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Bloggers Face $11k FTC Fines For Not Disclosing Paid Endorsements



This blog post was not sponsored by anyone. If it were, I would have to disclose such a relationship or face up to $11,000 in fines from the Federal Trade Commission, according to newly published guidelines.

An update to FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising includes the following language (emphasis added):

The revised Guides also 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. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.

The above language is a done deal–it’s already passed an FTC commission vote 4-0.

What does this mean for bloggers?

Well, aside from the obvious “pay for post” deals–which now need full disclosure–”in-kind” endorsements are also a no-no without disclosure. So the next time a celebrity or A-list blogger raves about the latest camera or computer, they’d better disclose any relationship they have–or dig deep into their pockets.

Interestingly, the language appears to close the loophole I see used the most. “Brand X didn’t actually pay for the post, so we didn’t need to disclose anything.” Well, actually, it appears you will have to from now on. If you post a glowing endorsement about the new Nikon camera, but fail to mention that you also “consult” with the company on its social media initiatives, that would count as a “material connection” and could result in a fine.

The only gray area appears to be where do you post the disclosure–does it have to be within the post, or is a “disclosures” page sufficient–and, do you have to disclose what you received in compensation?

So what about that endorsement on Twitter? Do you need to worry about that? It appears so:

The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.

Of course, the above guidelines are not binding–the FTC would need to prove that your actions violated the FTC Act–but I’m not willing to be the blogger that gets to put them to the test. ;-)

  • http://www.jaankanellis.com Jaan Kanellis

    This whole thing is completely ridiculous. How in the world do they hope to equally police this equally? You cant just fine one person and not another. None of this will stand in court.
    .-= Jaan Kanellis´s last blog ..Customers Are Searching the Web; Are They Finding Your Business? Marketing Event: September 29th, 2009 =-.

  • http://www.barbaraling.com Barbara Ling, Virtual Coach

    What ever happened to people doing their own research to make up their own minds?
    .-= Barbara Ling, Virtual Coach´s last blog ..Make money by MASTERING Your Niche Part 1 – Keep Proactively Current via RSS =-.

    • http://www.marketingpilgrim.com Andy Beal

      Hah! They invented marketers–and we ruined it. ;-)

  • http://www.seo-theory.com/ Michael Martinez

    I think disclosure of relationships is reasonable where there is a chance of consumer confusion. Of course, what people dispute or question is where to draw the line that demarcates the chance of consumer confusion.

    I read the 81-page document and I feel the FTC made some pretty good judgement calls. Some of us will have to get used to a new set of guidelines but marketing adapts and moves on. Business has to flow.
    .-= Michael Martinez´s last blog ..Why Brent Payne’s PageRank Sculpting report is bogus =-.

    • http://www.marketingpilgrim.com Andy Beal

      You read all 81 pages? I tip my hat to you sir!

  • http://www.mattcutts.com/blog/ Matt Cutts

    If you read what the FTC says, they mention this case: “Example 7 states more clearly that although the blogger has primary responsibility for disclosing that he received the video game system for free, the manufacturer has an obligation to advise the blogger at the time it provides the gaming system that he should make the disclosure in any positive reviews of the system.”

    In that last sentence, it seems clear that the disclosure is recommended within the positive review, not just some other page buried away in the site. Certainly if you wanted to be safe regarding these guidelines, clear and conspicuous disclosure within the review would provide that.
    .-= Matt Cutts´s last blog ..BusinessWeek articles on Google =-.

    • http://www.marketingpilgrim.com Andy Beal

      I wonder if the FTC will allow very small fonts–like the junk we see at the bottom of TV commercials. ;-)

      Matt I’m intrigued that you’re weighing in on this. Is this just a passing interest in the “per post” disclosure, or do you have your “Google hat” on. Perhaps Google is softly whispering in the FTC’s ear about using some kind of easily identifiable–and spiderable–disclosure tag? :-P

      • http://www.mattcutts.com/blog/ Matt Cutts

        Andy, I haven’t talked to anyone at the FTC about this issue myself; I think they’re doing just fine on their own though. :) I’m also happy to see the “results not typical” loophole closed on ads, even though that has nothing to do with paid posts. That’s just helpful to prevent consumer confusion.
        .-= Matt Cutts´s last blog ..Where have you been in the USA or world? =-.

  • http://www.wolf-howl.com graywolf

    @mattcutts funny I don’t remember google suggesting any sort of disclosure or FTC compliance when they gave away those android phones a few months ago … people who live in stone houses should be careful when throwing glass #justsayin’
    .-= graywolf´s last blog ..Thanks to this Months Sponsors – September 2009 =-.

