole host of litigation that has happened since,” says Roberta Jacobs-Meadway, an intellectual property attorney, and a member of the firm of Eckert Seamans Cherin & Mellott. Almost 30 years later, these guides are being revamped.

“What the [new] guidelines are saying is that you have to obey the same basic principles of disclosure when you are in a social networking situation and when you are using newer media to plug the product,” says Jacobs-Meadway. This means if people get paid to promote a product or receives a product for free, they have to state their intentions clearly. While this may put a stop to blatant false advertising, bloggers who review products will have to watch their backs as well. “In revising the guides, which are nearly 30 years old, the commission will address current marketing techniques, such as blogging and word-of-mouth advertising. Those who are compensated to promote or review a product using these techniques are not exempt from the laws governing truthful advertising,” says a statement from Richard Cleland, assistant director of the division of advertising practices at the FTC.

David Meerman Scott, marketing strategist and contributing editor for EContent, wrote about the nuances of these new regulations on his Web Ink Now blog. In a post titled “Bloggers in Handcuffs,” Scott wrote about these new regulations: “This is an important potential worry for people who talk about products that have been provided to them by a company. … I’ve been an advocate of full disclosure when doing a review on an expensive product that you have received for free. But now that I think about it, I do not disclose that I received a book for free if I write about the book. Should I?” Whether or not there will be exceptions granted for writing about certain products remains to be seen.

Jacobs-Meadway explains that most violations are brought to the FTC’s attention by consumers, but the FTC investigates each case individually. According to the FTC’s standard package of information regarding the guides, which it provided in lieu of an interview, “The guides do not purport to cover every possible use of endorsements in advertising. Whether a particular endorsement or testimonial is deceptive will depend on the specific factual circumstances of the advertisement at issue.” The punishment for violating these new guidelines could range from forcing companies to issue retractions or run corrective advertising to possible fines, says Jacobs-Meadway.

To find out how these regulations would be received, the FTC opened the topic for public comment on its website. Before permanently implementing the revised guidelines, the FTC staff attorneys will review the comments to “come up with a recommendation to the Federal Trade Commission’s commissioners about whether the guides should be adopted in final form, or whether further revision is needed,” says the FTC.

While some question the necessity of the revisions, others think they are a much-needed modernization of outdated regulations. Reviewing the proposed change, on his blog Scott asks, “While I do think that there is a social media ethics and disclosure issue here, do we really need to haul bloggers away in handcuffs?” Jacobs-Meadway is quick to focus on the positive affect these revisions will have on consumers: “I think it’s a good idea, it provides clarification in those situations that are open to interpretation. When dealing with clients, clarity is always better than ambiguity. This gives people certainty going forward, and that’s a good thing.”

According to the FTC, the new revisions will continue to be assessed in the coming months. The commissioners will likely vote on this matter some time this summer. Until then, advertisers and bloggers beware.

(www.ftc.gov; www.webinknow.com)