Bloggers and other reviewers must disclose any payments or free products they receive from advertisers, according to revised guidelines issued by the Federal Trade Commission (FTC) in October 2009. The guidelines, titled "Guides Concerning the Use of Endorsements and Testimonials in Advertising," were last updated in 1980, long before the Internet became a part of everyday life. In the newly revised guidelines, the FTC, among other things, clarifies how the guidelines apply to "social media" such as blogs, Facebook, YouTube, and Twitter.
The FTC issues guidelines in various areas to provide guidance to businesses and others regarding compliance with the FTC Act, which prohibits unfair or deceptive acts or practices. Although the guidelines do not have the force of law, they demonstrate how the FTC interprets and applies the FTC Act and provide insight into how the FTC intends to enforce the statute through the use of illustrative examples and hypotheticals.
Some situations addressed in the newly revised guidelines include the following:
- 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.
- An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer's product. Knowledge of this poster's employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.
- 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 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.
In addition to providing guidance on the application of the guidelines to social media, the newly revised guidelines also (i) eliminate the longstanding safe harbor of using a "results may vary" or similar disclaimer when presenting consumer testimonials, (ii) establish new requirements for determining when a testimonial or endorsement is sponsored, (iii) require companies to disclose their funding of research studies cited in advertisements, and (iv) impose additional guidelines relating to the use of celebrity endorsements.
Read the Hogan & Hartson Update "FTC Issues Guidance on Blogging-for-Pay, Testimonial Disclaimers, and Celebrity Endorsements in First Revision of Endorsement Guides in 29 Years." here.