Posted by Whitney on Oct 17, 2009 in
Uncategorized One of the biggest questions that’s come up time and again about the new FTC Guidelines is how this applies to Journalists. Most bloggers have the perception that journalists writing for newspapers and magazines are sent free stuff all the time that they then write about, with no need to disclose that the stuff came to them for free. This seems unfair at face value, now that bloggers are being asked to disclose in their pieces whether a company provided them with a product or service for free, at a reduced rate, or some other form of exchange, where the company sought to promote its product, and the blogger is essentially rendering this service.
There is a fine line between editorial pieces in journalism and endorsements, and I have even seen the term “advertorial” thrown around from time to time. But the bottom line is that most journalists have been to Journalism School. Most publications of high quality, including places like the Washington Post, New York Times and reputable magazines (Have you seen “The Devil Wears Prada?”) have strict guidelines on whether journalists can accept gifts. There are obviously products and books regularly sent to newspapers, and restaurants that would like nothing better than to provide a free meal to restaurant reviewers, but journalists can’t keep products they review; they can’t keep the books they read for work; they can’t accept free meals, because this crosses the line between journalism – unbiased reporting- and creating an exchange, or quid pro quo that might slant a review or recommendation. This separation, like that between Church and State, is sacred in some circles, while in others, people can’t wait to breach this wall.
What About Free Speech?
One of the more interesting criticisms I have seen of the new FTC guidelines requiring bloggers to disclose any exchange, product, discount or other exchange that may exist between them and an advertiser or company, is that somehow this violates “free speech”. The right to free speech in the Constitution has been litigated extensively, as anybody who’s ever taken a Constitutional Law course knows. I’ll explain this for those of you who may not have had this privilege as simply as I can.
While the Constitution states that “Congress shall make no law… abridging the freedom of speech, or of the press…” it’s clear that Free Speech and Press are not identical, nor are either of them absolute. In Schenck v. United States (249 US 47 (1919)), the Supreme Court held for the first time that the Freedom of Speech was not absolute, but had limits. Oliver Wendall Holmes wrote in his opinion that the constitutionality of free speech depends highly n the circumstances surrounding the speech. You’re not allowed, for example, to yell “Fire!” in a crowded theater, and there are words that have the effect of force, can incite others to riot- leading the Supreme Court to fashion a “clear and present danger” test. In later decisions, including Brandenberg v. Ohio 395 US 444 (1969), where a member of the Klu Klux Klan was convicted for making implied threats against the government for “surpression of the White Race”, helped shape the contours of the Free speech, meaning one can easily advocate for any idea, no matter how controversial or offensive, but threatening overt acts of violence or other unlawful behavior are not considered protected speech.
Speech has also been held to be reasonably regulated as to Time, Place, and Manner- not all forms of speech are equally protected, and the Government must show significant and important reasons for restricting speech. (An interesting side note- at large events, like the Super Bowl each year, there is often a particular area set aside to allow people to exercise their free speech rights without interfering with the operational issues of the event.) There are restrictions regarding public speech and private speech, as well as commercial speech.
States have long regulated commercial speech- you can’t see tobacco ads on TV anymore, and a decision in 1996, 44 Liquormart v. Rhode Island (517 US 484), limited the Government’s ability to restrict truthful, non-deceptive advertising.
What the new FTC Guidelines are attempting to do, at the heart of it, goes straight to this point- they are not trying to restrict “free speech” or private speech, instead, they are trying to regulate commercial speech and keep it truthful and non-deceptive, as they are allowed to and compelled to do under the law.
From the Free Dictionary:
A standard was first set in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557, 100 S. Ct. 2343, 65 L. Ed. 2d 341 (1980). In Central Hudson the Court noted that commercial speech serves the economic interests of the speaker but also helps consumers and society overall. It outlined a four-part test for judicial evaluation of the regulation of commercial speech. First, if the commercial speech is to receive First Amendment protection, the Court must determine that it concerns a lawful activity and is not misleading. Second, the Court must determine whether the asserted government interest is substantial. Third, if the answer to the second part of the test is yes, the Court must determine if the regulation directly advances the asserted government interest. Fourth, the Court must decide if the regulation is more extensive than is necessary to serve that purpose.
