FTC Issues New Blogger Guidelines

Ξ October 5th, 2009 | → 14 Comments | ∇ A Day at a Time, Technology, Wine News |

The FTC has issued new guidelines concerning endorsements and testimonials for the blogosphere, and the internet generally. Last updated in 1980, the new guidelines take a much needed step forward to include emergent social media on the internet. Though multifaceted, with respect to bloggers, the October 5th news release writes,
 
“The revised Guides [...] 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.”
 
For a fuller analysis of what this specifically means for bloggers we may turn to the FTC’s Endorsement Guides Notice itself.
 
“The Commission does not believe that all uses of new consumer-generated media to discuss product attributes or consumer experiences should be deemed “endorsements” within the meaning of the Guides. Rather, in analyzing statements made via these new media, the fundamental question is whether, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and therefore an “advertising message.” In other words, in disseminating positive statements about a product or service, is the speaker: (1) acting solely independently, in which case there is no endorsement, or (2) acting on behalf of the advertiser or its agent, such that the speaker’s statement is an “endorsement” that is part of an overall marketing campaign?
 
So how does one to distinguish between point 1 and point 2? Relevant facts would include:
 
” whether the speaker is compensated by the advertiser or its agent; whether the product or service in question was provided for free by the advertiser; the terms of any agreement; the length of the relationship; the previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and the value of the items or services received. 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.”
 
“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. 21″
 
Note 21 reads, in part,
 
“Even if that consumer receives a single, unsolicited item from one manufacturer and writes positively about it on a personal blog or on a public message board, the review is not likely to be deemed an endorsement, given the absence of a course of dealing with that advertiser (or others) that would suggest that the consumer is disseminating a “sponsored” advertising message.” (emphasis added)
 
However, page 10 is where it gets tricky.
 
“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. 22″
 
Note 22 reads,
 
“The fact that the participants technically might be free not to say anything about any particular product they receive through the program does not change the Commission’s view that positive statements would be deemed to be endorsements. The underlying purpose of these word of mouth marketing programs is to generate positive discussion about the advertiser’s products.”
 
The bottom line for the FTC (from pg. 11):
 
“[T]o the extent that consumers’ willingness to trust social media depends on the ability of those media to retain their credibility as reliable sources of information, application of the general principles embodied in the Guides presumably would have a beneficial, not detrimental, effect. And although industry self-regulation certainly can play an important role in protecting consumers as these new forms of marketing continue to evolve and new ones are developed, self-regulation works best when it is backed up by a strong law enforcement presence.”
 
Further, from pg. 39,
 
“The recent creation of consumer-generated media means that in many instances, endorsements are now disseminated by the endorser, rather than by the sponsoring advertiser. In these contexts, the Commission believes that the endorser is the party primarily responsible for disclosing material connections with the advertiser. However, advertisers who sponsor these endorsers (either by providing free products – directly or through a middleman – or otherwise) in order to generate positive word of mouth and spur sales should establish procedures to advise endorsers that they should make the necessary disclosures and to monitor the conduct of those endorsers. 79″
 
Note 79 reads,
 
“The Commission’s view that these endorsers have an obligation to disclose material connections with their sponsoring advertisers should not be seen as reflecting a desire on the part of the Commission either to deter consumers from sharing their views about products they like with others or as an indication the Commission intends to target consumer endorsers who use these new forms of consumer-generated media. As with traditional media, the Commission’s law enforcement activities will continue to focus on advertisers.”
 
This is a developing story. The precise implications for our community of wine bloggers is as yet unclear. But we can say:
 
1) Bloggers who routinely write about wines should disclose whether the wines have been purchased or given as samples by a distributor, agent, or winery.
 
2) The advertiser’s lack of control over the review is not sufficient to disqualify a blogger as an endorser of a product.
 
3) The blogger is primarily responsible for disclosing a material relation with distributors, agents and wineries when they have previously received similar products or services from a specific commercial entity or from multiple commercial entities, and when they are in the future likely to receive such products.
 
