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New FTC Rules Will Have Serious Impact on Blogs

Reviewed the Federal Trade Commission’s new rules regulating blog content, and unfortunately, they look to be far worse than I originally imagined. Jeff Jarvis points out some of the problems with the new rules here, but let me go into how they will affect gun bloggers specifically, since more than a few of us have gotten free stuff from companies, and not always because we were bloggers, or because we were given something with an expectation we’d write about it.  But it turns out that largely doesn’t matter.

As Sigivald initially thought, most of the reports indicate that only bloggers who are paid by companies or marketing agents are at risk of prosecution by the FTC. However, the FTC is clear that payment need not be in the form of cash, and even merely providing a review copy of a product itself may be considered compensation. But, just to keep things interesting, review copies may not always be compensation. The bureaucrats admit to being intentionally vague because they may or may not consider the value of the product as evidence against bloggers in the decision to prosecute.

For example, a blogger could receive merchandise from a marketer with a request to review it, but with no compensation paid other than the value of the product itself. In this situation, whether or not any positive statement the blogger posts would be deemed an “endorsement” within the meaning of the Guides would depend on, among other things, the value of that product, and on whether the blogger routinely receives such requests.

Confused yet? Well, that depends on how often you get offers to review. There’s no minimum standard for which you must begin reporting such “compensation.” And the mere presence of “offers” may possibly be enough to trigger an investigation even if you turn most review offers down. If that’s not bad enough, there’s liability on the part of companies who choose to work with blogs as well.

Marketers or sponsors would be obliged to monitor all the content of the blogs they have ever worked with. If a blogger gets a key fact or claim about the product wrong, marketer or sponsor would be liable.

The Commission recognizes that because the advertiser does not disseminate the endorsements made using these new consumer-generated media, it does not have complete control over the contents of those statements. Nonetheless, if the advertiser initiated the process that led to these endorsements being made – e.g., by providing products to well-known bloggers or to endorsers enrolled in word of mouth marketing programs – it potentially is liable for misleading statements made by those consumers.

Imposing liability in these circumstances hinges on the determination that the advertiser chose to sponsor the consumer-generated content such that it has established an endorser-sponsor relationship. It is foreseeable that an endorser may exaggerate the benefits of a free product or fail to disclose a material relationship where one exists. In employing this means of marketing, the advertiser has assumed the risk that an endorser may fail to disclose a material connection or misrepresent a product, and the potential liability that accompanies that risk. The Commission, however, in the exercise of its prosecutorial discretion, would consider the advertiser’s efforts to advise these endorsers of their responsibilities and to monitor their online behavior in determining what action, if any, would be warranted.

Bloggers and sponsors could all be facing potential fines of up to 11,000 for a failure to disclose. The practical impact is that a wise lawyer would advise companies to avoid pitching anything to bloggers unless a blogger can bring a profit greater than $11,000 to the company. Very few of us are capable of doing that.

And the liability does not just exist for mistakes in product claims, but also for disclosure itself. If S&W wants to give Caleb another hat after December 1, and he posts about it or any S&W product again in a way that may be interpreted in perceived as positive, they are liable if he forgets to add a note that they are compensating him in some way. It doesn’t matter if they didn’t even email him about that specific product, it’s a potential violation. It’s worth noting that traditional media won’t have to live up to the same standards as blogs:

The Commission acknowledges that bloggers may be subject to different disclosure requirements than reviewers in traditional media. In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e., where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages. Accordingly, such reviews are not “endorsements” within the meaning of the Guides. Under these circumstances, the Commission believes, knowing whether the media entity that published the review paid for the item in question would not affect the weight consumers give to the reviewer’s statements. Of course, this view could be different if the reviewer were receiving a benefit directly from the manufacturer (or its agent). In contrast, if a blogger’s statement on his personal blog or elsewhere (e.g., the site of an online retailer of electronic products) qualifies as an “endorsement” – i.e., as a sponsored message – due to the blogger’s relationship with the advertiser or the value of the merchandise he has received and has been asked to review by that advertiser, knowing these facts might affect the weight consumers give to his review.

The free speech implications of this are serious. but I think there’s even some free press implications. Why should bloggers not enjoy the same rights the regular media does? Does it matter that my press is Apache and PHP, rather than some huge, expensive offset printer? I don’t think so.

Because the rules are not clear, a blogger or marketer can have no idea whether his writing about a particular product will trigger an investigation, or worse, bring about civil penalties. The safe move will be for bloggers to not mention products or companies in a positive light, and for advertisers to stay away from blogs altogether. This will have a chilling effect on speech and free expression, so it’s difficult for me to believe that the FTC’s new guidelines are not a violation of the First Amendment. Hopefully the courts will agree.

19 Responses to “New FTC Rules Will Have Serious Impact on Blogs”

  1. Caleb says:

    You know, there are layers and layers of this that I didn’t think about.

