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Ian Paul

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New FTC Blogging Regulations: Forcing Transparency on a Culture of Full Disclosure

Posted: 10/06/09 09:04 PM ET

The Federal Trade Commission has come up with a set of strange new regulations to protect consumers from potentially misleading information in the blogosphere and social networks. As of December 1, the regulatory board is going to require bloggers, as well as prominent tweeters and Facebook types to disclose any paid endorsements to their followers, online friends and readers. That sounds like a fair idea, but not only do these new rules have the potential to reshape how many people interact and behave online, I have to ask: is this really necessary?

Here's what you need to know so you don't run afoul of the FTC's new rules:

Blogs:

A rare trend among some bloggers is to receive a small fee in exchange for reviewing a particular product or writing a blog post about it. Under the FTC's new rules, all bloggers engaging in this practice would have to disclose that they are receiving a fee for their blog post. Bloggers will also have to disclose any gifts they receive, such as a free gadget, book or toothpaste since the free merchandise counts as compensation.

The strange thing about this new rule is that, in my experience, many bloggers already disclose when they are being paid for reviews. In fact, I've seen many bloggers who have a dedicated Web page explaining their paid review policies. Most of them also clearly state that a fee does not guarantee a favorable review. You may not agree with paid reviews as a practice, but in my experience bloggers are interested in keeping this sort of thing transparent. Check out a few examples of paid review policies here, here and here.

I've also seen disclosure on those rare occasions I've come across a PayPerPost model, where a blogger is basically working a product endorsement into their writing. Of course, even if a PayPerPost blogger didn't disclose what they were doing, it is often painfully obvious they've been paid to insert something about 'Super Wowee Shampoo' into their blog.

But let's say you are working an endorsement into your blog for shampoo, and you end up talking about your experience with that product. If your experience was not normal, a "results not typical" clause just won't cut it. As of December 1, you must clearly disclose the typical results someone should expect from using that product.

Bottom Line: If you receive gifts, money or any other type of compensation from a manufacturer or service provider you have to disclose it.

Social Networking:

Now this is where things really get interesting. Prominent users of social networks and Twitter will also be covered by the FTC's new regulations. CNET's Caroline McCarthy uses an interesting scenario to illustrate this: a celebrity receives a bunch of free nights from a hotel chain, and then becomes a fan of the hotel chain on Facebook. There would have to be disclosure by the celebrity on Facebook that they have received a gift from that hotel.

That sounds reasonable enough, but what about the rest of us? Say for example, you work for Microsoft and become a fan of the company on Facebook or tweet about how much you love Windows 7. Now, what if you have not made it clear on your Facebook and Twitter profiles that you work for Microsoft? Some of your Facebook friends or Twitter followers might see your posts, and--knowing that you're an expert in technology, but not necessarily that you work for Microsoft--take your Windows 7 endorsement at face value. You may genuinely love Windows 7, but you haven't made it clear that you're receiving financial compensation as a Microsoft employee.

Under the new FTC guidelines, you may have just crossed the line. True, it's unlikely the FTC will be interested in you, but if you have a large amount of Twitter followers or Facebook friends, it might be a good idea to disclose your corporate affiliations.

Bottom Line: If you are going to tweet about how awesome your employer is, make sure everybody knows you work there.

Chat Rooms, Message Boards and Commenting

Let's say you work at the Apple Store, and, under your own initiative, you start posting messages under online Zune reviews about how much more awesome the iPod Touch is than the Zune HD. If you haven't disclosed that you work for Apple, you've broken the FTC's rules.

Bottom Line: Don't post comments that undercut your company's competitors unless you make it clear who you are. This one is especially important to follow, since the FTC has dealt with this before.

The FTC and You

While these new rules may seem confusing and perhaps even excessive, the FTC says it is not that interested in hitting individual bloggers or prominent social network users with heavy fines. Repeat offenders may end up being punished, but the new regulations are really about keeping corporations in line.

Richard Cleland, assistant director of the FTC's Bureau of Consumer Protection, says the regulatory body is more concerned with how advertisers pay for endorsements and reviews rather than the actions of individual bloggers and other online types, according to IDG News Service.

So if this is about how companies behave and not what online media is doing, why the new regulations? Is the FTC hoping to head off potential scandals, or does the regulatory body have documented examples of widespread abuse among bloggers receiving goods from the companies they cover?

Here's something else of note: traditional media is not subject to these new regulations. "The Commission acknowledges that bloggers may be subject to different disclosure requirements than reviewers in traditional media," the FTC's new regulations state. "In general, under usual circumstances, the Commission does not consider reviews published in traditional media...to be sponsored advertising messages."

So who are the bloggers then? Is Harry McCracken of Technologizer a blogger? Well, he used to be the editor in chief of PC World magazine (full disclosure: I have a regular writing gig with PC World). Are you telling me McCracken's "traditional media" ethics have suddenly changed, because he went into business for himself? Does he suddenly need more government oversight? Not likely. If anything, McCracken has made it a point to be very transparent about his new job, with clear statements about how Technologizer operates. Then there's TechCrunch's Michael Arrington, another prominent tech blogger, who discloses his venture capital investments, openly embraces his own partiality and lets his readers decide what to believe.

I suppose any regulations that encourage openness are a good thing, but from what I've seen most bloggers already hold themselves to a high degree of transparency.

But if you're one of those unscrupulous types the FTC is worried about, you should know the fines for bad blogging behavior go as high as $11,000. So if you're a big time blogger or prominent social media type (which can be anybody these days), keep in mind it's potentially a lot cheaper to practice full disclosure.


This article has been adapted for The Huffington Post from a piece that originally appeared on PC World.com's Today@PCWorld blog.


Ian Paul doesn't do paid reviews or accept gifts from technology companies, but you can still follow him on Twitter (@ianpaul).

 

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