Fines for Blog Reviews?
The Federal Trade Commission (FTC) has issued new guidelines (16 CFR Part 255) which have put advertisers, bloggers and other online publishers into a panic. The new guidelines, take effect December 1, 2009 and prohibit blog reviews which fail to disclose material connections between sellers and bloggers. Theoretically, under the new guidelines, a blogger could be fined $10,000 for failing to disclose that he or she received a free copy of a book reviewed for a blog post. As receipt of a free review is standard in the industry, the Guidelines have bloggers justifiably concerned.
The FTC does not have the power to make laws. What it does have is the power to enforce the very broad Section 5 of the FTC Act. In short, Section 5 of the FTC Act makes it illegal to involve oneself in any unfair or deceptive trade practices. The new guidelines state that the FTC will now begin pursuing certain endorsements and testimonials. On the testimonial side, “results not typical” will no longer be enough. You will have to state what the typical results actually are. Of greater concern to bloggers is the endorsement side of the new guidelines. The FTC will now be taking a much closer look at any social media advertising message which consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.
The portion of the new guidelines that has bloggers up in arms is 16 CFR Section 255.5. If there is a connection between and endorser of a product and a seller of that product, and the connection is not reasonably expected by the audience, the connection must be fully disclosed. But what constitutes “connection,” “reasonable expectation” and “full disclosure”?
What long-time bloggers think are reasonable expectations, what their readers think are reasonable expectations and what the FTC thinks those readers think are reasonable expectations may very well be three different things. Bloggers take for granted that everyone knows the book they reviewed was a free copy. They assume everyone understands that when readers click on the picture of the book and get sent to Amazon to buy it, that the blogger receives a small percentage of that sale. It might surprise you, but most people don’t know that. What matters is your audience. If you write a blog about marketing for marketers, there is a good chance your readers understand these dynamics. If you write a blog about what happened on The View yesterday, your readers might not be aware of the compensation you receive in the form of freebies and affiliate links.
The FTC has come out and stated that fears over the new guidelines are overblown. The FTC states publicly that advertisers and bloggers are in no immediate danger of being sued or fined over the new guidelines. The FTC will focus on the most egregious violators first. Before suing anyone, the FTC will send a cease and desist letter. Violators who ignore that cease and desist letter however, might be well-advised to compile a large sum of expendable cash and engage a good lawyer with lots of federal courtroom experience.
So Am I Good Until I Get the Cease and Desist Letter?
While the FTC states it has no present plans to bring federal lawsuits over inadvertent violations of the new guidelines, you do not want to be the focus of an FTC investigation. Once you come up on the FTC’s radar, you might be on it for quite some time. A more immediate concern might be state Attorneys General enforcing soon to be state adopted versions of the new guidelines, often called “tiny FTCs.” These tiny FTCs mirror the federal guidelines, but often allow for state Attorney General or even private enforcement. Being on the business end of a tiny FTC lawsuit will likely cost your company far more than a federal FTC fine.
What to Do
Read the new guidelines, read the examples provided therein and do not try pushing the envelope, at least until the scope of enforcement becomes clearer. Did you get a free copy of the book you are reviewing? Disclose it. Did you get a free MP3 player that you reviewed and honestly liked? Send the free one back to the sponsor and go out and buy one. Do you get paid through affiliate links? Disclose it on every page, in clear language that does not require scrolling or clicking to read.
Follow and Adapt
Over the next year, a clearer picture will develop as to how the FTC and courts interpret the new guidelines and how Section 5 of the FTC Act applies to bloggers. Until that time, bloggers are strongly cautioned not to make themselves a test case. While the rest of us bloggers will certainly appreciate the clarity your sacrifice will bring to interpreting the new guidelines, we are all going to miss you.