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Foursquare Founder to Fall Foul of FTC?


Last Year the FTC revised guidelines governing the use of endorsements and testimonials in advertising. As you may recall, the big news then was the addition of a rule stating that bloggers who accept free merchandise or services from companies they write about must reveal the terms of that endorsement to their readers or be found in violation of the law. Apparently someone forgot to tell Foursquare founder Dennis Crowley about this.

As discussed at CNNmoney.com, Foursquare founder Dennis Crowley recently speculated at a panel hosted by NYU, that “the next big thing” will be online social networks creating algorithms that account and weight users’ recommendations which marketers will be able to use to reward the most influential users for mentioning them (ahem… paid posts).

The shocker to Crowley came by way of a Forbes blogger who told him about the FTC regulations. Crowley said hadn’t heard about this and he made a note to bring it up to his legal team. This is a potential complication that could influence not only Foursquare but a lot of other social media platforms and their location based/referral services over the next few years.

Social media can be a powerful way to generate referrals and engage your audience in promoting your service or products. Rewarding visitors is an obvious strategy to get them to take the plunge and promote you to their friends and followers; however, with limited characters available through Twitter, Facebook, Foursquare and other social media platforms one must wonder how you squeeze in the proper disclosures.

For me, the answer is not including the disclosures in the update / tweet itself, but rather to include an additional feature allowing users to append their updates with the proper disclosure terms. While this might make user interface designers a little uneasy, perhaps the inclusion of such a feature would actually result in more people participating in such programs (I want to earn discounts and free stuff too).

One way or the other, I have no doubt we’ll see more and more social media campaigns which include providing an incentive for the customer to promote products and services with their followers and friends. The only question, is how social media giants will achieve this while staying on the good side of the FTC.

  • http://www.peerindex.net Azeem Azhar

    Interesting. You could easily use a URL shortener to attach a disclosure. Or make a hashtag (like #payola) which could get into common usage – and presumably qualify for appropriate disclosure.

    Of course, the whole FTC principle is slightly absurd and invasive. If you are an authority courtesy of your activity on twitter, say, you may get treated differently by companies, and by nature of living a life online will tweet about it.

    If I take a Groupon deal from a company I write about (but that deal is available to anyone) and then checkin using 4Sq or Gowalla at the venue (but don’t write about the company) and the check in is pushed to my twitter stream, am I in breach of the FT C guidelines?

    Thank god we don’t have anything like this in the UK :)

  • http://osarny.co.cc/LG+GS290+COOKIE+FRESH.html toddy
  • http://womma.org Steve Ziemba

    This is not surprising. According to a recent study by IZEA, “35% of pr, social media and marketing professionals are not ware of the FTC guidelines on endorsements in social media.”

    WOMMA is helping marketers navigate the regulated water within the FTC Guides via our conferences, webinars, and online certificate program.

    Disclosure. I am the Director of Marketing and Social Media for WOMMA and IZEA is a member company.