FTC to Bloggers: Disclose Freebies or Face $11,000 Fine
According to new guidelines from the Federal Trade Commission (FTC), bloggers who fail to disclose that they have received freebies when they write about a product can now be fined up to $11,000 per post. The new FTC Guide Concerning the Use of Endorsements and Testimonials in Advertising argues that any post of a blogger who receives "cash or in-kind payment to review a product" should be considered an endorsement. Because these posts are now officially considered endorsements, bloggers who receive freebies must now disclose this fact on their site.
Freebies and the Independent Blogger
While the FTC will obviously have a hard time enforcing these regulations, there can be no doubt that marketers regularly approach independent bloggers (and especially mommy bloggers) with freebies. When bloggers accept these exchanges, they may not always disclose them in the posts that result. So, while bloggers who are involved in these schemes often tend to say that they would have reviewed the product anyway or that their reviews are often critical, there can be little doubt that payments and freebies influence these stories.
These new rules and rather large fines should bring some bloggers and marketers into line, though others will surely continue to push the ethical boundaries. And blogging Payola is unlikely to go away completely because of these new rules.
This marks the first time the FTC has updated endorsement and testimonial rules since 1980. The new rules also take on celebrity endorsements. If celebrities endorse a product and make false or unsubstantiated claims, or don't disclose 'material connections' between themselves and the advertisers in ads and outside the context of the ads (talk shows, social media, etc.), these celebrities can be held liable under the FTC Act. Judging from this, it would seem that celebrities who tweet about a product they endorse are now risking large fines.
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"endorsing" should read "enforcing."
thanks Peter - I fully endorse your correction :)
how are they going to enforce this
Shouldnt you guys disclose that the FTC gave you that document (for keeps) and asked that you do a writeup about this?
kidding, but funny, no?
Unless I'm mistaken, it's a lot bigger than just "freebies". The FTC is essentially declaring that any online content creator who generates income from e-commerce referrals (e.g. belongs to the Amazon.com affiliate program) is now subject to FTC authority.
It won't take long before online dirty-tricks political activists are combing through opposing political blogs looking for positive book reviews that have Amazon.com links to the books. It also won't take long for blogs in competitive niches to begin ratting out each other for perceived violations.
This is nonsense that will have no effect on the worst online frauds, who are already in violation of the law but operate from overseas. It will be used for anti-competitive and anti-free-speech purposes against basically honest bloggers who assume their readers are intelligent enough to understand online revenue generation.
I can see so much grey area from this, and just hope the FTC doesn't start poking its nose into blogs which aren't even hosted in the US. There's already a whole host of red tape to go through just to get an Adsense account, and the best answer to click on is 'no' to any questions relating to doing business in the US.
Going for celebs who are repeatedly tweeting about stuff might be fair game, but I sincerely hope that the FTC bureaucrats have better things to do than sift through every single blog posts looking for mentions of commercial product.
I agree with Robert. Very well put!
I don't see the problem with the new regulations. Why should honest bloggers have anything to fear? Admit you get stuff for free when you are reviewing stuff a company sent you. Why is that so hard? Only dishonest people who make up spammy blog posts just to get junk for free have anything to worry about.
If you are in the business of blogging, you should be subject to the laws that govern business. That's common sense.
So now bloggers have to do things that magazine writers don't have to? Magazines write stories about the companies that buy advertising in their mags.
Solution: everyone will start adding a legal disclaimer in their footer that says they "may have received promotional consideration for products mentioned on this site".
Payola was specific to FCC-licensed broadcasters as trustees of the public airwaves, and had to identify sponsored programming. Payola was being paid to play a program and not identify it as paid programming.
While it sounds to be a great idea to give the disclaimer status in the blog for endorsements, how is the law going to keep an eye on this?
What about the Income Tax implications??? I'm no expert..but it seems creating additional tax revenue is THE big angle being played here. After all, writing for gifts is a form of bartering, is it not? And, as such, is it not considered income subject to federal and state income taxation?
Someone needs to put a pencil to this, crunch the numbers and figure out how much cash'o'la is involved.
Am I way off base here?
Who drop the text I put here?
I think it's a good idea, because the reviewer could just be saying good things to get something in return.
Speaking of magazines, PR companies routinely give magazines freebies of products to review, then push the magazines very hard to review them. The is especially true with health and beauty aids. When you read about the top 5 lipsticks (or the like) the article has been created from a tight collaboration between a PR company representing the lipstick company, a beauty editor, and a writer. Is this legal? It goes on every month. Ask anyone at a beauty mag or at a PR company that represents beauty product companies.
Regarding the FTC rules, the more transparency the better I say.
But I doubt they will have any serious effect in the blogosphere, unless the companies distributing the freebies -- not the blogs -- have to disclose what they are up to.
Here's my take on this issue http://paullevinson.blogspot.com/2009/10/ftc-wrong-to-regulate-deceitful.html
Meh, why don't they try and find the spammers who make millions off v1agra emails first before trying to regulate a flourishing industry?
Pretty frustrated about this, but if all I have to do is write a big-words, legal-sounding thing and post a link to it from my homepage, big deal.
I don't like the implication that we accept freebies in exchange for our positive reviews. For me, I accept freebies because they're mailed to me, and feel I have NO obligation to write anything positive about that product unless I truly do like it. My integrity is at stake.
Not that the FTC cares about that -- they're after $$$, right? The $11,000 I've been wondering where to spend?
I don't think the FTC is going to have a clue on how to regulate this. What scares me more is if they try doing it in all the wrong ways. What's the end result going to be for us bloggers?
Everything the government gets their hands, they ruin... Looks like blogging is next.
I think that those who fake their testimonials or pay for them, should be the people who fear the FTC the most.
There are a lot of websites and blogs that fake their testimonials on purpose to make a quick buck.
Tal
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I agree with Robert. I'm no expert..but it seems creating additional tax revenue is THE big angle being played here.I think it's a good idea, because the reviewer could just be saying good things to get something in return.
I agree with Robert and think it's a good idea. I'm no expert..but it seems creating additional tax revenue is THE big angle being played here.
Another question is what happens when someone mentions a product that wasn't received for a review? Do we have to keep the receipts for everything we ever buy to prove it wasn't a "gift"? Sounds like anyone with a blog now has to put up a disclaimer stating that any product mentioned wasn't a promotional item or gift or ....
Otherwise, anything discussed in a blog will be subject to investigation, and I dare you to find the receipt for that book you mentioned in passing that's been on your bookshelf for two years. I agree with the idea that paid testimonials have gotten out of control and can be misleading.
There may not be a good answer for all the new media venues, but I don't think this will do it either. As for revenue, if I get a book (one I didn't order or may not even like by the way) for review, and I write a review, does that mean I can send the publisher a bill? Can I take a loss on my income taxes? My time bills out for more than the book costs. Someone with time and money could turn this into a real circus.
I can see so much grey area from this, and just hope the FTC doesn't start poking its nose into blogs which aren't even hosted in the US. There's already a whole host of red tape to go through just to get an Adsense account, and the best answer to click on is 'no' to any questions relating to doing business in the US.
Who drop the text I put here?