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FTC Gives First Hint About Intended Blogger Enforcement

The Federal Trade Commission has given its first hint of how it intends to enforce the new endorsement guidelines that apply to bloggers, by revealing it investigated retailer AnnTaylor for a promotion run by its LOFT brand stores.

(If you are unfamiliar with the guidelines, they can be found in PDF form here. To find out why there is confusion about what they mean, read an interview with FTC spokesman Richard Cleland.)

In January, AnnTaylor invited a group of bloggers to a preview event for LOFT’s  Summer 2010 collection. The invitation stated that bloggers who wrote about the event and submitted their stories to AnnTaylor within 24 hours of the event would receive a mystery gift card worth between $50 and $500.

The blogger promotion was widely reported on in media as an obvious violation of the new FTC endorsement guidelines, and not surprisingly, drew the attention of FTC investigators. The FTC has widely been expected to find a company to use as an example to test the new guidelines on.

On April 20th, the FTC notified AnnTaylor that they have decided not to pursue enforcement action over the event for several reasons:

  • A sign was displayed telling bloggers to disclose the gift cards.
  • AnnTaylor adopted a new policy shortly afterward requiring notification of bloggers requiring their disclosure requirements before gifts are issued.
  • The event was a flop – only a small number of bloggers wrote content, and several who did disclosed the gift cards.
  • AnnTaylor only hosted one such event.

This may be good news for advertisers. It appears that the FTC may not hold advertisers accountable for a blogger’s failure to disclose as long as the blogger was notified of their need to disclose.

Another clue to the FTC’s thinking on enforcement was provided by an interview that Cleland gave in January to Jeff Bercovici of Daily Finance.  In the interview, he suggested that celebrities would be exempt from disclosures because:

The average consumer, Cleland said, might well be aware that celebrities of Paltrow’s stature often receive free clothing, trips and other swag.

The question, of course, is how this applies in a niche market like scrapbooking – does the FTC recognize the existence of “niche market” celebrities who would fall under Cleland’s interpretation? And if they do, how many people in the industry would fall into that category in their eyes?

Many in the scrapbook industry will be watching for the FTC’s future interpretation of these guidelines, due to the widespread use of editorial and designer samples in the industry, and the prevalence of online publishing of materials.

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9 Responses to FTC Gives First Hint About Intended Blogger Enforcement

  1. Tiffany May 4, 2010 at 11:11 am #

    In order to stay within the rules, I think it’s just best for bloggers in any niche to just disclosure that they’re being compensated for their reviews or to say on their site that they have been given free products.

    It’s way better to be clearly safe than risk offending two readers who get upset because you’re being compensated in some way for blogging or being creative. It’s as easy as putting a disclaimer on your about page that sometimes you get free goodies or incentives for products you promote and then noting which products were given to you in the individual review posts.

    • Nancy Nally May 5, 2010 at 9:50 am #

      Tiffany, it’s not clear from the FTC guidelines if putting a disclaimer on your “About” page is sufficient disclosure. It’s also not clear, as I noted in my reply to Ginny, if it is sufficient to note individual products you receive or if receiving products from them means you have to put a disclosure on everything you ever write about a specific company. And what about other things? Some companies do things like host breakfasts in their booth at CHA – if I ate a bagel and drank some orange juice they provided while they gave me a show & tell of their booth, does that constitute a “material connection” to a company to the FTC? Again, no one seems sure. It’s a very complex issue and that is why everyone is waiting to see from actual enforcement actions how the FTC will interpret it.

  2. Ginny May 4, 2010 at 11:39 pm #

    I have no problem disclosing. I always did before posting anyways, my reviews usually mention what I was sent. I’m kind of irritated though that bloggers have to disclose but celebrities do not. I think if one has to, then every one does. All of my reviews, that now fall under these guidelines seemed pretty obvious to me that people would know I was sent an item. In the reverse, I’m sure there are a ton of consumers out there that do not understand what celebrities get for free.

    Plus I see your point on the niche thing. There are definitely scrapbook celebrities, but would a non-scrapbooker know that? Who is to determine who a celebrity is?

    • Nancy Nally May 5, 2010 at 9:44 am #

      What about newspaper, book, and magazine writers, and TV people? They don’t have to disclose either under the guidelines…and I totally agree that everyone should be held to the same standards. Making only bloggers disclose discriminates against them solely for the fact that they are published electronically. Some people, for instance, write for both print and electronic mediums…so why should they have to follow different rules for one format than the other? It’s ridiculous.

