Bloggers Face New FTC Scrutiny

Ξ May 21st, 2009 | → 7 Comments | ∇ A Day at a Time, Technology, Wine News |

In November 2008 the FTC issued a Federal Register Notice titled Guides Concerning the Use of Endorsements and Testimonials in Advertising. For the first time in FTC history, the Guide, to be voted on and possibly published as early as this summer, will take blogs under their purview. Recent press references of this action may be found on the Huffington Post, the blog Bare Feet Studios, and, the most precise account, Blogola: the FTC Takes on Paid Posts, from Business Week.
 
So, the question is how might this new FTC Guide affect the wine blogging community? The answer, at this point, is not entirely clear. However, an email exchange with the FTC’s Betsy Lordan of the Office of Public Affairs produced this nugget from Richard Cleland, Assistant Director, Division of Advertising Practices, Federal Trade Commission,
 
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.
 
The text of the proposed Guide does offer examples of blogging that might come under regulatory review. Example 7 from page 84:
 
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. The readers of his blog are unlikely to expect 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 would likely 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.
 
Under this example, a wine blogger would seem to be required to reveal that s/he has received a wine under review from a producer, or a corking device, book, etc. But it does not necessarily stop there. What is not entirely clear are whether other forms of compensation that might be relevant and require disclosure: For example, has the blogger’s transportation costs to a vineyard or winery been paid for by the latter in exchange for a promotional review? From the Guide:
 
New Examples [ ] apply the general principle that material connections [emphasis added] between the endorser and the advertiser should be disclosed to several new forms of marketing – blogs, discussion boards, and “street teams.” The Commission specifically seeks comment on these examples, with particular focus on the expectations held by consumers as to the relationships that exist between advertisers and endorsers in these new marketing contexts.
 
And of the referenced discussion boards the Guide has this to say:
 
Example 8: An online message board designated for discussions of new music download technology is requented 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.
 
This would seem to clearly require full disclosure on a message/discussion board that an employee has posted a review. But what of the blogger from Example 7? The question is not whether the blogger has become an employee by virtue of some form of compensation, but whether a compensated blogger on a message/discussion board might also be required to disclose such compensation with his review.
 
And what are the implications for the owners/administrators of wine review sites, Cellar Tracker, et al., in maintaining the transparency of posters’ reviews? Are they ultimately responsible for guaranteeing transparency? I did put this question to the FTC’s Betsy Lordan. She has pledged to get back to me with an opinion from their legal staff. I shall add the text of the reply as soon as it becomes available.
 
The opportunity for public comment on the proposed Guide ended March 2nd of this year. All comments made up to this date may be found here.
 
For an update please see this.
 
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7 Responses to ' Bloggers Face New FTC Scrutiny '

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  1. on May 22nd, 2009 at 1:09 pm

    Hi Ken

    Did you catch the (nearly two hour) congressional hearing about the future of journalism. Headed up by John Kerry, the hearing addressed blogging as well. the CSPAN web site had the video, but it’s no longer available

  2. Administrator said,

    on May 22nd, 2009 at 1:19 pm

    Nice to hear from you, Arthur. I’ve read accounts of the hearing but I did not watch the hearing itself. I’ll try to find it. It was held in early May, I believe. Cheers.


  3. on May 22nd, 2009 at 4:23 pm

    May 6th. Youtube has only excerpts. CSPAN had the whole thing until recently. Maybe deeper searching of that archive will turn up something.


  4. on May 24th, 2009 at 11:46 pm

    The FTC will never be able to enforce these laws because there are just to many bloggers out there and virtually everyone is making their opinions known online. It would be hard to prove someone was recieveing compensation for positively reviewing products.

  5. Administrator said,

    on May 25th, 2009 at 8:39 am

    Thank you for the comment. While it is without a doubt true, on the one hand, that the FTC, should the guidelines be approved in their current form, will face a daunting challenge, but on the other hand, the guidelines’ intent is not enforcement per se, but to promote voluntary compliance. The FTC’s larger idea is that bloggers should no longer be exempt from ‘truth in advertising’ regulations, and, most importantly, that consumers will positively benefit from a blogger’s disclosure.

    This has nothing to do with intrusive govt. regulation, in my opinion. It is about encouraging bloggers to provide the consumer with relevant information so that they might make an informed purchasing decision.

  6. Sean said,

    on June 1st, 2009 at 6:01 am

    Ignoring the issue that enforcement of these new guidelins, I do think that most professional wine critics (WS, WA, etc.) satisfy these standards. For example, professional wine critics do not provide readers/consumers with itemized lists of gifts (e.g., food, etc.) or gifted services (e.g., travel/airfare, etc.). Having said this, I do believe that journalists should disclose any (direct or indirect) compensation received.


  7. on July 24th, 2009 at 5:29 pm

    In addition to the voluntary compliance, I think the main targets will be not just every blogger but the truly influential bloggers – and they are easy to find. There is much about the blogosphere that is self-policing, or should I say those who delight in outing others. I agree with you that the ethics should initiate with the writer/blogger for all to benefit the most.

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