Disclose or Pay Us $11,000, Says FTC

28 | Posted In News by David

The federal government, in its infinite wisdom, has decided to set a fine of up to $11,000 on bloggers who are paid to write reviews and fail to disclose it.

In the first update to the Guides Concerning the Use of Endorsements and Testimonials in Advertising in 29 years, the FTC has included the following language:

Bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.

The update also says this:

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.

The effect here could be pretty sweeping. The most obvious application of something like this would be pay-per-post arrangements like that from Izea or ReviewMe. The way it is phrased, though, seems to include the common practice of sending review units to bloggers for review. Does this mean that you have to disclose when a company sends you a product for review or else be subject to a fine?

Is This Necessary?

Such an update is only natural. A lot has changed since 1980. The word “blog” didn’t even exist back then, so it could be argued that the FTC has to adapt. The devil could come in how it is applied.

Personally, I don’t think it is necessary. I think the free market takes care of this problem far faster and far more efficiently than a government bureaucracy. The moment one discovers a quid pro quo for a review, the entire reputation of a blogger is cast into question. Those kinds of people don’t usually last long, and the backlash can be severe in the social media circles.

Have you ever seen the itchy trigger finger on Twitter alone in some circles when an affiliate link is tweeted?

Plus, at the end of the day, the government is about the most inefficient and unsuccessful group – EVER. Pretty much everything they do turns to crap. Do we really want the FTC using blunt (and ill-informed) force to inject itself into a constantly evolving new media that it is pretty much guaranteed not to understand? Are we going to see forms and reports that bloggers are forced to fill out on threat of jail? After all, how is any of this information going to reach the FTC?

On the surface, I can see that this is a natural update. When I look deeper, I see a potential can of worms. Is it just me?

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  • http://www.lifeofjustin.com/ Justin Wright

    I highly agree. 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?

    However, I do think it's a good practice to share this information with your readers, regardless of the new law. Then again most people can spot a paid review from a mile away.

  • http://www.nextlevelblogger.com/about Christian

    Is it necessary? Ha. Yes, for them. they need to stick their fingers in, because it means revenue, right? But can they actually ENFORCE this? I don't see any way possible. I compare it to the RIAA trying to bust college kids for having music downloads on their hard drive. Yeah right, that's gonna fly.

    You're absolutely right…the internet is already killer at weeding out these idiots who are just in it to make a buck. We need regulation, which is why we regulate the heck out of it already.

  • http://winnermindset.com winermindset

    I totally agree with you on the gov issue.

    “ALL GOVERNMENTS LEFT ALL OF THE PEOPLE DOWN ALL OF THE TIME”

    but what can you do? They have GUNS!!!

  • http://www.nextlevelblogger.com/about Christian

    Ha, the government tracking down non-disclosure on behalf of all us poor consumers who can't detect it for ourselves. Bless their little hearts :)

  • http://www.lifeofjustin.com/ Justin Wright

    That guns comment made me picture a 13 year old blogger sitting in the basement, when out of no where they come in and blow his door down with guns drawn about not disclosing a link in one of his posts.

  • gregellison

    It is going to be interesting to see what the paid posting companies are going to do when some of them don't require disclosure, but now they have to. Greg Ellison

  • http://lifestyledesign4u.com Gordie Rogers

    One of the few times it's good not to be an American. Will they police blogs on American servers run from overseas?

  • http://website-in-a-weekend.net/ Dave Doolin

    If that's how they want to play it, it becomes meaningless. If everyone ends up making the same statement of material connection, the consumer is in the same predicament: “Who to trust?”

    This is like those people who say that linkedin recommendations should not be reciprocated.

    Ok.

    Then what?

    We're moving back to the monkey tribe, reputation isn't everything, it's the only thing.

  • http://website-in-a-weekend.net/ Dave Doolin

    They will prosecute the American(s) involved, yes.

  • http://FreeAcaiBerry.org/ Steve

    The paid for post advertisers set the rules and the bloggers had to obey even though they wanted to disclose. This is a very good thing for blogs.

  • Christian

    I hope I understand your post right… Here in germany this is normal. Here in germany every affiliate-link needs to be marked as one! And a paid review needs to be marked as well. If you don't do this, you can get high payments from lawyers. At the moment you live in an marketing-paradise in the USA. Many things you do to earn money, will not work in germany. If you earn money with something here, you need to say it to your visitor: “Hey, this link is paid! -> I will earn money!”. Your hidden marketing-actions to make money, will not work here… On the other side I think this is good for customers, because they should know, if a review is paid or not. Because paid-reviews are often partial. Just my two cents.

