FTC Guidelines on New Media and Disclosure Won't Just Affect Bloggers

FTC Guidelines on New Media and Disclosure Won’t Just Affect Bloggers

Oct 8th, 2009 | By Laura Bergus | Category: Blogging, Featured, Lead Article, Social Media

UPDATE: DigComm has created a very intriguing, standardized way of indicating the level of “material support” a blogger or social media user has received for a given post. See http://cmp.ly for details. For instance, this post would be tagged DISCLOSURE OF MATERIAL CONNECTION: http://cmp.ly/0.
Thanks to Evan Brown (a.k.a. @internetcases) for the tip.

There has been a lot of press about the FTC’s new guidelines on endorsements and sponsorship disclosures [pdf].

Most commentators are bemoaning the fact that bloggers who get free stuff for the purpose of reviewing it will have to be very careful in what they say and how they say it. Fundamentally, such reviews should include a disclosure of the product and any other “material sponsorship” the writer may have received. Reading through the regulation, it’s clear that FTC is concerned with products and services traditionally fraught with problems of deceptive marketing or even fraud, like health and beauty aids, magic kitchen devices and weight loss programs.

Image used under Creative Commons license

But what bothers me is the application of these guidelines not just to bloggers, but to all kinds of “consumer generated” “endorsements.” The FTC says that the standard for what constitutes an endorsement is subjective (and justifies this by saying the definition has always been subjective):

[A]n endorsement means any advertising message (including verbal
statements, demonstrations, or depictions of the name, signature, likeness
or other identifying personal characteristics of an individual or the name
or seal of an organization) that consumers are likely to believe reflects the
opinions, beliefs, findings, or experiences of a party other than the
sponsoring advertiser, even if the views expressed by that party are
identical to those of the sponsoring advertiser.

P. 4, Guides Concerning the Use of Endorsements and Testimonials in Advertising [pdf]

The guidelines are explicit that there is no minimum value of what must be disclosed, and that other evidence, such as any kind of relationship between the sponsor and the “endorser” as well as the endorser’s reputation for being someone who reviews things, will be relevant in determining liability for both 1) failure to disclose “material support” of any kind and 2) statements that may be misleading or false.

This extremely subjective, case-by-case determination of who counts as an endorser, what counts as an endorsement (broadly described as “positive statements”), and who will be liable (the marketers and advertisers who are in even a tenuous “sponsorship” role can be liable for the contents of any endorsement, even in cases where the advertiser has no knowledge or control over what the statement says), make this an impending legal mess.

As for how attorneys and clients can expect to be affected? It all depends on how the FTC decides to follow through on enforcement. As I noted, the examples in the guidelines make me believe that targets of the new standards will likely be folks who make borderline claims within certain categories of products and services. However, beyond those examples, the text is very broad. And the very media that the FTC is addressing (primarily blogging and social media) has made many folks painfully aware of this issue. I can imagine that advertisers and marketers will need some careful advising in this new arena. Good luck!

DISCLAIMER: I was not “materially sponsored” by anyone in the writing of this post. In fact, I don’t think there were any products covered by the FTC involved here at all… But if there were/are, I’d tell you that I have an ongoing relationship with Social Media Law Student and am compensated by the camaraderie of our wonderful writers and the fame and acclaim of writing for such a great blog, which I think must have some value. If only those guidelines had a lower-limit threshold, maybe I could figure this out…

Tags: Blogging, endorsement, FTC, payola, sponsorship

5 comments
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Huma October 8th, 2009 5:41 pm :
Great article! Jessica and I were talking about this at lunch today, and she said that apparently there’s some federal statute that actually preempts the FTC’s newest ruling? And that one of the guys that consulted for the FTC in coming up with this (he’s a law prof somewhere) was actually involved in the original federal statute about this (the preemptive one), but later admitted to forgetting to mention it while consulting. Hahaha. Jess knows the whole story, but it just struck me as soooo funny.

[Reply]
Laura Bergus Reply:
October 8th, 2009 at 9:12 pm
Thanks, Huma. Yeah, I read about that, too – great point. I think Jess was referring to Eric Goldman. (The statute in question is 47 USC 230, which provides immunity to “providers” and “users” of “interactive computer service[s]” for others’ content.) I don’t want to be one to quibble with a law professor (oh, wait, yes I do…), but I think outer limit of 230 would be tested in cases where one “user” solicits content from another, as here. It’s one thing to hold harmless an ISP acting as a mere distributor (see, for instance, Zeran v. AOL), but I don’t know of cases where one person asks another to post something and then claims immunity under 230 when the second party posts the requested content (but these cases may exist…). Also note that 230 expressly preserves criminal, state, IP and electronic privacy laws. Where I think the FTC is probably on the shakiest ground is when they say an advertiser may be liable when they can’t control (and therefore can we assume aren’t even aware?) a user’s conduct. Thanks for bringing it up!

[Reply]
Jessica Dobias Reply:
October 9th, 2009 at 9:12 am
Yes, Laura you are right – it was Eric Goldman!

Here’s the blog post, Huma! http://blog.ericgoldman.org/archives/2009/10/do_the_ftcs_new.htm

You’re right, Laura. I hadn’t done any research on the topic – I just read briefly and quickly his article and thought it was quite hilarious that he was one of the people to consult the FTC on the regulation and actually admitted that he forgot to remind them of 47 USC 230!

Next time anyone of us gets one of those “super nice” professors who loves to make you feel like a fool when you misinterpret the law, we have this evidence to show even professors make mistakes!

[Reply]
Jessica Dobias Reply:
October 9th, 2009 at 9:22 am
On that note, Huma…

Here are the professor’s blogs I like to read:

Our School:
Professor Yung’s Sex Crime Blog: http://sexcrimes.typepad.com/sex_crimes/
Professor Miller’s Evidence Blog: http://lawprofessors.typepad.com/evidenceprof/
Professor Schwinn’s Constitutional Law Blog: http://lawprofessors.typepad.com/conlaw/

Everywhere Else:
Law Librarian Blog: http://gallagherlawlibrary.blogspot.com/
CyberCrime Professor Blog: http://cyb3rcrim3.blogspot.com/
Media Law Professor Blog: http://lawprofessors.typepad.com/media_law_prof_blog/
(43)Blog (IP Prof Blog): http://tushnet.blogspot.com/
Eric Goldman’s Blog: http://blog.ericgoldman.org/
Wings and Ravioli: http://jimmilles.com/

This is just one of my favorites. My friend’s dad is the department head of the publishing for IP at BNA and he recommended this blog to me. I love it. Hopefully you will too.
E-Commerce and Technology Blog: http://pblog.bna.com/techlaw/

[Reply]
FTC Guidelines on Online Disclosure: Bad for Bloggers and Business? October 11th, 2009 9:26 pm :
[...] use social media (including blogging) for reviews or endorsements. As I’ve written elsewhere, I think these rules are bad for more than just bloggers who get free iPhones or baby toys, since liability for failure to disclose a sponsorship [...]