Central Hudson represented a compromise between one approach that emphasized Consumer Protection and another that stressed a free marketplace of ideas. Only five justices fully joined in the majority opinion, and the viability of the test has been called into question. In Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico, 478 U.S. 328, 106 S. Ct. 2698, 92 L. Ed. 2d 266 (1986), the Court upheld a law prohibiting advertisements inviting residents of Puerto Rico to gamble legally in local casinos. Justice William H. Rehnquist emphasized Puerto Rico’s substantial interest in reducing the demand for casino gambling among its citizens and noted that the regulation at issue directly advanced this objective. In addition, he maintained that because the legislature could have banned all gambling by local residents, this legislative power included the lesser power to ban advertising of casino gambling. Justice John Paul Stevens dissented, arguing that Puerto Rico had blatantly discriminated in punishing speech “depending on the publication, audience, and words employed.”
This is an area of law that can be really complicated, but the take home message is this:
The Freedom Of Speech is not absolute, especially when it comes to Commercial Speech. And if you are going to engage in commercial speech, including on blogs, you need to not engage in any activity that might be considered fraudulent or misleading. Hence the rules of disclosure and Guidelines to make this easier for people to understand.
So while I understand how people think the guidelines effect their free speech rights, they have to understand that free speech is not absolute, especially where advertising, endorsements and testimonials are involved.
Tags: free speech, FTC, guidelines, journalism
Posted by Whitney on Oct 8, 2009 in
Uncategorized When it comes to the new FTC regulations regarding disclosure in advertising, the best way to learn what to do is to read the examples given in the Guidelines themselves, or to see examples of how disclosure is done well, so you can model your disclosure accordingly.
Blogging/Magazine Article Example
One great example is a piece that Kristin Brandt from the Manic Mommies podcast did in a recent article for Real Simple Magazine. For “teaching” purposes, I’l excerpt some examples here, with permission of the author. Kristin was reviewing different sets of headphones, several of which she has acquired in association with her podcast, Manic Mommies.
Here’s what I’ve discovered – there is no one perfect solution. Instead, I’ve found a couple favorite headsets which, together, make the (almost) perfect solution for me:
Apple In-Ear Headphones with Remote and Mic ($79)
I’m certainly not the first person to complain about the earbuds which come with my iPhone (my biggest issue is they wouldn’t stay in my ear). But I liked the combination of a headset which I could use to listen to podcasts and music, as well as talk on the phone. So, upon the recommendation of some of my Facebook friends, I purchased a pair of Apple In-Ear Headphones, which come with three sets of ear cups, meaning I could select the size which worked best for me (and stayed in my ear).
I don’t really use the remote function of the headset, so if I had to do it again, I might chose the JBL ROXY In-Ear Headphones with Microphone which has the same listening/speaking capability at half the cost.
In this first paragraph, Kristin talks about what she purchased and who recommended them to her. She probably did not have to say her Facebook friends recommended these to her, and she was not legally obligated to do so, but it works with the narrative perfectly, and sets up the other sources of the products below. This is probably a case of more disclosure than perfectly necessary, but it also sets her up as a credible source, because she is talking about where she gets her information before trying a product. Next paragraph:
iFrogz Ear Pollution Toxix ($19.99)
Sometimes, like when I’m exercising or editing our podcast, I just want a simple pair of headphones. I have a ton of “free” headphones kicking around the house, but most slip off my head and have terrible sound quality.
When I was sent two pairs of Toxix headphones to try, I actually thought they were for the kids. But after using them while on the treadmill, I came to appreciate these deceptively cute pair of headphones. They are well designed to stay on your head, even if you are bouncing around, they are tough enough to throw into my laptop case and at just under $20 I don’t worry about letting the kids use them. My kids have co-opted the headsets we received, which gives me an excuse to buy a pink pair for myself.
