FTC cracks down on web endorsements by bloggers, celebrities, new media

As the Internet has developed, so has the ability for anybody to write about or link to product and brands while appearing only to be helpful or writing news — when there is actually a ka-ching with every click or eyeball. 

Now, the Federal Trade Commission has put down its foot with revised endorsement guidelines that are effective Dec. 1, 2009. The last update to the FTC document titled, “Guides Concerning the Use of Endorsement and Testimonials in Advertising,” was in 1980 — nearly two decades ago and in the nascent days of the Internet. The update for the first time addresses new media and what it calls “consumer-generated content.”

“These are actually the same guidelines that have been around since the ‘80s,” said Andrea Anderson, partner with Holland & Hart legal firm who focuses on trademark and advertising. “They just now apply to the new media.”

Long story short, be it blogger or celebrity, organization or expert, everybody has to fully disclose if they stand to gain — either by receiving product or money — from saying good things about a certain product or brand. That includes a company employee who gets on a message board or social media site, such as Twitter, to rave about his company’s products.

“Before there was the thought that consumer-generated content was not an advertisement, and the rules of advertising didn’t apply,” Anderson said. “But the FTC said, ‘No, it can be (advertisement)’ depending on the relationship.”

In a companion story to this article, Anderson explains from a legal perspective what companies must know and do to be in best compliance with the new guidelines. Click here to see that Nov. 23, 2009, story, “What new FTC rules for “word-of-mouth” marketing may mean to your business.”

From affiliate to blogger

In most media coverage of the FTC guidelines as they have developed in the last couple of years, most of the focus has been on bloggers. The scope, however, is much larger and affects any “word-of-mouth” advertising, Anderson explained. Although not specifically mentioned in the guidelines, this may also include marketing popular on the Internet called “affiliate programs.” With such programs, brands and companies offer financial rewards to those known as “affiliates” for each visitor, customer or sale brought to the brand by the affiliate’s efforts.

“In some cases, that may mean a positive review or a link placement to direct a website visitor to that business,” she said.

“Consumers might not understand the reason for the review is to fuel the affiliate revenue,” she added. “The safest thing for these folks to do is to put some disclaimer on their site informing readers the affiliate links generate revenue for them.”

That doesn’t mean a link to another page, micro-print in a corner, or some vague wording, such as “sponsored link.” She said any disclaimer must be front-and-center right where the links, reviews or comments are.

That means that companies and brands that provide product to such advertisers, marketers, bloggers or other new media are obliged to reveal that they do this and how they may profit.

Guideline specifics

Under the revised guidelines, which were announced Oct. 5, 2009, by the FTC (www.ftc.gov):

>> advertisements that feature a consumer and convey as “typical” his or her experience with a product when it is not the case will be required to disclose the results that consumers can actually expect. In the 1980 version, advertisers could dance around that with unusual results in a testimonial as long as a disclaimer such as “results not typical” was included.

>> anybody who has any kind of material connection to a product, brand, service or advertiser must disclose that relationship.

>> companies that refer in an advertisement or other public venue to findings of a research organization must disclose the connection between themselves and the research.

>> celebrities must also disclose relationships with advertisers when making endorsements even outside traditional ads, such as on talk shows or in social media.

The guidelines’ revision specifically addresses new media, not traditional media, Anderson explained, since the FTC does not consider product reviews published in traditional media to be sponsored advertising messages. 

“Traditional media has typically applied its independent editorial opinion to these things, and therefore product reviews in traditional media aren’t generally considered sponsored advertising messages,” she said. “Bloggers, though, should realize the whole thing is about transparency and authenticity.”

Guidelines not law

Having these revised guidelines doesn’t mean the FTC police will be patrolling for violators with penalties ready to be handed out. Decisions about violations or misleading and deceptive advertising, marketing or information dissemination will be on a case-by-case basis and, if found to be true, both advertisers and endorsers may be liable, the FTC said in a release.

Anderson said investigations by the FTC could come about via consumer complaints or the FTC’s own review of industries. The FTC, however, has the burden to prove if any conduct violates the FTC act, and it can issue a complaint when it has reason to believe the guidelines have been violated.

The 81-page revised guidelines with full details are available in PDF from the FTC by clicking here.Copies also are available from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

–Therese Iknoian