4) The vote was unanimous, 4-0. The Guidelines will take effect December 1st of this year.
 
Admin

 

14 Responses to ' FTC Issues New Blogger Guidelines '

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  1. tom merle said,

    on October 5th, 2009 at 7:17 pm

    I would think that what counts to establish credibility with consumers is the record of evaluations. I would assume that most sites that review widgets of any kind receive test items as samples, say cell phones. If the reviewing entity finds some of the widgets mediocre and some superior then this would seem to indicate that the fact of free samples is immaterial.

  2. Sherman said,

    on October 6th, 2009 at 12:21 am

    Given a relationship between the blogger and a member of the supply chain, what is the penalty for non-disclosure, and how would any such penalty be enforced? Anything in the new guidelines about this area?

  3. Administrator said,

    on October 6th, 2009 at 12:49 am

    Good question. As I understand the FTC Guidelines, the pursuit of penalties would follow upon the perceived harm done to the public. Enforcement, the recommendation to law enforcement, would therefore be a function of the number and severity of public complaints. Some internet sources have already assigned a dollar value to the penalties. I have yet to find independent corroboration of their figures. The story is developing. Stay tuned.

  4. Jeff said,

    on October 7th, 2009 at 7:54 am

    Nice post and summary, Ken.

    Most wine bloggers who have a readership already do disclosure, so I think the ultimate eventuality is that the fringe will shake out, which is probably better off for everybody anyway.

    Again, nice post.

  5. Administrator said,

    on October 7th, 2009 at 8:09 am

    Thank you, Jeff. And I agree with you. The best wine blogs, yours included, already do disclose. The FTC Guidelines were not rewritten for wine bloggers, after all. The FTC is far more concerned with misrepresentations in the health and medical fields, ‘canned’ testimonials for electronic gear, questionable child care products, the larger issue of a manufacturer’s liability.

  6. Slaked said,

    on October 7th, 2009 at 8:17 am

    Great post. Thanks for the update.

  7. Lisa said,

    on October 7th, 2009 at 10:33 am

    The big discrepancy is that wine (and other) print magazines routinely receive free wine samples – some review no matter what the outcome, others only write about those they recommend.

  8. Sherman said,

    on October 7th, 2009 at 10:49 am

    Looking at a Wall Street Journal aricle on 10-6-09, they say “There are no fines for violating the guidelines, FTC officials say, although bloggers could end up in court if they don’t stop violating the guidelines.” They go on to say that enforcing the guidelines could be difficult, since the agency (the FTC) has limited authority and staff. So apparently, only the most obvious and most blatant offenders will be in line for possible punishment. Seems like another federal answer to an unasked question –

  9. Administrator said,

    on October 7th, 2009 at 11:16 am

    Lisa, Sherman, you both make excellent points. The FTC’s updated Guidelines were not written in a vacuum. They did rely on commenters to provide some direction prior to their decision. It is likely, owing to the great public interest in the discrepancy between print and blog standards, that the subject will be revisited once the dust settles following their Oct. 5th notice.

    And the FTC is not a law-enforcement agency. Violations of the Guidelines will be recommended to law enforcement on a case-by-case basis, and then only in instances of egregious, flagrant and repeated abuse of the public trust.

    An important caveat: the FTC has very little interest in themselves actively ‘policing’ the blogosphere. The important wrinkle here is that consumers now have the FTC’s Complaint link to report violations. This, I believe, is the most important development.


  10. on October 7th, 2009 at 10:27 pm

    The ultimate goal here is transparency. That is a standard that should be the minimum for admission to the world of wine writers.

    It is a standard that needs to be applied not just to the blogosphere but to all winewriting–and, of course, to all comments on product quality.

    I cannot see where any responsible critic should be opposed. There are no onerous reporting requirements. To my mind, the entire wine community would be advanced by taking a united stand for openness and absence of taint in our writings.

