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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.

Image: ICanHasCheezburger

Meghan Keane

Published 6 October, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

Comments (4)

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Emmanuel Vivier (BuzzParadise.com | Vanksen.com)

Disclosure is definitely a required step to avoid deceiving consumers…as we always have requested from start, 3 years ago for the nearly 300bloggers outreach campaigns we have deployed with BuzzParadise (http://www.buzzparadise.com) in more than 12 countries.
But why are bloggers treated with more severity than mature traditional media?
Most offline press & TV journalists are offered outrageous gifts & travel invitations year along and I never saw any disclosure about it, not once!  I am 200% for disclosure but I really think that FTC and WOMMA should be asking the same from the other media to be fair… Consumers trust is as important whether you are a TV audience or a WOM audience.

Emmanuel Vivier
CEO & Founder
Vanksen (Buzz, digital & advertising Agency : http://www.culture-buzz.com)
& BuzzParadise.com (Connecting Brands & Bloggers Worldwide : http://www.buzzparadise.com)

over 6 years ago

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Adrono

@Vivier: It's simple, really. Bloggers don't have high paid lobbyist in Washington. Any effort to try and get this applied to them would be stomped on.

over 6 years ago

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harry gummett

Richard Cleland, assistant director of the FTC's division of advertising practices told the BBC disclosure was up to the endorser i.e the blogger

"It can be a banner, part of the review. The only requirement is that it be clear and conspicuous'" he said.

What brands will do is the same as they already do with affiliates, they will include in their terms and conditions for affiliates/bloggers/tweeters that they are responsible for disclosure in a clear and conspicuous manner. A general disclosure on your About Me page or in your Terms & Conditions is unlikely to meet the FTCs requirements.

over 6 years ago

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Jacob Wright

To be honest, other media are regulated so it's not correct to say that TV and magazines are a cowboy country where brands regularly pay for endorsement, and that bloggers are getting an unfair deal.  Yes there are shady things going on with PR and with positive mentions in editorial being bartered for advertising buys, but generally speaking there are solid and well enforced rules for governing the relationship between advertising and editorial, and blogs are receiving (long overdue) an equivalent level of scrutiny.

Furthermore, there is something particularly insidious and unethical about paid evangelising on blogs and social media.  It's one thing for me, as a consumer, to buy a magazine which I know is a commercial endeavour and read editorial about a product.  It's quite another for someone posing as an independent voice to effectively lie straight to my face and endorse a brand on Facebook without revealing to me that they are being paid by that brand.

This is all part of the web growing up as a commercial medium. 

over 6 years ago

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