    • http://www.marketingpilgrim.com Andy Beal

      Oh snap! ;-)

  • http://www.crearecommunications.co.uk Luci

    I think it’s a good idea, in theory, and it does help out consumers who might not be aware that such deals exist, even though it seems obvious to us (people like my Grandma and mother spring to mind).
    As Jaan said, how is this kind of thing going to be policed? I can see lots of high profile blogs being punished and smaller ones getting away with it
    .-= Luci´s last blog ..301 Redirects – Search Engine Optimisation Tutorial =-.

  • http://www.barrywheeler.ca Barry Wheeler

    Disclosure is warranted but will it necessarily work? There’s many A-List bloggers and celebrities that operate outside of the FTC jurisdiction. There is a successful blogging world outside the USA the last time that I checked.

    I do agree there has to be proactive disclosure. In fact, some websites here in Canada, including the Government of Canada’s sites do now carry a proactive disclosure statement.

    Sure it would be easy for a blogger to hide relationships, especially if consulting on a corporate social media strategy. However, how long will the relationship remain “hidden”? Plus, with many consumers being somewhat mindful of marketing and endorsements, people have become much more in tune to what smells as a pure endorsement and what is an unbiased and uninfluenced opinion of a product.

    This does however, change the landscape for many bloggers.
    .-= Barry Wheeler´s last blog ..Success Starts with the Relationship =-.

  • http://online-strategist.com Oscar Del Santo

    This reminds me of the famous case we had in England not that long ago with the renowned philosopher Roger Scrutton when it was discovered that he was being ‘sponsored’ by tobacco companies – though he claimed that he never wrote an article he would not have written anyway in relation to smoking and anti-smoking laws.

    Full disclosure is always the best policy.
    .-= Oscar Del Santo´s last blog ..SEO y PPC: La Unión hace la Fuerza =-.

  • http://www.artisaninteractive.com Scott Woodard

    A decent idea in practice but enforcement is going to be a nightmare. How much is the FTC going to have to spend to attempt to police this?

    My guess is that they make examples out of the first few they prosecute but many bloggers who are already engaged in questionable advertising practices won’t really change, they’ll simply cover their tracks or find a loophole.

    • http://www.marketingpilgrim.com Andy Beal

      I’m guessing the FTC will use the Google model. Wait for competitors and rivals to snitch on those that violate the guidelines, then go after those that have multiple fines.

      The paperwork involved for one $11k fine is just not worth the FTC’s time, but a blogger with a couple dozen infractions? That’s someone to make an example of. ;-)

  • http://searchmarketingwisdom.com Alan Bleiweiss

    I’m deep into the new guide PDF – okay, only read 11 pages so far… There’s lots of wiggle room as is typical of regulatory guides, and that means there’s going to be lots of continued debate for people like Guy Kawasaki, or blogs like TC. And of course, the very first example I thought of after those two was the Google Android giveaway that I learned about thanks to @graywolf…

    I’m just curious to see how or if any of these are going to change their ways, or instead, wait til Uncle Sam comes knocking ten years after the fact.

    * Note – this comment is not to be construed as an endorsement of the blog on which it is made, or for / on behalf of any individual, entity or party which may or may not be mentioned within the comment itself or the article to which it has been submitted.
    .-= Alan Bleiweiss´s last blog ..Six Rules for Custom eCommerce SEO =-.

  • http://www.thefinalguide.com Shyam Sundar

    I’m blogger but I dont know how this news affects me and at the same time I don’t want to get penalised so I better don’t want to think about posting on product reviews.
    .-= Shyam Sundar´s last blog ..Favicons in Gmail =-.

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  • http://www.symptomsofpanicattacks.org Symptoms Of Panic Attacks

    Yeah I heard something about the FTC regulations on a forum that I visit frequently. It can get confusing sometimes and even scary to think that we could get into trouble for posting certain things on our blogs. I guess this can be a good thing because you have to take into consideration what you want to post.
    .-= Symptoms Of Panic Attacks´s last undefined ..If you register your site for free at =-.

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  • http://lulu.com/USpace USpace

    .
    Now that’s HOPE & CHANGE I was hoping for! Our government is simply brilliant, some of the smartest idiots in the world!
    .
    absurd thought -
    God of the Universe says
    outlaw most bloggers

    license all the rest
    monitor their writing
    .