What Do the FTC Endorsement Guidelines Mean for Bloggers and Small Business Owners?

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With the realization of how important social media has become and will continue to be in consumer decisions, the Federal Trade Commission (FTC) has updated the Guides Concerning the Use of Endorsements and Testimonials in Advertising, pulling bloggers under the guidelines' umbrella. The new guides require bloggers to disclose "material connections" they have with advertisers when they have been given cash, products, or other consideration for publishing a post related to the advertiser.

What's new about the update to the guides?

According to Mary K. Engle, Associate Director, Bureau of Consumer Protection, not a whole lot.

"The endorsement guides have been around since 1980, and they've always required that endorsers disclose their relationship with advertisers," says Engle in a video on the FTC website. "What's new here is that we're applying this principle in today's world, in the world of social media, where you can't always recognize an advertisement just by looking at it."

What does this mean for bloggers?

In another FTC video, Engle makes clear that the FTC's intent is not to go out looking for bloggers in violation of the regulations; the purpose of the new rules is to "bring some transparency to the process," she says.

Bloggers, therefore, must be sure to disclose relationships with advertisers when they receive free products for review, compensation, or other consideration so consumers can better decide how much weight to give the blogger's opinions about the product.

It is important to note, however, that the FTC has no authority to impose civil penalties, which means it couldn't fine bloggers even if it wanted to do so, according to Rich Cleland, assistant director of advertising practices at the FTC, in an interview with Clickz.com.

What does this mean for small business owners?

Small business owners can still give out products for review and pay bloggers for posts, but it is important for advertisers to know that they can liable for "misleading and unsubstantiated statements made by the endorser," according to Anthony DiResta, general counsel of Word of Mouth Marketing Association (WOMMA).

Accordingly, DiResta advises advertisers to adopt policies and practices not only for educating bloggers and other endorsers regarding disclosure but also for following up on whether proper disclosure has been made.

How will the FTC monitor and determine violations?

As Engle notes, the FTC will not out be looking for bloggers in violation of the endorsement guidelines, but DiResta says that the FTC will likely follow up on any complaints made by consumers or consumer groups.

In determining whether violations have occurred, the FTC is really concerned with whether the post or announcement is "sponsored" and "therefore an advertising message" and will consider the following factors:

"...whether the speaker is compensated by the advertiser or its agent; whether the product or service in question was provided for free by the advertiser; the terms of any agreement; the length of the relationship; the previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and the value of the items or services received."

The new guidelines come into effect on December 1, so whether you're an advertiser, blogger, or both, make sure you're ready to comply.

For more information visit:

Clickz.com

Federal Trade Commission

Word of Mouth Marketing Association ("WOMMA")