Here it comes: the first FTC regulation on blogs

You know that blogging has arrived when the U.S. Federal Government formally announces fines for blogging they don't approve of.

It happened.

Yesterday.

On Monday, October 5, the U.S. Federal Trade Commission announced that bloggers who endorse products or services and don't disclose the payment they have received for those endorsements can be fined up to $11,000.

 In The Washington Post, Cecilia Kang reported:

"The new guidelines also affect how advertisers use studies by research institutes they help fund."

In fact, she added, "Any financial ties must now be disclosed when companies cite the findings of a research organization they fund."

How will this affect you?

Hard to know. The practical ability of the FTC to monitor endorsements (including affiliate promotions) and corresponding financial disclosures is limited, since as of last year there were 133 million blogs on the Internet, according to Technorati -- and there are likely a lot more now.

As for the FTC, an estimate of 2,000 employees in total would be generous, based on some quick Web research I did on the subject.

Yet I know some people personally, and about a few more people not so many degrees of separation away from me, who would be glad to tell you that you don't want to run afoul of FTC rules.

Because life gets really, really uncomfortable.

And that's before they start going after your money.

So, a word to the wise. Be painfully honest.

And keep your eyes open. The Feds have planted a new flag on the Web. 

And yeah, that's right. There's more ahead.

David Garfinkel
Publisher, World Copywriting Newsletter

Comments

[twitter.com/michelfortin]

What will be interesting is to see how the FTC clarifies its new rulings (on a "case-by-case basis," they say). Because this might affect affiliate marketers.

For example, say one of our affiliates blogs about us. They lie in their endorsement -- something over which we have little control.

The new rule stipulates that the advertiser AND endorser are both liable. Does "advertiser" mean the affiliate program owner? Meaning, are we, as affiliate providers (vendors) also liable for what our affiliates say/sell?

This could literally mean a ton of affiliate programs shutting down if this is the case. Because it's now too risky to operate one, or at best, force an application process so that we can vet, qualify, and monitor hundreds, perhaps thousands, of affiliates.

Logistically, this could become a nightmare.

Something to think about.

[David Garfinkel]

Michel, you bring up a very interesting... and somewhat chilling... point.

Again, hard to know. My best guess is that the merchant's level of legal/regulatory exposure might be connected to the amount the FTC could show the merchant "caused" (or "led") the affiliate to lie.

But in this highly networked business world, everything will probably be established through one "case" or another.

This is one situation where the pioneers really DO get all the arrows, even when the pioneer is in the right and ultimately wins through appeals and negotiation.

Brrrrrr!

David

[DK Fynn]

The thing is, how will this be applied internationally?

What if a person in the US has their sites hosted on Canadian servers, or vice versa?

What if it's US affiliates promoting a UK merchant, or vice versa?

It'll be interesting to see how this plays out.

[Shirley Anderson]

As a Canadian, I also wonder how it will impact globally. How on earth can they possibly monitor such a thing??

I assume that this ruling is to offer recourse for disgruntled customers.

I actually find this news terrifying. I've been trying to remember if I've ever published anything that may violate this ruling.

Shades of big brother? After what I heard a couple of months ago about the U.S. government passing a law (I think it was a law) stating that they can take over net based companies on a whim, big brother just naturally comes to mind.

Best of luck to us all!

[twitter.com/michelfortin]

Shirley, Big Brother is not too far off the mark. It's a slippery, slippery slope...

[Scott Lovingood]

Sadly this is another sign of government not understanding technology or people.

How do you track it? The only time this will come into play is if
1) They want to make an example of someone (many on the web tend to lean conservative or anti establishment) If a well known blogger publishes something the gov doesn't like they can come down hard as this rule will be nearly impossible to not violate in some way.
2) A high profile case gets reported by a competitor (Though Bernie Madoff lasted for a long time under the careful eyes of the FTC even with people reporting him)
3) The government decides that owning insurance, banking, and automobiles isn't enough and wants to own the web.

Notice that the rules for bloggers is much tougher than the rules for a newspaper, etc.

If they enforce these, they will simply drive many companies over seas.

[thetomr]

So is a "I might make money from this offer" disclaimer going to work for this scenario? Also I wonder, how many levels up or down the chain of responsibilty goes. If I am an affilite for someone, and they screwed up, do I get a share of the hit too even if I did my due diligence and posted a disclaimer?

[Rachel Henke]

Thanks David. I'm not going to get into a panic about this but it certainly makes me happy that I'm receiving your updates so I can know what is going on with blogging.

[David Garfinkel]

To thetomr:

To be determined.

I'm guessing here: My read on this is that the FTC wants you to make it clear you have a business relationship with the person/product/company/service you are endorsing.

How you make it clear is up to you.

Of course, there's a catch:

Whether or not they approve your form of disclosure is up to them.

David

[Brandon]

I have 2 questions about this.

1. How will this play out to review sites that don't endorse any product but simply write a review stating the facts? Do we still need to disclose any earnings or potential earnings?

2. How will this affect a subscriber list? If they are off the hook then I'm sure you will see less affiliate blogs and more opt-in pages. Hey, maybe that's a way around it since it's not a blog but a newsletter.

[David Garfinkel]

Brandon,

Great questions.

Again, I'm the reporter here, not the regulator, so: hard to say.

I did hear from a friend who (Thank God) used to be an FTC lawyer and is now a civilian and is entrepreneurially minded.

Because he is a lawyer, I couldn't fully understand what he had to say, but the gist of it is, if you make at least some kind of effort to let your reader know you are an affiliate, the chances are good that the worst that could happen is you would get a letter from the FTC, not a fine.

Now don't hold me to this. I don't know, my ex-FTC friend doesn't know, and actually it may be the case that nobody knows at this time.

One thing I do know for sure, though, is that you DON'T want to be the example the FTC chooses to make of someone who is flagrantly unwilling to let people know he or she is profiting from a link to a sales page.

Anything that travels from one computer to another across the Internet is fair game. But I wouldn't expect the FTC to go after you writing to your subscriber list.

Still, better safe than sorry, right? Let them know.

David

[Tom Troughton]

Thank you for alerting us to this fact. Something that had not even crossed my mind. . . .

[Kenny Barrow]

Is government looking to see if they can get another peice of the money pie?

Everyone is tightening the their financial belts and the US government is certainly no exception.

The disclosure information can be exploited in many ways.