    Say for example the Gunsite Pro Shop gave me a free magazine carrier made by Blade-Tech. Because the Gunsite pro shop gave me the mag carrier for free, does that mean that the next time I write about a BladeTech anything I have to mention that I got one for free?

    Man, I’d like to stick it to the man here, but I also don’t have eleven large sitting around to defend myself from the predations of a stupid government.

  2. mariner says:

    I’m sure the courts will agree.

    Just like they agreed about “Campaign Finance Reform”.

  3. DirtCrashr says:

    Nobody gives me anything about which to produce written materials or endorsements. I get nothing from my blogging but an elevated sense of self and a bunch of invisible friends. ;-)
    However somebody does want to buy an old blog post and put it on their website – how’s that gonna work? It’s not a quid-pro-quo, it’s apriori work that became valued after the fact. They’re riding coattails, not me. Stuff it FTC.

  4. Sebastian says:

    I think I saw you take some free swag at GBR; Better not write anything good about it, or the man will stick it to you :)

  5. Steve says:

    Regulation on the internet rarely works …

    Are print journalists also under such rules?

    If a gun blogger gets sent a gun, with ammo, for review. Does he have to then consider the “free” ammunition he used as a gift or payment? What about the use of a the gun? That would cost money if rented.

  6. Linoge says:

    Hm. I wonder how that works for invisible affiliate links, like Amazon has… Do you have to declare sponsorship from Amazon, from the product you are linking to, or both? :)

  7. comatus says:

    Linoge, did you have anyone specific in mind? Heh.

  8. Nathaniel says:

    This is going to get thrown out the first time someone with balls stands up to the feds following an attempt to enforce this ridiculous nonsense.

  9. Steve says:

    heh heh, I did not click the link but saw that post later on another site :)

    The more I read about this the more I am pissed off.

  10. wolfwalker says:

    Um, folks, there ain’t nothing really new here. In essence, the new regulations say “we can’t write a simple rule that covers all cases, so we’re making this a subjective judgement call by the individual case and investigator.” If you get a friendly investigator, you’re fine. If you get an investigator who needs to make quota, or doesn’t like your blog or your attitude, or is just mad at the world that day, you’re screwed.

    Which is pretty much the way it is with most federal regulations.

    It is, however, somewhat painfully ironic, at least for me. For years I’ve advocated a middle road between the “no rules” anarchist-libertarians and the “have a rule for everything” nanny-staters. One of my main objections to the nanny-state mind-set is that it tries to put everything in writing and leave no gray areas. Then you get things like “three-strike” laws that jail a guy for life because he stole a pretzel from a street vendor. This rule looks to me like somebody’s conscious attempt to leave a BIG gray area … and I still don’t like it because of the obvious room for abuse. What’s an honest middle-roader to do?

  11. glnts says:

    Legit media has had to abide by rules like this for years so you shouldn’t be surprised that it is hitting the bloggers now. A lot of the MSM (big time media) can’t accept/won’t acceipt freebies because of the compromising position it puts them into.

    If you want to function like the MSM, then you need to stop taking freebies and pay for whatever it is you use/review/whatever.

    • Bitter says:

      Hate to tell you glnts, but the media does accept freebies. Books publish review copies all the time to be sent to newspapers and other outlets that review books. Movies are screened for critics, outdoor writers are invited to try guns or visit new preserves, and FTC acknowledged this. They might not take direct compensation, but that’s not what this rule is about. The FTC even says that a review copy of a product is considered sponsorship for new media, but not for old. This hampers bloggers who are trying to actually report as well as bloggers who really just want to have a conversation with friends.

  12. Richard says:

    What about other “new media,” such as podcasts? For example, if Michael Bane talks about a new Ruger gun that was sent to him for evaluation…do the new rules apply?

    First Amendment protections for the media should apply to -all- media. A one man operation printing leaflets or running a blog should be protected the same as a large organization like the NY Times or CBS.

    • Bitter says:

      I didn’t see any formal examples of podcasts, but they did cite other new media sources such as forums. So I do believe there is a reasonable assumption that it applies to everything in new media. Though your example of Michael Bane may fall into a media exemption since he could reasonably argue that it’s an extension of his television show. Though to be honest, I’m not sure on that. It would seem the FTC considers that you as a blogger or even forum participant, you should know all of the FTC case law and rules on advertising and sponsored speech.

  13. Kristopher says:

    Wolfwalker: Nope.

    Dead-tree media folks have a right to publish anything in text they want ( short of libel or criminal conspiracy ), and not disclose any damned thing.

    This is a first amendment infringement, pure and simple.

  14. Diomed says:

    So is the FTC going to be hiring a few hundred recent college grads to do nothing but troll the internets looking for violations, or will they just rely on snitches?

  15. james says:

    Definitely one of the better posts I’ve read in a while. Thanks!

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