FTC to Rule Blogs Must Disclose Gifts or Pay for Reviews
October 8, 2009
The recent news that the Federal Trade Commission intends to revise the rules from 1st December so as to require bloggers to disclose any connection with advertisers, including, the receipt of free products “Guidelines Concerning the Use of Endorsements and Testimonials in Advertising” raises the question whether similar obligations are imposed on bloggers in the UK and EU.
Specifically the guidelines provide that anyone endorsing a product online must “disclose the material connections they share with the seller of the product or service.” It is unclear what constitutes an “endorsement” and the FTC appears to use the terms ‘blog’ and ‘consumer generated media’ interchangeably. Some say ‘endorsements’ will include anything from a blog entry to a Facebook post, to a 100 word tweet on social networking site Twitter. See The Trademark Blog, who also features the full text of the revised FTC guidelines.
So, the FTC’s aim is to stop advertisers using bloggers and social media sites like Facebook and Twitter to promote goods or services on behalf of their clients. This is being done by placing an obligation on Bloggers to disclose whether they have any connection with the advertiser, or have receive freebies or payment in return for positive feedback. While the updated FTC guidelines are not law, advertisers and bloggers could be issued warnings or be brought into court by the agency for violating the guidelines. The FTC has even announced a fine of up to £6900 to ensure the new rules stick.
In the EU there are consumer protection measures of various sorts, but they do not use the same approach of imposing a positive duty on bloggers. For example, the Consumer Protection against Unfair Trading regulations which came into force in May 2008 prevents, among other things, buzz marketing – ti.e. falsely pretending to be a consumer (also known as ‘astroturfing’). The Business Protection from Misleading Marketing Regulations 2008 implementing the Consumer Practices Directive (UCPD) prohibits businesses from advertising products in a way that misleads traders – OFT Guide to the Regulations. So there are regulations in the UK aimed at preventing advertising likely to mislead, but these do not impose a duty on bloggers to disclose incentives.
Struan Robertson is reported by Times Online here as saying that protection from “unscrupulous practices” already exists, under the terms of the Consumer Protection regulations in that “failing to declare that editorial content has been paid for is punishable by up to two years in prison, and falsely representing yourself as an individual when you are a company is a crime.” However, he is simply saying that advertorials must be disclosed as such, and that astroturfing, (mentioned earlier) is a criminal offence. This is not saying there is a general obligation on bloggers to disclose freebies or other inducements received.
The FTC’s approach of viewing blogs as a form of advertising raises the question whether it is more appropriate to regard bloggers as ‘journalists’. This is a matter that has been debated. See here where it is argued that bloggers are different to journalists because “Bloggers tend to write what they know, think and feel. Journalists are supposed to give facts, and unfortunately don’t always get them correct”. Here the conclusion is that this is an irrelevant discussion, while here Dan Mason points out that as traditional media looks to User Generated Content to maintain its own viability, the credentials of bloggers as citizen journalists has been brought sharply into focus
The new FTC guidelines have come in for criticism as too harsh. Many traditional journalists receive free products for review purposes yet they will be unaffected by the new rules. How can the FTC make such a sharp division between those writing pieces online and those writing for newspapers? Other critics of the new regulations have questioned the FTC’s ability to police the guidelines given the size of the “blogosphere”. It is inevitable that many companies will continue to give freebies or payments despite the revised regulations and the possibility of detection is minute. In addition, there is nothing in the guidelines which states how disclosures must be made – this is left to the endorser and is likely to cause confusion amongst consumers.
In the EU a report called ‘User-generated content and weblogs’ written last year the importance of clarifying the status of weblogs is discussed. This report was adopted by Parliament’s Culture Committee (though it is not a legal initiative). The concern is that bloggers are in a position “ to considerably pollute cyberspace. A spokesperson is quoted as saying: “We already have too much spam, misinformation and malicious intent in cyberspace” ….”the public is still very trusting towards blogs, it is still seen as sincere. And it should remain sincere. For that we need a quality mark, a disclosure of who is really writing and why. “
So the EU discussions are seeing the solution as possibly introducing a quality mark, rather than placing an onus to disclose on all bloggers.
A more recent document discussing the legal standards that should apply to weblogs was published earlier this year.
Surprisingly neither the FTC guidelines nor the above reports specifically focus on affiliate arrangements. As a solicitor regulated by the Solicitors Regulation Authority, I am under strict obligations to disclose referral fees, and even to control what any referral partners say to others to attract business. Consequently, I and many solicitors do not bother with referral arrangements. Given that paying referral fees to others for the introduction of business is a standard business practice, it would be interesting to see whether regulators will turn their attention to requiring affiliate arrangements to be disclosed – or are we all presumed to be savvy enough to know that these things go on?
