FTC Sticks to Its Regulations as Blogger Backlash Builds

Today, the Federal Trade Commission responded to an "open letter" from online advertisers that asked for the commission's newly updated guidelines to be scrapped because they purportedly "muzzle social media" and, thus, inhibit the freeflow of ideas.

ftc blog"Although the [Interactive Advertising Bureau (IAB)] contends the FTC's Endorsement Guides are unconstitutional, the Guides apply only to marketing and they attempt to illustrate some of the factors relevant to distinguishing advertising from editorial content," says Mary Engle, the FTC's director of the division of advertising practices, in an email statement released today. "If particular communications do not in fact constitute advertising, as the IAB appears to be suggesting, then the Guides do not apply. Where the message is advertising, however, disseminators have an obligation to ensure it is not misleading. This includes, when it is not otherwise clear from the context, identifying when the endorser has been paid for the endorsement. Although IAB may disagree with the policy, nothing in this approach is unconstitutional," Engle re-iterated.

The request for the FTC retraction, written by Randall Rothenberg, president and CEO of the Interactive Advertising Bureau, a group that represents more than 375 media and tech companies including AOL, Google, MSN, and The New York Times Digital, also called for the commission to begin anew with "a fair and open process," this time with more input from bloggers and other social media professionals. Read the full letter here.

In submitting the letter, the IAB joins the chorus of bloggers and pundits arguing that the new guidelines punish new media. "One of the extremely real effects of these rules is to dry up a flow of opportunity to solo media entrepreneurs without touching offline media professionals," says Rothenberg.

He points to the oft-cited book review example, in which books received by bloggers are considered a form of compensation and as a result would have to be disclosed. "By saying, 'Don't worry, bloggers, we're going after publishers,' it's saying it's okay to send those books to magazines and newspapers but not to a blog or a social media site or someone who's known to review on Amazon. It's saying if publishers send these books to someone who reviews things for Amazon.com, the publisher can be penalized. But if you send them to The New York Times or The Atlantic or freelancers who does contributing to Publishers Weekly, you do not face the threat of penalty."

The IAB's letter was released a day after the FTC made itself available to media for questions on its revised guidelines. During the session, the FTC's Engle reportedly stressed that the commission would not be going after bloggers but instead would focus on advertisers. The statement echoed assistant director of the division of advertising practices Richard Cleland's comments in an article published by Fast Company, on October 7. In that article, Cleland denied the reported $11,000 fine for bloggers and clarified, "Our approach is going to be educational, particularly focusing on advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they're saying is true?"

"The document is laying out a regulatory structure that has penalties attached to it, and it has investigative procedures attached to it," says Rothenberg. "If the FTC's intent is only to educate, the document should have been written to reflect that."

Instead of FTC intervention, the IAB argues, new media as a sector should police themselves, much like traditional media does for newspapers and magazines. In a March 2, 2009, letter issued in response to the FTC's call for comments on its new guidelines, the IAB argued that "strong and effective self-regulatory programs already exist," citing the Word of Mouth Marketing Association's "Ethical Blogger Contact Guidelines" and the Direct Marketing Association's "Guidelines for Ethical Business Practice."

The FTC, who's clearly sticking to its guns, doesn't think that is enough.

Full disclosure: Randall Rothenberg freelanced for Fast Company in 2002.