This is a great example, where Kristin says she was sent two pairs of headphones to try, and liked them enough she’s willing to buy a pair herself. While she might want to say who sent her the headphones, she has disclosed that she did not purchase them herself- this is an example of a good disclosure that lets the reader know what the writer has received and they can figure out the credibility of the writer accordingly. Example Three:
Jabra Halo ($129)
I’ll admit that I’ve dreamed of being able to cut the cord, and listen to my iPhone without a headset cable getting in my way (how many times have I dipped a cable into paint or caught it on something). Which is why I was so excited when we received the Jabra Halo Stereo Bluetooth headset at Manic Mommies HQ. After charging the headset, I was able to pair my iPhone to the headset and was soon listening to tunes sans wires. It was awesome.
I did have one issue with the headphones – the volume control is, well, difficult to control. Sliding your finger up and down the side of one of the ear pieces is supposed to control the volume. But I found it was very touchy and, in the end, I didn’t seem to be able to control the volume much. They also cost more than I would normally pay for a pair of headphones, so I can understand how they may not be right for everyone.
Again, Kristin discloses that they got this headset through Manic Mommies HQ- clearly a promotional item sent to them, in hopes they would review it. Kristin then does a great review of the pros and cons of the item. We know she did not purchase the item herself, and her review seems honest and straightforward. This should please both the person promoting the headset and the FTC because the review is based on the experiences of an actual user, with disclosure as to what sort of exchange or quid pro quo (ie. sample headset) was involved, so any consumer could figure out the believability of the review.
Podcasting example
Another great example of disclosure can be found on almost any episode of Marketing Over Coffee. Chris Penn and John Wall regularly not only thank their sponsors, but when talking about their use of Blue Sky’s email service, or Hubspot’s various products or ventures, they mention that they have also been sponsors of the show. No one is left with any unclear or misleading impression of what Chis and John’s interest in promoting the sponsors might be, and when they talk about the products and services, they are doing it as genuine customers of the services they discuss. As long as Chris and John disclose the name of the sponsors, and whatever products they get to use or play with, if provided for free or as part of a larger sponsorship or product placement, they satisfy all the FTC requirements well.
Chris does Marketing over Coffee on his own; it’s not part of his job at the Student Loan Network. But you’ll notice if Chris talks about his day job, it’s an example of what they do during the day. This could be seen as a promotion or testimonial about the day job, however, this is not a communication covered by the new FTC regulations. Why? Because the Student Loan Network is not and has not paid Chris to talk about their products on Marketing Over Coffee- there is no quid pro quo regarding Chris’s possible endorsement on Marketing over Coffee and its blog. Therefore, no disclosure is necessary. Chris is clearly interested in having us all use the great services the Student Loan Network provides, because it’s what he does, but this is not a paid endorsement, so it is not subject to a fine if Chris talks about his day job and forgets to mention the name of his company at the time.
Current Example- This Post
The information given above has not been paid for by anyone nor written in exchange for any product or service- it is a non-commercial transaction. I don’t even have any affiliate ads other than a link to my Amazon Store on the “Building Blocks” page of this site, so I will tell you that all the content I produce here is done free of any sponsorship whatsoever at this point. If you decide to buy a book I like from my Amazon store, they will give me a few pennies as a bounty on the sale, so to speak, but it’s usually less than a dollar per book- equivalent to a postage stamp.
I have, on occassion, received an item in the mail and have disclosed where it came from when I have reviewed the same and will continue to do so.
Now, while I do not formally have to disclose that I happen to know and like John, Chris and Kristin and consider them all friends, it’s probably something that makes these examples more valuable to you, the reader. And this is what is at the heart of the FTC’s new guidelines- they want to make sure consumers and readers of reviews, endorsements and testimonials understand what they can realistically expect and make sure they aren’t getting ripped off. They have to have information to know how biased the reviewer may or may not be; they have to have information in order to judge the trustworthiness of the reviewer before the rule of Caveat Emptor or “Buyer Beware” takes over.
I wouldn’t have to disclose any relationship with anyone in these examples, because this is a non-commercial transaction, at best taking place within the Trust Economy, as Chris Brogan and Julien Smith might say. It’s outside the regulation of the FTC, since there isn’t an exchange or expectation of a quid pro quo.
I hope these examples help- please keep asking questions in the comments, and I’ll try to help you sort out what may or may not be covered. Again, the regulations go into effect December 1, 2009, and we’ll learn more and more about what’s okay and what’s not as more and more cases in the gray area are brought up.