  11. Administrator said,

    on October 7th, 2009 at 10:35 pm

    I couldn’t agree with you more, Charlie. As usual, you are right on the mark. Great to hear from you.

  12. Peter May said,

    on October 10th, 2009 at 7:11 am

    As a suggested voluntary code of practice no-one can object. But as some sort of law with legal penalties ??

    I read two daily newspapers. Their reviewers of books, wines, theatre, movies, travel and vacations all get them free. Readers know that.

    But Joe Soap writing a personal blog for their family or whatever has to disclose what was paid for?

    “Went on great holiday (paid for) found buzzy bar wherethey make great margaritas (bought 6 barman gave me one on the house), had great pub meal (2 for 1 discount) and waiter brought us a great grappa with the bill (on the house). Saw great sandals in shop (on sale, got 50%off)…..”

    Wine writers on blogs must disclose while writers in magazines and newspapers don’t? Is this official recognition that the blogosphere is more influential than traditional media?

    Also not clear who is affected. It is US bloggers, or writers on blogs hosted in the US? Can you Greybeard write freely while your other writers risk a SWAT team breaking down their doors?

    And if a blogger writes that they paid for goods they review, who will or can prove them wrong?

    Re wine, what about wines you taste at trade shows? How about if you pay to attend a wine show but the pours are free once inside the show?

  13. Admin, Ken Payton said,

    on October 11th, 2009 at 8:01 am

    Hi, Peter. You ask some good questions about the FTC’s new Guidelines. Here’s how I approach the issue. Of the major difference between established newspapers (and mags) and bloggers with respect to freebies, I think you may have answered your own question when you write “Readers know that.” The FTC believes that there is no way traditional media can operate without samples. Imagine a computer reviewer for the NY Times. To review a dozen new computers over the course of a month cannot be achieved without the manufacturers giving computers to the reviewer in his official capacity as an employee for the Times. And that the public, indeed, knows this. Therefore, there is no deception of the public.

    A blogger, by virtue of his or her independence, their non-affiliation, it is felt that the public will possibly assume, according to the FTC, the same standard ‘traditional’ media enjoys may apply. Therefore, deception may occur without disclosure. After all, it costs little if anything to set up a blog. There is no financial investment or reputation driving consistent, credible review quality. The simple truth is that drug companies, consumer electronic manufacturers, vitamin and diet promoters, among many other businesses, have turned to the internet as an end-around of govt. oversight.

    In the example you provide of a certain ‘Joe Soap’, the FTC makes it clear that a blogger endorsement follows upon a consistent, repetitious relation to a given business. There is nothing, I repeat, nothing in the new Guidelines that remotely suggests a citizen blogger writing for their family would be required to disclose anything! However, should travel companies establish a relation over time with ‘Joe Soap’, the citizen blogger, then yes, disclosure would eventually be required. But even then, the details of the restaurant and bar comps., the discount on sandals, would fall well outside of the Guidelines.

    You must remember that the Guidelines are but a first attempt to address the growing problem of internet fraud and mis-representation, of the pernicious, sometimes injurious trafficking of the false testimonials of shills, of all those ‘gaming’ the system. Even wine writers!

    But your concerns about Greybeard may be put to rest!

    And as for a SWAT team breaking down the door, if a mother had given her child a dietary supplement advertised on a fake ‘family’-issues blog as improving children’s health that was, in fact, injurious, then that mother would likely want some legal recourse.

  14. Greybeard said,

    on October 15th, 2009 at 3:18 pm

    An interesting topic, and thanks to Peter and Ken for covering a few bases in their discourse.
    I am a firm believer in transparency, so rest assured that should I ever start to receive freebies from wineries or retailers in the course of my writing I will happily provide full disclosure. Unfortunately this seems a forlorn hope (no free samples ariving with the morning mail yet!) and I continue to use my own hard-earned cash for those modest wines mentioned in my posts – whether it is ones bought directly for home drinking or those enjoyed at tastings.

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