FTC Sets Endorsement Rules for Blogs
Tuesday, October 6, 2009
Bloggers who offer endorsements must disclose any payments they have received from the subjects of their reviews or face penalties of up to $11,000 per violation, the Federal Trade Commission said Monday.
The agency, charged with protecting consumer interests, had not updated its policy on endorsements in nearly three decades, well before the Internet became a force in shaping consumer tastes. The new rules attempt to make more transparent corporate payments to bloggers, research firms and celebrities that help promote a product.
"Given that social media has become such a significant player in the advertising area, we thought it was necessary to address social media as well," said Richard Cleland, assistant director for the division of advertising practices at the FTC.
Consumer interest groups have long complained about the lack of disclosure. They say consumers often have no way of telling what corporate payments have been made to bloggers writing on parenting, fitness, dieting and financial services sites, for example.
Consumers Union, a nonprofit advocacy group that publishes Consumer Reports, launched WebWatch.com to monitor bloggers' ties to corporate sponsors. But the group shut down the site earlier this year after it ran out of funding.
"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 FTC said in a release. "Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service."
Rick Calvert, chief executive of the blogger conference BlogWorld & New Media Expo, said his organization believes bloggers should disclose compensation they receive from companies they write about, including when they receive free products.
But he said it would be difficult to enforce the FTC's policy with "tens of millions of blogs, podcasts and other forms of new media content out there and growing every day." And he said bloggers are divided about the rules, with some finding it perfectly acceptable to accept products without disclosure.
The new guidelines also affect how advertisers use studies by research institutes they help fund. Any financial ties must now be disclosed when companies cite the findings of a research organization they fund.
"We have for years tried to get the FTC to adopt fair disclosure of ties that provided financial support for studies that were submitted" to agencies like the Federal Communications Commission, said Joel Kelsey, a policy analyst at Consumers Union. "It's fine to submit those comments, we just absolutely believe they have to disclose if there are financial ties that led to the writing of those reports."
Punishments for violations will range from a warning letter to a fine of up to $11,000 per violation.