  • easisell

    David it's not just you. I had a bunch of complaints on my Twitter feed yesterday about this. I don't think it's particularly necessary – I agree with you that the free market will handle it better. We don't need more rules, we need more freedom – we need more freedom of choice so that we can shape a better, more efficient world.

    At the end of the day, I've learned that the Federal Government isn't there to make life better. It's there to increase profits, power & restrict freedoms.

  • http://www.thegoodwineguru.com/ George R Perry

    I think this could be dangerous. I'm not saying that people shouldn't disclose that they have a relationship with products that they're reviewing, but I think there are levels of relationship. I run a wine site, and while I have received free wine to review, the provider understands that just because they gave me the wine gratis doesn't mean I'm going to write a favorable review, but I always thank them for the wine at the end of the post regardless of my thoughts on it – does that count as disclosure to my readers or do I need to do something more? I think people will get in trouble because they thought they were covering themselves and it turns out they weren't, and will get hit with fines that they can't pay.

  • http://propsblog.com Blake @ Props Blog

    The FTC really should just stay out of it since as you said, people who don't disclose affiliates don't last long anyway.

    I think as long as bloggers aren't required to disclose their exact compensation in their review post, I don't think it is a huge deal. Even then, I don't think it will come as a huge shock to most readers.

    TV networks aren't required to disclose how much each ad cost during the commercial, as long as bloggers say that it is a sponsored review, I don't think it's any different.

  • http://www.jrgriggs.net JR Griggs

    Yeah I wrote a post about it too. I think the gov needs to worry more about disclosing there payoffs. But, to avoid problems I created a disclosure page for general items and I'll post paid or free items I review in the post.

  • http://www.onlinepaycheckblueprint.com/ Franck Silvestre

    Yup, I do not make paid reviews on my blog (I recently reviewed a blog, but the owner didn't even know it).

    Thanks for letting us know this though.

    Franck
    the Body Guard marketer

  • http://www.blogmarketingexperts.com/ Bruce Inouye

    Hey David,

    I'm with you on this….NOT NECESSARY!

    Just like what you said, everything the US government does ends up in doo doo. I think this is “front and center” for our attention now and very soon, when all the dust settles, our government will look at some other group to regulate. Then the attention, and enforcement will die by the wayside. There is no way to enforce regulations on the millions of blogs and sites out there. That is the the reality. I wouldn't lose any sleep.

    But, I do think it is a good idea to have one more disclosure item at the bottom of our sites, maybe labeled “integrity.” That could sit next to the “disclaimer”, “privacy,” and “TOS?”

    PS: I'm already seeing “additional disclosures” written below testimonials on some salesletter sites.

  • Mara

    It's just you.

  • Anna

    I think it's a great idea to force people to disclose when they're paid to say good things about a product. Not everyone is sophisticated enough to detect it from the words alone. The free market is NOT good at kicking out the scums who prey on innocents. After the past 18 months in the US, how can you argue that?

    Maybe the government won't be good at it. But they'll get better and better as they learn more.

    (And yes, if you take free wine with or without a promise of a good review, you are unethical. Studies have proven that people unconsciously make different decisions than when they have no exchange of valuables.)

  • http://UltimateWorkAtHomeDads.com CharlesSeymourJr

    What I do is tell people in each post, and in my Use document on my sites, that I am being paid a commission if they purchase.

    This doesn't have to be “Hey wait… I'm only saying this because I'm being paid so don't listen to me!” It can be “be sure to make up your own mind on any product because even though I will be paid a small commission when someone purchases, you should always make up your own mind.”

    I often say that EARLY in a post so that by the time someone is far along the purchase trail, my statement won't get in their way.

    But people respect us more when we tell them that we have a vested interest… and even if it weren't the law, wouldn't YOU want to know that someone is being paid if you purchase through their lead?

    Charlie Seymour Jr
    http://twitter.com/UltimateWAHDads

  • Crushable

    From a broad perspective, it just comes from the fact that people are tech illiterate including the FTC. Trying to regulate internet marketing when you know nothing about it, as im sure it is the case with a bunch of 50 year old men on the ftc, is going to lead to poor outcomes, not the ones intended.

    cheers from SuperAwesomeDating

  • http://jrmarketingtips.com/ Jenny

    The FTC is essentially declaring that any online content creator who generates income from e-commerce referrals is now subject to FTC authority.

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    “Hello,
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    regards
    hazz.hazz”

  • clie78404743

    “Hello,
    lets discuss about ecommerce usa.In the U.S, every city, county and state has their own separate sales tax with differing rates, limits and deadlines. This mean ecommerce merchants who sell their products or services in the U.S. could therefore be subject to all of these taxing districts. So how are online merchants able to collect their payments of sales tax with the varying sales taxes?
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    regards
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