And the bottom line is: when in doubt, disclose. These are good rules, helping everyone be straightforward and honest about their opinions and biases for the public. There’s nothing onerous and evil about any of this. And if we’re lucky, blatant spam on social networks might ease up a bit, too. Here’s hoping.
Tags: chris brigan, christopher Penn, FTC, john wall, julien smith, kristin brandt, manic mommies, Marketing over coffee, regulations, trust agents
Posted by Whitney on Oct 6, 2009 in
business,
community,
economics,
education,
new media 
The Federal Trade Commission has issued new guidelines that go into effect December 1, 2009 regarding the use of endorsements and testimonials in advertising that for the first time specifically include blogs. While there’s a ton of rumors swirling around about what this means, here’s my two cents worth, read from my viewpoint as an attorney, albeit one who does not currently practice in this field professionally.
Brief History
Back in 2007, the Federal Trade Commission (FTC) published a notice in the Federal Register seeking comments from the public on the existing Guidelines Concerning The Use of Endorsements and Testimonials in Advertising, looking for information about the usefulness and the economic impact of the Guides, as well as seeking information about the increased use of consumer endorsements. The FTC then published a notice in the Federal Register again in November of 2008 discussing the comments received and posted proposed revisions to its Guide, requesting comment on the proposed revisions. (This is all required under the rules of Agency Law, and has been done precisely as required.)
Seventeen comments from various advertising concerns were received, including, most relevant to online content producers, BzzAgent, Word of Mouth Marketing Association, Public relations Society of America (PRSA), the Direct Marketing Association, the Interactive Advertising Bureau among others.
The final version of the new Guidelines published October 5, 2009 will become effective as of December 1, 2009, and are no longer subject to revision or public comment. For the reference librarians among you, you can find the new Guidelines at 16 C.F.R. part 255, or view them online by clicking here.
What are the Guidelines and Why are They Necessary?
The whole point of having FTC guidelines regarding endorsements and testimonials is to try to ensure truth in advertising, so that if the typical consumer sees an ad on TV, in a magazine, or online, they are aware it is an ad, and that the information contained within it is reasonably truthful and reliable. The FTC is in charge of enforcing the rules requiring advertisers avoid outright lies and fraud, and advertisers and endorsers are subject to fines for doing so.
The advent of consumer generated content on a mass scale has radically changed who can provide information, opinions, endorsements and testimonials. So where do bloggers, podcasters, and other user generated content producers fit into this mix?
The “New” Rules of Disclosure
The rules themselves are not particularly new, but they do extend to cover new media sources, consumer generated content, and attach the same standard used for businesses, celebrities and the like to the “Mom & Pop” blogging world. Blogging as a medium is now going to need to take itself more seriously, and bloggers are going to have a new level of professionalism expected of them as it concerns endorsements or reviews that have some sort of exchange or quid pro quo attached.
Yes, I can still complain that the service stinks at my local grocery store. But if the local grocery or one of its competitors gave me anything or paid me to write a review of their service online, I need to disclose that in my review, so people can discern any potential bias.
So How do I know if I am doing an Endorsement? Am I equivalent to an expert or celebrity?
The Guidelines expressly define what constitutes an endorsement or testimonial and treats both identically. Endorsements “must reflect honest opinions, findings, beliefs or experience of the endorser.” They “cannot convey any express or implied representations that would be deceptive if made directly by the advertiser.” This means the endorser is covered by the same rules that would apply to any ad agency- there is no longer any safe harbor for consumer generated content that is exempt from the Guidelines. Likewise, advertisers have to disclose the connections between themselves and endorsers, and are liable for any false claims made by their endorsers.
The rules further state that as used in the rules, a product includes any product, service, company or industry, and an expert is defined as “an individual, group or institution possessing as a result of experience, study or training, knowledge of a particular subject which is superior to what ordinary individuals generally acquire.”
In plain english, this means:
- Almost anyone can qualify as an expert for the purposes of the rules, by just being able to review a product or service.
