The Federal Trade Commission today announced the penalty for bloggers, celebrities and lay people who fail to disclose receiving payment for endorsements. Starting December 1, anyone who endorses a product, virtually anywhere, without disclosing brand relationships will receive a fine for $11,000.
This is the first time the FTC has updated its guidelines since 1980. Clearly some updating was neccessary. But enforcement is another story.
$11,000 is a steep price to pay for endorsement violations. And the fees will likely come out of brands' pockets.
In the 1980 version of the guidelines, advertisers could promote unusually positive or outlier experiences with a disclaimer like “results not typical.” But now, anyone who gets paid by a marketer and blogs about their product is considered to be a prodcut endorser. And could face a $11,000 fine.
But more likely, these fees will come back to brands sending out products and payments to people. That's going to get increasingly difficult in a world where people want to spread good will about their products across platforms. Especially becase brands can't be accountable for everything that consumers say about their brand.
The FTC wasn't specific about how disclosures must be communicated but said its decisions would be made on a "case-by-case" basis.
The first two problem areas would appear to be social media and television. Disclosing a payment in 140 characters or less is difficult to say the least. And celebrity endorsements are covered under the new rules, meaning that any mentions on a talk show or other media would need to be prefaced with payment details.
And blogging will come under the most scrutiny though. The FTC wants to get ahead of the way product information is spread.
According to Richard Cleland, assistant director of advertising practices at the FTC:
"In 1980 most of all advertising was disseminated by the advertisers themselves; today a good part of that advertising is being disseminated by users."
Joe Chernov, VP-communications for word-of-mouth marketing firm BzzAgent, tells AdAge:
"If a consumer's speech has been materially influenced by a marketer, it must be disclosed. That speech, the consumer's speech, also must be restricted to their own personal experience."
And herein lies the rub. In today's market, the lines are continually being blurred between paid promoters and "brand evangelists." Trying to make things clearer for consumers may be a good intention, but enforcing it is another story.
Most brands consider getting people to talk them to be a good thing. But doing so requires ceding some control over what they say. And the FTC is looking for the oppposite result.