Hannah is an attorney at Hollingsworth & Zivitz, PC where she focuses her practice on business law and entrepreneurial services. Hannah is one of the few attorneys in Indiana to offer experienced legal guidance on promotional law, including advertising, sweepstakes, contests, consumer privacy, and e-commerce related issues.
Have you ever used your blog to review a product you received for free? Have you ever offered a fellow blogger a deal where you review his product or service if he reviews yours? Did you disclose that deal to your readers? If not, it is time to start.
This week, the FTC announced new rules aimed at increasing transparency used in social media advertising. Starting December 1, 2009, bloggers and other users of social media such as Twitter and Facebook must disclose if they have received any type of payment in exchange for promotion, advertising or endorsement. This seems to include in-kind exchanges, free product or good old fashioned money.
Almost every business has a blog these days. It is a free, easy way to reach existing and potential customers. And there is a lot of trade going on out there in the blogosphere. Bloggers commonly receive gratis products or services in exchange for a positive write up. Companies who send out free stuff have nothing to lose, because if a blogger doesn’t like their product or service, the blog simply doesn’t review or promote it.
In many communities there is a spider web of connections among successful social media sites. But the era of “you scratch my back and I will scratch yours is over.” Bloggers who promote one another for pay, free goods, free services or simply shared promotion now face significant penalties from the Federal Trade Commission, up to $11,000 per violation!
What does this mean for your business? Well some common social media practices that may be affected include anything from writing a positive comment on Facebook in exchange for a free hat to writing a recommendation for a CPA on LinkedIn for a discount on your taxes. You may think that the blogosphere is so vast and there is too many infractions out there for the FTC to catch you, but don’t forget about Naptster. The federal government cracked down on anyone and everyone, including teenagers living in their parent’s homes, simply for downloading a few songs. The FTC is primed to make an example of any business violating these new rules. Don’t subject your business to an $11,000 fine. If you are promoting another company’s product or service on a social media site, and you have ANY kind of relationship with that company, be sure to disclose it.
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While I applaud the federal government for acknowledging that meaningful trade, commerce and conversation occurs over the Internet, this law is mindboggling. Correct me if I'm wrong, but if you receive some dispensation for promoting a cause on the web, disclosure is now required by law.
This is wholly untenable, because value can neither be measured nor contained. I may say here (without provocation) that "Brandswag is awesome!" If Kyle later sends me a referral, must I admit that I once posted here? What if an idle comment spawns a business idea?
And if it is only a planned exchange that breaks the law, all we have to do is reduce formality. "I'll send you a product for to review, and when you are done you can either return it or destroy it (wink wink) so there's no net value to you."
The death of Napster did not kill file sharing; it is more rampant than ever. The FTC will not enforce authenticity and transparency. Instead, the social web will demand it, just as it has in in person for all of human history.
I think you make some good points here. But aside from your example above, there are lots of clearer cut situations where advertisers are getting play for pay on popular blogs. I am always wondering if Daily Candy reviews products because they get free stuff and not because that particular $300 face cream is actually the best things since sliced bread. Consumers do have a right to know if a blog recommendation is really just advertising in sheep's clothing.
On the other hand, I totally see your point and I think there are going to be lots of closer calls when it comes to blogs being used cooperatively to help people network their businesses.
On the whole, I think the bottom line is that the federal government is just trying to make a statement that it doesn't matter the form of the endorsement, if it is paid for, it needs to be disclosed. Which means, as you said, that the feds are finally understanding the influence of the Internet.
Laws about disclosure are kind of like laws about copyright: they don't actually make sense, but they are enforceable when publishing is expensive and controlled by only a few people. You cannot contain and regulate information. Until we realize that information is not property and veracity cannot be enforced, we will continue have silly, ineffectual laws like this one.
I would love to see some examples of how people are disclosing such 'deals'. What would be the best way to disclose the details if I reviewed a product that I was given for free?
Let's say I have a site that reviews products all the time. Is a simple terms and conditions/disclosure button that applies for the whole site saying 'the reviewer was given the product for free to write the review' adequate discloser or would there need to be more specific for each review? A seperate disclosure per post? Does it have to be on the same page or can it be a link linking off to the disclosure?
So many questions! Just want to make sure I know this back to front
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