There has been a flurry of press articles of late on the FTC's proposed revisions to its Guides Concerning the Use of Endorsements and Testimonials in Advertising which propose creating liability in some circumstances for both bloggers and companies who supply products to bloggers. These proposed revisions have been criticized as “too stringent” and have caused concern among those involved in non-traditional advertising, such as blogs, social networking sites (such as Facebook), viral marketing, and word-of-mouth marketing. These concerns may be an overreaction to the not as-yet finalized revisions.
First, the FTC’s proposed revisions do not create strict liability for statements made on blogs, on social networking sites, and in other non-traditional media. For example, a seller would not be held liable if a blogger bought its product in the store and posted false or misleading statements about the product, unless the seller itself later used these statements in its advertising. Sellers, however, should be careful about providing samples. If a seller widely distributes samples (for example, sending packets of laundry detergent to everyone in particular regions of the country), then it is difficult to see how the seller would be liable if someone receiving the sample then made false or misleading statements about the product. On the other hand, if the seller targets a narrower audience in the hopes that someone will write a positive review of the product, the liability risk under the proposed revisions is greater.
Second, even if a seller decides to send samples to a narrow audience or recruits bloggers or social networking site members to write product reviews, the proposed revisions provide guidance on how the seller can limit its liability (see § 255.1, example 5). The seller should ensure that the reviewers are educated and trained on the rules regarding false or deceptive statements and substantiation, and should monitor the statements made and stop the publication of statements that violate these rules.
Finally, the FTC’s proposed revisions are not final, and the FTC has some hard questions to answer. For example, it seems unreasonable to think that providing samples or gifts of de minimis value would raise questions about the endorsement in consumers’ minds and should trigger the proposed disclosure requirements. Also, how does this differ from the traditional practice of companies providing books or movies to reviewers? Do consumers believe a movie got two thumbs up because the reviewer got to see it for free? The proposed revisions also don’t directly address whether liability would be imposed in the sampling scenarios discussed above. Time will tell, but the FTC's final revisions may well look different from its current proposals.
