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FTC Responds to Blogger Fears: "That $11,000 Fine Is Not True"

ftc blog As you've likely heard by now, the Federal Trade Commission is trying to reign in freebie-grabbing bloggers and graft-happy social media users masquerading as unbiased critics. The agency announced an update to the FTC Act of 1980, the requisite guidelines for consumer endorsements and testimonials. For many, the takeaway has been this: Bloggers Must Disclose Every Single Freebie Sent to Them From Companies—or Pay an $11,000 Fine. Scary.

Pundits quickly bashed the FTC as an old-economy regulator trying to legislate new-media technology. Few considered that the government may actually try to protect consumers from false advertising or bloggers on the take. It's "insanity and inanity. And danger," wrote blogger Jeff Jarvis. "The regulations raise no end of questions."

We asked a few other prominent bloggers what their biggest concerns were about the news, then we solicited responses to those concerns from Richard Cleland, assistant director, division of advertising practices at the FTC. (You can read the full report at ftc.gov.)

Heather B. Armstrong, author of parenting blog Dooce: "Eleven thousand dollars is a little crazy for a post. Maybe I'm being naïve, but I think a lot of people who are in violation [of not disclosing] just don't know that they're supposed to."

Richard Cleland: "That $11,000 fine is not true. Worst-case scenario, someone receives a warning, refuses to comply, followed by a serious product defect; we would institute a proceeding with a cease-and-desist order and mandate compliance with the law. To the extent that I have seen and heard, people are not objecting to the disclosure requirements but to the fear of penalty if they inadvertently make a mistake. That's the thing I don't think people need to be concerned about. There's no monetary penalty, in terms of the first violation, even in the worst case. Our approach is going to be educational, particularly with bloggers. We're focusing on the advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they're saying is true?"

Brian Lam, editorial director of Gizmodo: "Some colleagues of mine just reminded me of how many freelance pro journalists take junkets. In the end, I'm glad these rules are being introduced, but it's kind of stupid to attach unethical behavior to a particular publishing medium. Look at how shitty TV journalism can be, by and large."

RC: "It's not the medium, it's the message. We want to establish a self-imposed ethical standard so people are aware of the conflicts of interest. That's the base, and we're saying: This is commerce. That's acceptable, but when that happens, the reader should know that there's this potential bias. Actually, these rules have applied to consumer endorsers since they were issued in 1980. I don't think the concept of 'disclose what I'm being paid' is a radical concept that is going to be foreign to people."

Amy Sherman, author of the food blog Cooking With Amy: "I'm more concerned that this will cause confusion among people and whether they can think they are free to say what they want. How is a blog different from word of mouth? Does it matter how big you are?"

RC: "When it comes to word of mouth and blogging, there's no difference. With word of mouth, there are instances when you're not necessarily hired by an agency but set up by a company. You get the inside info and get to be the first to have access, so you can earn bonus points for every person you tell—that is what I consider word of mouth. If you're paid to sell somebody's product in this way, and you deliver an endorsement, it doesn't matter in terms of how many people you send it to, but it does in terms of public interest and whether what the blogger has done is worth the inquiry. If you have 20 friends or 16,000, obviously, we'll look at the one with 16,000."

Ryan Block, founder of gadget blog GDGT: "There is a lot of vagueness and lack of definition to the guides."

RC: "There is some vagueness....The bloggers have to look at how they do their blogging, their business practice, and figure out the way that consumers will best get the message that this is a sponsored post. In terms of clear and conspicuous, the criteria there is that the consumers will notice the disclosure. Disclosures can be made in different ways, whether you make it outside of the text but in proximity to blog, or incorporate it into the blog discussion itself—those are the issues that bloggers will have discretion about."

That leaves one big question on everyone's mind: How is this going to be enforced?

RC: "I realize there are hundreds of thousands of bloggers out there. Enforcement on a case-by-case basis—that's not even a realistic approach. There are other types of enforcement, surfing the Internet, finding companies that are making significant health claims about products, identifying where problems exist. We'd alert Web sites to potential problems and then invite them to contact us about questions of compliance. I don't think it's a matter of the enforcement side being weak but the most cost-effective tool in our arsenal. In this case, we're going to rely more on voluntary compliance than prosecution. That's the most likely source that we'll be able to use to identify a problem, and if we do see a problem at a ground level and then ask the right questions, we'll figure out why there's a problem pretty quickly and go from there." Also, Cleland adds, "Competitors are very quick to turn people in. I've never suffered from a shortage of competitive complaints."

Got a question you want us to ask the FTC? We'll forward it to Richard Cleland directly. Send it to ideas@fastcompany.com.

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