Buzz Kill: Government Eyes Fake Bloggers

Apr 14, 2010

The Federal Trade Commission has a stern warning for businesses secretly using bloggers and others in social media to endorse their products and services: we’re coming after you.

In a move that has generated a backlash as big as the blogosphere itself, the agency put the word on the street last December that it had begun looking to haul into court the most flagrant users of cloaked endorsers.

“Social media is here to stay, and we have enough respect for advertising on the Internet and the important role of the blogosphere as a marketplace for public opinion to hold it to the same standard we apply to advertising in any other medium,” says Mary K. Engle, director, FTC Division of Advertising Practices.

The new policy will affect any performance retailer, tuner or builder that is in any way paying for positive posts, reviews or testimonials on blogs or social media networks like MySpace and Facebook.

A Controversial Call

During the past few years, a cottage industry in “posts-for-hire” has sprung up on the Web, through which professional writers are paid to post positive reviews and endorsements on every social network and blog possible for their sponsors.

Consequently, it’s a good idea for shops to verify with any ad agency subcontractors handling their promotion on the Web-including Web designers and other Web marketers they hire-that their promotion efforts are not in violation of the FTC’s new policy.

Despite the FTC’s firm warning, there has been a spirited push-back against the new guidelines, with many established bloggers characterizing the new policy with cries of Big Brother, 1984, and “government muzzling of free speech.”

Jeff Jarvis, one of the medium’s most prominent spokespeople, posted on his blog: “For the FTC to go after bloggers and social media-as they explicitly do-is the same as sending a government goon into Denny’s to listen to the conversations in the corner booth and demand that you disclose your Uncle Vinnie owns the pizzeria whose product you endorsed.”

And Randall Rothenberg, CEO of the Interactive Advertising Bureau, responded with unbridled indignation, dismissing the new FTC guidelines as “constitutionally dubious,” and castigating the agency as being draconian.

“We offered to bring in bloggers, social media executives and others from among our membership and work with you to develop practical guidelines and self-regulatory mechanisms that would protect consumers from real harm, while assuring that independent opinion in digital media isn’t stifled,” Rotenberg wrote in an open letter to the FTC. “But Commission staff did not follow up with us on our offer, held no public hearings on the proposed Guides, and ultimately dismissed our concerns.”

According to the FTC, the impetus for the new guidelines has been an ever-increasing prevalence of company endorsers-paid either in cash and/or in free products and services-who masquerade as unbiased, “everyday” consumer reviewers in all sorts of social media forums.

Specifically, Engle points to a Proctor & Gamble social media blitz campaign, in which she says 400,000 moms were given free products in exchange for their cheery reviews of the same in blogs and on Twitter.

Other flagrant cases, according to Engle, include a blog reviewer who received free use of an automobile-along with free gas for a year-in exchange for an endorsement, as well as bloggers who received luxurious vacations in exchange for their supposedly unbiased endorsements of a consumer electronics product.

“Our concern is with the advertisers who pay consumers to talk up their products and make it look like independent consumer opinion,” Engle says.

Double Standard?

While IAB agrees that brazen misrepresentation in Web reviewing needs to be reigned in, what sticks in the organization’s craw is that the FTC drew a stark distinction in its new guidelines between traditional journalists and new media bloggers.

Essentially, the agency ruled that while any blogger who receives a free product or service must explicitly reveal that fact-even if the subsequent review is negative-traditional journalists will not be held to the same standard.

The FTC’s reasoning: the public has long known that journalists often receive free books, theater and movie tickets and the like from companies, in hopes that those products or services will be reviewed.

“What concerns us the most in these revisions is that the Internet-the cheapest, most widely accessible communications medium ever invented-would have less freedom than other media,” Rothenberg says. “These revisions are punitive to the online world.”

Given the firestorm the FTC has ignited, the tussle over what’s fair and what’s not seems destined to continue for some time. In the meantime, here’s how to protect your shop, based on the facts-on-the-ground right now:

• Get Your Attorney to Go Over the Guidelines. The FTC has posted a complete copy of its updated “Guides Concerning the Use of Endorsements and Testimonials in Advertising” online. If you’ve ever used a blogger or social networker to endorse your shop-or you plan to-this is the first stop for you and your counsel.

• Assuage the Fears of Your Bloggers. While there was undoubtedly white-knuckle fear among thousands of bloggers and other social media posters when the FTC guidelines first dropped, the agency has since assured the blogosphere that its primary mission is to go after the businesses who hire them. According to Richard Cleland, the FTC’s assistant director of the Division of Advertising Practices, the agency also sees as remote the prospect of seeking up to $11,000 fines through the courts for social media reviewers who fail to reveal their sponsor ties. Instead, the FTC will first write a series of warning letters to the offenders.

• Cease and Desist. If your shop does secretly have bloggers singing your praises, or twittering away on your behalf, now would be a good time to knock it off. Despite the backlash, the FTC has every intention of moving ahead with its mission to clean up the Web. There’s no reason your shop should become a poster child for the FTC’s crusade.

• Be Sure to Identify All Paid Research. For years, companies have been commissioning research that casts themselves, or their industry, in a positive light, ostensibly offering businesses and consumers an unbiased, third-party perspective. Some companies freely admit to financing such studies. Others do not. Under the new FTC guidelines, all companies must explicitly state that they have paid for such research, especially if it’s used for marketing and promotion purposes.

• Disclose the Nature of All Celebrity Endorsements. The FTC is tired of celebrities who make service or product endorsements for a company without disclosing their commercial relationship with the firm. Essentially, the agency wants that relationship made explicit. When safeguarding against this provision, ask your attorney to clarify the FTC’s definition of celebrity. Few, if any, shops have the bankroll for an A-list movie star, but they still may be using a local former football great as a hawker.