Disclaimer: This article is written as a reaction to the FTC’s Guidelines. I am not a legal expert in any means, so this article only represents my opinions and personal interpretation of the guidelines as they stand today.

How Might the FTC Guidelines Affect Bloggers?

With today’s release of the Federal Trade Commission’s (FTC) Guides Concerning the Use of Endorsements and Testimonials in Advertising report and revisions, the blogosphere—make that the bloggers of the blogosphere—are all abuzz. There’s really two pieces to the newly revised guidelines: keep consumers/customers informed about advertisements, endorsements, paid endorsements, paid-in-kind endorsements, and overall, the need for disclosure; the second is about accuracy of advertisers’ and bloggers’ claims. Bloggers have been on notice about increased disclosure since this ball got rolling, but when it comes to holding advertisers and bloggers liable for what each other says… that’s truly concerning.

When to disclose?

Based on Section 255.0, Example 8:

A consumer who regularly purchases a particular brand of dog food decides one day to purchase a new, more expensive brand made by the same manufacturer. She writes in her personal blog that the change in diet has made her dog’s fur noticeably softer and shinier, and that in her opinion, the new food definitely is worth the extra money. This posting would not be deemed an endorsement under the Guides.

Assume that rather than purchase the dog food with her own money, the consumer gets it for free because the store routinely tracks her purchases and its computer has generated a coupon for a free trial bag of this new 51 brand. Again, her posting would not be deemed an endorsement under the Guides.

Assume now that the consumer joins a network marketing program under which she periodically receives various products about which she can write reviews if she wants to do so. If she receives a free bag of the new dog food through this program, her positive review would be considered an endorsement under the Guides. (Pages 50-52)

If you purchase the product, you probably have no need to disclose. In effect, there’s nothing to disclose, because you have no relationship with the advertiser.

If you are offered a free sample through a store based on previous purchases “to try it”, you probably have no need to disclose. I think what distinguishes this from freely given product samples from PR to a blogger is that this is still very much removed from the advertiser. This is an incentive to consumers in general, it is not reserved to influential bloggers. (A brand sends bloggers products in hopes they’ll review, love it, and influence their readers.)

If you receive a free product/sample through an advertising relationship, you are probably required to disclose this relationship. How much do you need to disclose is a key piece of missing information—do bloggers need to disclose particulars of the relationship? This example in particular refers to what sounds like an affiliate network, like LinkShare or Commission Junction. These systems, typically work on a commission basis. A blogger posts a link to a product on Nordstrom, and if someone clicks on that link and makes a purchase, the blogger receives some percentage of commission from that purchase.

But what about PR/Brand relationships?

By going through the guidelines and reading through examples, it is very likely the FTC means these as well.

The revision to Section 255.5 (Disclosure of material connections) explains further:

When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.

Example 7: A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge.

The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance. (Page 80)

If the product was given to you (whether free or with payment attached) for the purpose of reviewing, it is likely you will need to disclose that relationship. Again, the FTC is ambiguous (in fact, I’d say they really haven’t even touched on it at all) about how to go about disclosure. I would presume that there is a marked difference between paid reviews and paid-in-kind reviews (e.g. with a product sample). Nevertheless, both situations seem to merit disclosure as per the guidelines.

It appears value is important, because their example is of a video game blogger who receives a free gaming console (likely $200-600 in value) and not merely a sample bag of ten peanuts. It is unclear whether value has any consequences for disclosure, level of disclosure, and the like.

Disclosure Isn’t the End of the World

Those who fear disclosure should not fear if their reviews are honest, they have built up a strong audience, and they have credibility established. It is also much too early to determine the actual effect disclosure will have on posts/blogs. I’d expect the FTC wants bloggers to disclose on a per-post basis, but it’s not certain how long, detailed, or thorough that per-post disclosure needs to be. Can bloggers merely include a one-liner and link to a post for a more thorough explanation of their editorial policies? It’s uncertain at this time, and it is with great hope that the FTC will recognize that the average blogger is not experienced in legalese and archaic jargon and will provide at least some basis or clearer guidelines on how exactly to comply with the revisions.

Something product/service review bloggers do is review and recommend products. This is the very nature of a review. I tell my sister, “I loved X! You should try it!” because of my experience. But Section 255.1 should make review-based blogs pay close attention to what they’re saying, how they’re saying it, and how will readers interpret it?

The Commission is revising the fifth and sixth sentences in proposed new Example 5 to clarify that the advertiser and the blogger both are subject to liability for misleading or unsubstantiated representations made in the course of the blogger’s endorsement.

Example 5: A skin care products advertiser participates in a blog advertising service. The service matches up advertisers with bloggers who will promote the advertiser’s products on their personal blogs. The advertiser requests that a blogger try a new body lotion and write a review of the product on her blog. Although the advertiser does not make any specific claims about the lotion’s ability to cure skin conditions and the blogger does not ask the advertiser whether there is substantiation for the claim, in her , review the blogger writes that the lotion cures eczema and recommends the product to her blog readers who suffer from this condition. The advertiser is subject to liability for misleading or unsubstantiated representations made through the blogger’s endorsement.

In order to limit its potential liability, the advertiser should ensure that the advertising service provides guidance and training to its bloggers concerning the need to ensure that statements they make are truthful and substantiated. The advertiser should also monitor bloggers who are being paid to promote its products and take steps necessary to halt the continued publication of deceptive representations when they are discovered.

The blogger also is subject to liability for misleading or unsubstantiated representations made in the course of her endorsement. The blogger is also liable if she fails to disclose clearly and conspicuously that she is being paid for her services. [See § 255.5.]

Being held liable for inaccuracy or false claims is a major concern for advertisers AND bloggers. I feel that this is something that will cause certain advertisers, brands, PR firms, etc. to pull out, at least substantially, of certain industries. Nobody wants to be liable for anything. The last thing an advertiser/brand wants to be is liable for what a blogger says. A blogger they don’t really have control over. Bloggers, on the other hand, write about their experience, but of course, many make suggestions as to who might like the product (e.g. in the example, the skin care product worked well for dry skin, so the blogger recommends it to those with dry skin). When does a blogger’s experience become the blogger making a claim?

What distinguishes a claim from experience is primarily the idea that a claim is a result that applies to the average customer. For example, weight loss advertisements that show someone who experienced substantial weight loss but then conditions this statement with “results not typical.” But it is a very scary thing to recommend a product to readers and be held liable that the blogger’s experience is more than that—that it is a claim.
This leads to the debate about what kind of things you can and cannot say. I’m most curious to understand and see more examples of what constitutes a claim and how best to posit your review as your experience vs. a claim about the general populous. Is it even possible to make recommendations to a certain subset of people without it being a claim? (e.g. “If you like Batman, you’ll love this game, too!”)

The Guidelines go into effect December 1st, 2009. We have a couple more months for experts to help us understand what this really means and how best to comply with the revised guidelines. It is unlikely that the guidelines will be retroactive, but the revisions do not address this either way. With so many issues raised, it is only expected that at least twice as many questions are posed.