Blogging late about a news event is a mixed blessing. The blogger has the benefit of reading everyone else's hastily keyed impressions and thus can seem oh-so-much smarter with several days to think about issues others gave about five minutes' thought to (sort of reminds me of law school, actually). The downside is that after a couple days the news event is essentially played and now the late blogger must try to place something interesting on top of a pile of prior opinion that is already gathering dust. Blogosphere, I make you this deal: I won't poke holes in your snap judgments, and you won't expect me to be smart or interesting.
That said, the Federal Trade Commission's Monday release of its Guides Concerning the Use of Endorsements and Testimonials in Advertising (warning: big PDF) is another example of the government attempting to place old media rules on new social media. These developments throw off the sort of fascinating policy discussions that make my job so enjoyable. Cyberspace exceptionalism. Notice or norms? It's a conversation, it's not "media." Any market failures here? You can't regulate the Internet. Government paternalism.
Early campfire stories from CNET, where the web welkin is always falling, Yes, new FTC guidelines extend to Facebook fan pages, and the Guardian, America's memo to bloggers: don't lie or we'll fine you, conjure up scary images of FTC lawyers hunting down tweeters and Facebook "fans" of Corporate America. Censorship and naivete in Washington are eloquently decried by Jeff Jarvis at BuzzMachine, FTC regulates our speech, and Dan Gillmor at Mediactive, A Dangerous Federal Intervention in Social Media. The most entertaining take I've read on the new endorsement guides is this post from Edward Champion at Reluctant Habits, Interview With FTC's Richard Cleland, in which a dogged interviewer bests an FTC official in a game of reductio ad absurdum.
Bloggers, Tweeters, Fans: Type With Confidence
Since 1980, the FTC has had guidelines in place concerning the use of testimonials and endorsements to sell a product or service. Rules on substantiation, and rules calling for disclaimers on typicality and paid sponsorship, were a part of those guidelines. (For my non-lawyer readers, the endorsement guidelines are detailed descriptions of advertising techniques that FTC staffers believe run afoul of the FTC Act, 15 U.S.C. 45, which forbids unfair and deceptive trade practices.)
The new guidelines extend existing guidance to social media advertising, by setting out several circumstances where FTC staffers believe that disclosures about compensation should be made.
The intended audience for the guidelines is advertisers, not bloggers. The FTC is chasing its traditional nemesis -- marketers -- who have lately taken to social media to hawk products and services. It's no secret that marketers are turning to social media in a big way. That's where the eyeballs are. Moreover, social media is well-suited to advertising, see Robert Cialdini's book Influence (Disclosure: This is not an affiliate link and I am not being compensated by Cialdini, his publisher, or Amazon.com). Social proof is powerful; marketers want to tap into it.
Bloggers, tweeters, fans: The FTC is not targeting you. They are targeting the companies who are impersonating you. Just like the mighty humpback whale that travels north in search of krill and herring off the Alaska coast, the FTC is following advertisers' migration into social media. Bloggers, you're more like the puffins. The FTC is not really interested in you.
The guidelines cover only "endorsements," a category of speech that addresses an infinitesimally small percentage of cyberspace. At least I hope so. The guidelines define an "endorsement" as:
any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.
Presumably, a blogger/tweeter/fan will know whether he or she has received a cash payment or freebie. If the blogger/tweeter/fan writes an "endorsement," he or she must disclose the cash payment or a freebie. This doesn't happen very often, and the burden seems slight. The FTC will not be targeting bloggers who violate the guidelines.
Homework for Lawyers and their Marketer Clients
The flip side of this coin is that the FTC will be looking hard at companies who use social media to advertise their products and services. Which means that lawyers will have new compliance advice to sell to companies using social media for advertising. A cottage industry in compliance/avoidance strategies has been created.
Here are the FTC examples that specifically pertain to social media marketing. I've (helpfully) bolded the portions that advertisers should linger on.
