It's been a little more than three months since I wrote a story about the Federal Trade Commission's inclusion of social media in its Guides Concerning the Use of Endorsements and Testimonials in Advertising, first issued in 1972 and last updated in 1980.
At issue was the disclosure of "material connections" between advertisers and endorsers, which the FTC defines as connections "which might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience)." So if I am a blogger and got free chocolate from Godiva, I should disclose that when I rave about it. (By the way, I like Godiva's new Gems, especially the dark chocolate ones. The only disclosure that's probably necessary is the lack of self control that led me to devour most of a bag within an hour of purchasing two of them in a two-for-one deal at a local Godiva outlet.)
While some folks I interviewed didn't have a problem with the government applying guidelines for more traditional types of advertising to blogs and other social media, others thought it put an unfair onus on companies to keep tabs on bloggers and a similar onus on bloggers to disclose any connection that might be considered "material."
The FTC just issued its final guidelines governing endorsements and testimonials. While the guidelines indicate decisions will be reached on a case-by-case basis, they do state posts written by bloggers who receive cash or in-kind payment (like her weight in chocolate, for example) to review a product are considered endorsements. Because it's an endorsement, bloggers must disclose the material connections they share with the company that provides a product or service.
Also, while earlier versions of the guidelines didn't explicitly state that endorsers as well as advertisers could be liable under the FTC Act for statements they make in an endorsement, the new guidelines say both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement-or for failure to disclose material connections.
Reiterating some of the points from my story, when possible companies should provide guidance and/or training to bloggers concerning the FTC's requirements for substantiation and disclosure. And, said Thomas Cohn, an attorney with Venable LLP, a law firm that advises clients on the legal and practical aspects of complying with FTC regulations and industry self-regulation programs:
If a company is providing products to third parties or compensation or any type of valuable consideration in exchange for a positive statement, or even with the hope they might get one, they should take steps to make sure that the disclosure of that connection is made by the third party.
If there's a contract, certainly put it in the contract, Cohn said. Mihaela Lica, writing on everythingPR, relates several instances in which disclosures of material connections weren't clearly made, including one involving a public relations company called Child's Play that serves as a middle man between advertisers and bloggers. As she notes, Child's Play doesn't require bloggers to disclose when they receive products. And it suggests bloggers not review products they do not like. She wonders:
... Are companies ready to deal with truthful reviews that describe a product with all its pros and cons? And how can a PR company like Child's Play "sell" such an idea to a customer? Just some of the many questions we should be asking, because sooner or later many more will ask them.
As I wrote earlier this month, most companies would do well to get over their fear of reviews that aren't overwhelmingly positive. Negative reviews can actually help a brand, if they are responded to in a thoughtful way.
Elizabeth Lordan, my source from the FTC's Office of Public Affairs, told me the FTC's primary focus would be on advertisers rather than bloggers or other endorsers. And Cohn said the FTC generally chooses to prosecute cases that "are most egregious and easiest to prove." Still, he said:
Endorsers need to know the FTC is holding them to the same standards (as advertisers). They need to step up their efforts to make disclosures, preferably on the same page where they make an endorsement or testimonial.