-If you receive money or any sort of exchange, including a free product, even if unsolicited, you must disclose this in the endorsement somewhere. You can’t disclose it after the fact- it needs to live with the endorsement. Writing about it, positively or negatively, does not matter- you are effectively an endorser and need to disclose this “quid pro quo”. (Section 255.2 regarding Consumer Endorsements).
- If you are endorsing something, you must be a bona fide user of the product at the time the endorsement is given. So writing a positive review about a book you didn’t read is deceptive; writing a review about a product you intend to try but haven’t yet is deceptive as well, IF you have received any sort of exchange. I can write about how I like my R16 mixer and say anything I want about it, positively or negatively, because I paid for it myself, even if I haven’t put it through all its paces. I don’t have any disclosures to make because there’s no quid pro quo in any way, shape or form.
-The advertiser is liable for any false claims you make. If I was paid or got a free service in exchange for trying it out and writing about it or podcasting about it, and I decide to say that “X brand soda is not only tasty, but cured my cancer” (or something equally unprovable and clearly a false claim) the advertiser as well as myself are liable and can be fined for that statement, No Matter How Large My Blog Audience Is or Is Not.
There are great examples in the actual guidelines I recommend you read if you have any questions. It should clarify most situations if you have any questions.
But I think there are inevitably some gray areas- here are some personal examples:
-Chris Brogan is a close friend who has written a book. I bought the book, but then I was also sent a review copy as well. If I write a review, what are my disclosure requirements?
Well, I have received the product for free, but I also paid for it. I am also friends with the author, and may have some bias because of it. The BEST practice is to disclose both the copy received and the friendship along with the purchase- that way, everyone is clear when reading the article about potential bias. I could review the book without disclosure because I purchased the item and probably get away with it. However, full disclosure of the circumstances surrounding the review or discussion of the book is clearly the best policy, as it always has been.
-Another close friend, Andy Quayle, has an internet hosting service I use for my blog as a paying customer. If I talk about Tubu to friends or blog about it, what do I have to disclose if anything? I don’t have to disclose that I know the owner because regarding this “exchange”, I am just like any other commercial consumer- there is not reduced price or free service given with an expectation of advertising by word of mouth or otherwise in return. But even when talking to my friends, I tend to do disclose that I know Andy anyway, because it actually tends to add rather than subtract credibility on the whole. If you tell someone “I use this service and it’s great- I know the guy and he really cares about his customers”- this benefits you, the business and your friend who know all the facts and have a good basis to judge your credibility and bias on the issue. Lack of disclosure doesn’t substantially change the message, but it may lose some of its value as well.
A product available on Amazon.com starts to receive a bunch of reviews that are part of an elaborate joke or hoax, equivalent to being “Rick Rolled”. As someone writing a review, are you liable? No. This is still fine, unless you were paid or received a free product or service. You can still refer to a product sarcastically or rant or anything you like on Amazon or elsewhere, as long as you weren’t paid to do so and don’t disclose it. Review to your heart’s content. And if you were paid or received a free product, disclose it, and you’re fine.
How Does This Effect Celebrity Bloggers? How will they have to adapt their content, if at all?
Let’s take a quick look at a couple of celebrity bloggers and their businesses, from the outside, and how these new regulations may affect them.
Take Gary Vaynurchuk. Gary produces Wine Library TV, and this started as a way to build community around wine and sell more wine out of Gary’s family shop. If Gary is paid by a sponsor to endorse a certain wine, discuss it on his show, or otherwise blog or rant about it, good or bad, he needs to disclose that he recieved payment for that. If he is sent free bottles of wine even just one, and then discusses it in any way on any of his channels, personal or Wine Library TV, even if it was through a distributor and not from the Company directly, solicited or unsolicited, he needs to tell his viewers that he did not pay for the wine, and where he got it from.
Likewise, if Gary recommends that you attend a conference where Gary gets a hefty speaking fee, he has a commercial interest as does the host, in your attending the conference. Asking Gary to “pimp” this out to his network is, in essence, asking for advertising over the web, and Gary will need to disclose his financial interest to avoid potential complications.