      And the biggest problem is what exactly do you have to disclose? The guidelines actually state that you have to disclose any “material connection” that you have to a company, but it doesn’t define what constitutes a material connection. If I’ve been sent product to review or giveaway a couple times by a company and then talk about a different product of theirs that I bought myself, do I still have to disclose a “material connection” because of the past stuff? No one seems sure. That lack of clarity – the concern that we don’t even know what we are supposed to be disclosing for sure – is the biggest concern of all.

  3. Ali May 5, 2010 at 3:18 am #

    I think all bloggers need to disclose. And celebs too when they make a verbal statement that endorses a product. I wouldn’t expect them to disclose for stuff they are wearing or restaurants they are going to. As for “niche celebrities”, come on! First off, top scrapbookers are only as much “celebrity” as a well-read journalist or a high-profile business person (though I know some of them behave otherwise), and secondly where do we draw the line? Ali Edwards is a “scrapbook celeb” purely because she blogs so well, but there are also hundreds of other scrapbook bloggers who might get a hundred hits on their blog and consider themselves “scrap celebs” too! It really isn’t hard in our industry for bloggers to write “so I was sent this new product X from Y company”, which immediately makes it clear they didn’t pay for it, or if they are being paid to write about it it’s easy enough to note at the end of the blog entry that payment had been received. After all, travel and lifestyle journalists have done this for years “So-and-so flew to the Maldives with Air Luxury and stayed at the Sun Burn Hotel courtesy of Bewitched Travel”…. Soemtimes I think we are making this harder than it is. However, I do like the way Scrapbook Update is on the case and brings it to the attention of those who may not have had it reach their radar yet.

    • Nancy Nally May 5, 2010 at 10:11 am #

      To me, the litmus test of who is a scrapbook celebrity would maybe be if companies are handing out free product to them. That means that in their eyes it is worth spending money to get their product in that person’s hands because it is a good marketing investment for them because of that person’s high profile.

      As I’ve noted above, it’s not just a case of disclosing the individual free items…there are questions about how broad the disclosures need to be and what they need to encompass. And while travel writers may have done disclosures for years as part of their profession’s ethics code, plenty of other writers don’t typically disclose – book & restaurant reviewers, most prominently.

      There are also questions about affiliate advertising links – the FTC seems to want those disclosed too and no one is sure how to do it correctly to keep them happy. The addresses themselves show as an affiliate network when clicked on – is that enough? Is a separate disclosure page for the whole site enough? Does there need to be a disclosure on each article? Or next to each individual link? No one knows…and that is what scares people.

      The FTC’s rules hinge on the concept of “would readers reasonably expect this writer to have been compensated or have received a gift for this from the company?” The problem comes in defining “reasonable”. Some people are more savvy than others and will understand without being told that marketing people are probably handing out free review product and take that into account. They will weigh what their personal experience is of the author into how much they trust a review. They understand the concept of affiliate links and know when they see certain network names in the URL what they are clicking on. But other consumers are completely blind to all of that .

      So where on that spectrum does the FTC think a “reasonable” person is? Judging from the interviews we’ve heard given so far, it appears they think that “reasonable” person equals completely blind person when it comes to marketing. They want to play net nanny and protect us from the “evil” marketers.

      The frustrating thing is that while the FTC apparently doesn’t trust us to be able to decide who to trust when we are reading content on the web that might have been influenced by commercial interests, they apparently trust our judgment in evaluating other media. When a news network runs a story about an auto company, they don’t have to issue a disclaimer with it that the auto company is an advertiser on the network. So why do they think that we need those reminders when we are reading web content?

  4. Marilyn B. Hughes May 5, 2010 at 9:32 am #

    I recently had a giveaway sponsored by a company. One of the guidelines I had to follow was that I had to specifically name the company donating the item, which I did.

    I didn’t even know this law was in effect, but apparently the company that sponsored my giveaway was. Personally, I have no problem saying what company….they deserve the advertising for sponsoring something.

    Smiles~
    Marilyn

  5. Traci Brennan May 5, 2010 at 11:59 am #

    I suppose that the IRS won’t be far behind….they never are.

  6. Emily May 6, 2010 at 2:00 am #

    I think it’s ridiculous to have to disclose keeping scrapbook product, because this is only if you make a positive endorsement of it, right? So the idea here is that you make a positive endorsement so you get to keep the products? BUT if your review was negative then you wouldn’t probably want the product anyway! And it goes without saying that a used stamp or cut up paper used to create a layout is being kept by the reviewer. Duh. Does the obvious need to be disclosed?

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