Example 5:
A skin care products advertiser participates in a blog advertising service. The service matches up advertisers with bloggers who will promote the advertiser’s products on their personal blogs. The advertiser requests that a blogger try a new body lotion and write a review of the product on her blog. Although the advertiser does not make any specific claims about the lotion’s ability to cure skin conditions and the blogger does not ask the advertiser whether there is substantiation for the claim, in her review the blogger writes that the lotion cures eczema and recommends the product to her blog readers who suffer from this condition. The advertiser is subject to liability for misleading or unsubstantiated representations made through the blogger’s endorsement. The blogger also is subject to liability for misleading or unsubstantiated representations made in the course of her endorsement. The blogger is also liable if she fails to disclose clearly and conspicuously that she is being paid for her services.
In order to limit its potential liability, the advertiser should ensure that the advertising service provides guidance and training to its bloggers concerning the need to ensure that statements they make are truthful and substantiated. The advertiser should also monitor bloggers who are being paid to promote its products and take steps necessary to halt the continued publication of deceptive representations when they are discovered.
Example 7:
A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.
Example 8:
An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product. Knowledge of this poster’s employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.
The foregoing examples suggest at least three new compliance obligations that advertisers need to immediately take on:
- Monitoring: Endorsers who receive payments or freebies must be monitored to ensure that endorsers are making required disclosures and to ensure that endorsers are not making unsubstantiated claims.
- Training: Endorsers who receive payments or freebies must be given training in the new FTC guidelines, to minimize the chance that endorsers will make unsubstantiated claims or will fail to disclose their connection to the advertiser.
- Workplace Social Media Policies: Advertisers must have in place policies for employees that require them to disclose their status as an employee when making endorsements in social media and other online venues.
Beyond these obvious initiatives, there are a lot of other gray areas for lawyers and their advertiser clients to discuss:
- How permissive will the FTC be with promotional messages that fall short of an endorsement of a specific product? Could Coca Cola sponsor social media messages about the benefits of carbonated sugar water without making a disclosure?
- What does "clear and conspicuous" mean? Would "ADV" work for a tweet?
- With a blog, would it be sufficient for the endorser to publish -- much like a privacy policy -- a one-time message indicating that the endorser frequently receives gratis goods in exchange for reviews? Or would the blogger need to make disclosures on a case-by-case basis (e.g., "This review is positive, so it needs a disclaimer," "This review is negative, so I don't have to run a disclaimer.")
- To what extent will endorsers be allowed to downplay the connection to the advertiser? Will a terse "Promotional consideration received" be sufficient? Will an icon be sufficient?
Finally, I wonder if any of this applies to lawyer communications in social media. Would a lawyer who has AT&T as a client be able to post, without disclosing the attorney-client relationship, "I just love my iPhone and I don't mind being locked-in to a two-year contract at all" on a blog or message board? That's just nuts, right? I withdraw the question.
Loose Change
A few other random thinking-out-loud notions that arose while going through the FTC guidelines.
First, the FTC was not impressed with arguments made by several commenters that (1) self-regulation is the best policy route and (2) that regulation would adversely affect the growth of social media. These arguments have prevailed in Washington since the dawn of the commercial internet, particularly in the area of privacy, so it was surprising to see the commission reject them, and pointedly so. "The Commission disagrees ... with those who suggest that there is not yet an adequate basis to provide guidance in this area." Whether or not this kind of thinking translates into other areas where self-regulation is king remains to be seen.
Second, it was disappointing to see the commission draw a line between user-generated media and traditional media. That seems to be an untenable distinction in 2009, and it promises to create mischief. I personally don't agree with the commission's reasons for requiring user-generated endorsements to contain disclosures (the internet has a way of sorting this stuff out on its own), and I certainly don't agree with its reasons for not saddling traditional media with similar disclosure obligations. Does this mean that Engadget.com must run a disclaimer but the Washington Post's tech toy reviewer need not? This may turn out to be unimportant in the long run, however, because traditional media seem to be embracing the idea that transparency is an attribute with commercial significance.
Third, if an when these guidelines are challenged on First Amendment grounds, how will social media speech be categorized? We are already seeing in the FTC's new guidelines how marketers who venture into social media spaces have brought along their federal regulators. Will they also bring the lesser protections that the First Amendment accords to commercial speech?
(Image: Marydoo)
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