Likewise,Mommycast.Com is one of the longest running parenting podcasts, and the people behind Mommycast have received some great sponsorships and endorsements. Some of them, like Dixie and their Aveeno Baby campaign (of which my show, the LD Podcast was a part of last year) are explicitly acknowledged in the audio portions of their show. Other potential sponsorships or promotional exchange deals, such as when Mommycast went on the Disney Cruise, have not been totally transparent as to what was paid for or sponsored content. In the future, any such program where there is an exchange of money, endorsements, items, whether solicited or not, will have to be part of the the written, audio and video shows they produce. They can continue to produce the great content they always have, but they need to disclose what has been given in exchange, if anything, for their endorsement, review, opinion or other representations, regardless if the material is scripted by the sponsor or not.
This also means music shows will need to disclose if they receive free CD’s or downloads from the artists trying to promote their music, book review shows will have to disclose if they did not purchase the books themselves, and review sites looking at commercial products of any type will have to detail anything they received in hopes of review.
While some bloggers like Laura Fitton, a.k.a. @Pistachio have handled this to date by providing a page on their blog with bulk disclosures of all clients and potential interests, the rules are fairly clear and best practices require that the disclosure live along with the content. Without indicating that there is a relationship in individual blog posts that promote a partner, there is a substantial chance consumers will not scour the website for all existing relationships, so best practice would require disclosure within each audio, video or blog post where an endorsement is made.
Implications for Twitter
Chris Penn and I discussed this a bit today. “Buzzing” or promoting things for money in 140 characters or less is going to be challenging. Safety says that you should probably link to a blog post where all detailed disclosures, if any, can be made rather than not disclose. Twitter is microblogging, after all. Likewise, we may see hashtags like #PE for paid endorsement take off, to meet disclosure requirements in as few characters as possible. Tweets from companies directly are not consumer endorsements and are fine. If you ReTweet someone’s else’s paid endorsement, you have not personally benefited from the transaction, so you are just passing along the message. Because you haven’t been the recipient of any quid pro quo, you are unlikely to risk any liability. What’s going to be interesting is to see how the FTC handles mass contests like “Win a Mac Book Air” and how this interacts with the endorsement/paid advertising regulations. I would expect these sorts of issues will be some of the murkier ones to sort out once the Guidelines go into full effect.
The Good News
This is probably the first time independent bloggers, podcasters and video producers have some up against any sort of formal regulation or rules. However, it’s already the rules and conditions that most people follow and have self-imposed anyway, as failing to follow these rules harms both your credibility as well as that of whatever you decide to endorse. This is just another case where good common sense prevails on a day to day basis.
Bloggers, Podcasts and video producers- any producer of consumer-generated content online- are now being treated as real business people and grown-ups. This will probably result in all of us “producers” being taken more seriously. Blogging has grown up, and warrants actual rules and regulations- we should be pretty proud. Likewise, it means we should expect that advertisers and companies treat our opinions and views with more respect as well- the relationships they seek with us will be even more valuable when done correctly, because there will be a clear benefit and avoiding an expensive potential fine of up to $11,000 per post, for violations. This means advertisers and companies may spend more time talking to and training their blogging staff, street teams and the like, which again, will benefit both the disseminators of the information as well as consumers.
Implications for Advertisers
The implications for advertising through blogger outreach programs has a new level of seriousness, however. Since ad agencies are liable for any false claims a blogger might make, there may be more review required of potential posts, or requests to remove posts with false claims after the fact, to avoid liability on the side of the advertiser and blogger. This will start to change the endorsement space, hopefully for the better as each side treats the endorsement and recommendation or review process more seriously than ever before.
At the end of the day, the FTC has put together a reasonable set of guidelines that asks everyone to be reasonably responsible for themselves and what they ask other people to say about them. While I am eagerly awaiting to see what kind of enforcement actually occurs and how the cases are determined, good common sense and basic disclosure practices adopted by most credible and long-standing bloggers already will keep everyone out of harm’s way.
Just remember, even if it’s free, even if it’s unsolicited, let everyone know.
Tags: bloggers, brogan, BzzAgent, Christopher S Penn, FTC, Gary V, Gary Vaynerchuk, guidelines, izea, Laura Fitton, mommycast, pay for post, Pistachio, podcasters, PRSA, regulations, video, Wine Library TV, word of mouth
