Failure to Disclose Can Be Costly – To The Tune of $11,000 Per Post

On October 5, the Federal Trade Commission released its final revisions to its guidelines for advertisers regarding endorsements and advertising testimonials to remain complaint with its act, marking the first amendment to The Guides since 1980. These guidelines change the disclosure rules around paid paid endorsements and testimonials – and how these brands can best leverage online endorsements in their marketing campaigns.

Why are these guidelines important to the blogging community? According to the new FTC guidelines, a blogger becomes an “advertiser” or “endorser” the moment that there is a “material connection” made between that blogger and the brand/product they are covering. These rules apply whether the blogger accepts payment, free product for review, or other forms of paid endorsement (read: sponsorships to travel to conferences). Further, the FTC Guides will affect posting by bloggers and consumers on other online media, including Twitter and other social networks. Pay-Per-Tweet services such as Ad.ly and Izea will be required to comply with these new guidelines.

While these rules previously focused on the companies releasing these marketing materials, these new rules affect everyone from bloggers and online content publishers, and contains very clear regulations and consequences associated with the use of paid testimonials in blogs, through several amendments to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising and Blogging, which address the important need to disclose connections between advertisers and endorsements. Failure to comply with these new guidelines can result in fines of up to $11,000 per incident.

The decisions regarding fines for violations will be handled on a case-by-case basis, but it is important to note that any blogger who receives cash, free product, sponsorship to travel to events or conferences, free lunches or drinks to discuss a product, or any other form of material compensation will no longer be considered an objective publisher, but an “endorser.” These new guidelines pose a hazard to professional bloggers, who view their blogs as a legitimate publishing platform, and will affect everyone in the publishing industry, although they serve an important purpose to the public.

Before the emergence of online media as a mainstream publishing platform, our news and reviews were largely fed to us through traditional print and broadcast media outlets. Most of these outlets – and more importantly – the reporters/critics who worked for them – were self-policing publishers who carefully abided by the journalism code of ethics, which specifically addresses the maximum value of goods/services that a reporter could receive in order to remain objective. The standard hovered around $25. However, some publishing companies, such as Tribune Media (where I got my start in “Web journalism”), enforced much stricter guidelines: we were not allowed to accept anything more than a cup of coffee without full disclosure in our stories.

As a film critic, I was often invited to cover movie premieres or press screenings, and invited to meet with the film’s stars. PR firms would lavish reporters will full buffets, open bars, and goodie bags full of products related to or branded with the movie’s name and logo. What did this mean for me as a Tribune employee? I wasn’t allowed to accept these packages, and if I accepted a bite to eat or drink, it had to be disclosed in the review I wrote. Often times, this added a great deal of additional color to my stories, particularly my interview pieces, which were written in first person. My interview piece with Matthew McConaughey (for which I had to accept a 45 minute bus ride to a secret rendezvous point) started out with:

“A bunch of reporters are on a bus, headed for an undisclosed location in New Jersey, which will turn out to be an isolated trailer park in the middle of nowhere. This isn’t a secret rendezvous with Dick Cheney or any other high-ranking government official. We are meeting Matthew McConaughey, who is on a nationwide tour promoting his new film, Sahara.”

In an interview piece about Kevin Spacey, I mentioned that I was having lunch with the actor in a New York City Hotel. While I never posted a surgeon general’s warning on my stories, it was clear in reading them that there had been some form of compensation – never monetary, but the compensation in the value of the goods or services I received in doing my job. It didn’t turn off my readers, and often times, made my stories more engaging.

So how can bloggers avoid violating the new FTC guidelines? Disclose, disclose, disclose! If you’ve received a free product for review, make sure that you work it into your story, or disclose it at the end of your post. Some bloggers use their publishing platforms as a business/source of revenue, and those that do will have to ensure that their rate sheets are clearly posted on their sites, and either referenced or linked to in their stories.

What do you think of the new FTC Guidelines? What tips do you have for your fellow bloggers to avoid running afoul of the FTC?

Download the guidelines for advertisers(PDF)