Hey, blogger! The consumer protection police would like a word with you.

Media criticism.
Oct. 7 2009 6:29 PM

The FTC's Mad Power Grab

The commission's preposterous new endorsement guidelines.

FTC.

If you're a blogger and you write about goods or services—and what blogger doesn't write about books, movies, music, theater, restaurants, home theaters, laptops, manicures, clothing, tutoring, bicycles, cars, boats, cameras, strollers, watches, lawn care, pharmaceuticals, gourmet food, maid service, hair care, concerts, banking, shipping, or septic tank service from time to time?—then you've just made yourself vulnerable to an investigation from the Federal Trade Commission.

In new guidelines (PDF) released Oct. 5, the FTC put bloggers on notice that they could incur an $11,000 fine if they receive free goods, free services, or money and write about the goods or services without conspicuously disclosing their "material connection" to the provider. The FTC guidelines extend even to Facebook and Twitter posters. If you received a gratis novel from the publicity department of a publisher and posted a tweet about it without disclosing that the book was a freebie, you become an "endorser" in the FTC's view. It could—in the name of consumer protection—hit you with a fine. The 81-page guidelines, which also mandate stringent celebrity endorsements rules, will take effect Dec. 1.

When we think about power-mad federal agencies, the FTC rarely comes to mind. This outfit usually busies itself with credit card fraudsters, intrusive telemarketers, potential violators of antitrust law, and the like. The new guidelines are meant to address another one of the beats that the FTC walks—advertising fraud. The new guidelines, which are not law, are designed to give advertisers guidance on how to stay in compliance with the endorsement and testimonial appendages of the FTC Act, and they mark the first update since 1980.

The guidelines have to be read to be believed. They are written so broadly that if you blog about a good and service in such a way that the FTC construes as an endorsement, the commission has a predicate to investigate. The only way stay on the FTC's good side is with a "clearly and conspicuously" posted disclosure of the "sponsors" who provided you with the good or service (or money) to blog about the good or service. As I read the guidelines, the FTC could investigate you if you did disclose but it was not satisfied with the disclosure.

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Why is the FTC intent on hounding bloggers? It says it isn't, that the target is the growing blog-for-money business. According to the Word of Mouth Marketing Association, the biz was worth $1.35 billion in 2007. The Los Angeles Times identifies IZEA as one major company that helps advertisers place paid pitches in blogs and Twitter feeds.

A law blog produced by the Washington law firm of Arnold & Porter breaks down who, under the new guidelines, the FTC would regard an "endorser" who must disclose:

The FTC states that it will consider a number of factors including (1) whether the speaker was compensated; (2) whether the product was provided for free; (3) the terms of any agreement; (4) the length of any relationship; (5) previous receipt of products or likelihood of future receipt from the same or similar advertisers; and (6) the value of any items received. The revised Guides further state that it may not matter that the advertiser does not control whether the speaker reviews the product positively.

Seeking guideline clarification, blogger Edward Champion interviewed FTC spokesman Richard Cleland on Monday. In Cleland's view, a blogger who kept a free book that he reviewed on his site would have to disclose this "compensation."

"If there's an expectation that you're going to write a positive review," Cleland told Champion, "then there should be a disclosure."

The FTC would also take interest in blogs that keep Amazon Affiliates links on their pages or display an advertisement for the book under review, Cleland expressed.

Champion swarmed Cleland with a set of smart hypotheticals, to which he scarily responded:

These are very complex situations that are going to have to looked at on a case-by-case basis to determine whether or not there is a sufficient nexus, a sufficient compensation between the seller and the blogger, and so what we have done is to provide some guidance in this area. And some examples in this area where there's an endorsement.

In other words, the vagueness of our guidelines doth make suspects of you all.

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