FTC To Bloggers: Your Payola Days Are Over

According to the FTC and its revised version of the FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising, bloggers are now covered under the requirement that all publishers must disclose "material connections" to advertisers.

In other words, the FTC will now require bloggers to disclose any free products, services or payments they receive from companies to review those companies' products. Disclosures must be "clear and conspicuous," said the FTC.

The rules take effect Dec. 1, and according to the FTC, could cost bloggers or advertisers up to $11,000 per violation. The FTC stated it can also go after bloggers or advertisers following "inappropriate" product reviews. (If you're a blogger, review a product favorably because of your relationship with a vendor and the product turns out to be a lemon, you could be held liable, in other words.)

"The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement," wrote the FTC in a statement announcing the rule change. "Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement -- like any other advertisement -- is deceptive if it makes false or misleading claims."

In the new guidelines, the FTC also said that advertisers can no longer hide behind the "results not typical" line when using a consumer's personal experience -- such as in a weight loss commercial -- to extol the benefits of a product.

"Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect," stated the FTC. "In contrast to the 1980 version of the Guides " which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as 'results not typical' " the revised Guides no longer contain this safe harbor."

According to the FTC, the new rules were voted in unanimously, 4-0, by the FTC's commissioners. They also cover certain types of celebrity endorsements for products.

"The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media," the FTC stated.

In the FTC's 81-page discussion of the new rules (available in a PDF download here), the FTC doesn't make clear how it intends to manage the flow of product-based commentary on millions of blogs, review sites and discussion boards, but does indicate it will involve "law enforcement action" in major cases, and that endorsements and testimonials would be "treated identically" in how it enforces the guidelines.

"All Commission law enforcement decisions are, and will continue to be, made on a case-by-case basis, evaluating the specific facts at hand," the FTC wrote.