October 6, 2009

FTC To Require Disclosure Of Kick-Backs From Bloggers

In an attempt to regulate blogging for the first time ever, the Federal Trade Commission is taking measures to make product information and online reviews more accurate for consumers by mandating that bloggers and writers on the Internet clearly disclose any compensation or gifts they receive for reviewing a company's product.

As expected, the FTC said its commissioners voted 4-0 on Monday to pass the final guidelines, which will be in effect December 1.

The penalty for violating the rules could result in fines of up to $11,000 per violation. Bloggers or advertisers could also face injunctions and be forced to reimburse consumers for any financial loss ensuing from influenced product reviews.

The commission did not detail exactly how it expects bloggers to disclose conflicts of interest, but assistant director of the FTC's advertising practices division Rich Cleland, said the disclosure must be "clear and conspicuous," however it is done.

Though many consumers turn to bloggers to see product reviews, what many people do not realize is that many reviewers are paid or given free products like computers or trips to Disneyland for their write-ups. Traditional journalists, on the other hand, are generally asked to return any products borrowed for reviews.

The FTC gave notice about the plan to regulate endorsements last November, but before doing so there was a broad range in the level of disclosures about such potential conflicts of interest in the blog.
The proposal has concerned bloggers, who think the scrutiny would make them think twice before posting even innocuous comments.

Cleland tried to ease these fears in saying that the FTC will more likely to nail advertisers than bloggers for violations, unless it is a blogger of a "substantial" operation, who knowingly violates the guidelines.

The current FTC rules already ban deceptive and unfair business practices, but the final guidelines seek to clarify the law for blogging.

The commission has not revised its antiquated guidelines on endorsements and testimonials since 1980.

According to Cleland, a blogger receiving free products without the advertiser's knowledge would not violate FTC guidelines. For example, if a person receives a free bag of dog food as part of a promotion from a pet shop would not be considered a violater of the FTC guidelines if he writes about the product on his blog.

One blogger, Linsey Krolik, said that she always acknowledges any freebies she has received on products she writes about, but has become more vigilant since last fall's notice by including a note at the end of posts saying, "very clear in italics or bold or something - this is the deal. It's not kind of buried."


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