Controversy is brewing over whether the FTC will exercise its enforcement discretion and go after bloggers for violations of the current testimonial guides or the revised testimonial guides once they are approved (likely later this summer). The issue is whether a blogger who is compensated by a manufacturer should disclose the connection when recommending the product. The compensation can be in the form of cash, advertising dollars or products, such as a free computer or a free vacation. Does compensation in any form affect the bias of the blogger such that a failure to disclose violates Section 5? Should the concern be limited to cases of cash payment but not free product? Does it depend on the total value of the compensation, whatever the form?
The FTC’s position in its proposed revisions to the testimonial guides is that consumers should be notified if bloggers receive compensation or free products to post reviews and that failure to disclose can result in Section 5 liability for marketers and bloggers alike. The examples the FTC’s gives of conduct requiring disclosure include a college student reviewing video games on her blog who gets free copies of games to review from manufacturers and an employee of an MP3 player device company who posts favorable comments about his company’s products on a music discussion chat board (apparently whether or not encouraged to make such comments by his employer). Some suggest this is simply a logical extension of the rules that apply to testimonials in print and tv ads to the online marketing community and will provide ground rules to facilitate making blogging endorsement deals more common. Others suggest more clarification should be given as to the FTC’s positions on when a marketer can be liable for a blogger’s lack of disclosure, that the FTC has not fully considered the First Amendment issues with its position and that workshops should be held or comments solicited as to whether there is a meaningful distinction between significant compensation and small amounts of free product with limited value.
In the meantime, if you blog about products or services, and receive any sort of compensation for your words of wisdom or if you market a product or service and provide any sort of compensation to bloggers, the dot.com disclosure guidance is recommended reading.
