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10/5/2009
02:09 PM
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FTC Rules Require Bloggers To Disclose Payments

Bloggers who accept payment for posts must now disclose their relationship with sponsors.

The Federal Trade Commission on Monday announced revised advertising rules to clarify that bloggers are covered by the agency's requirement that publishers disclose "material connections" to advertisers, such as endorsements made in exchange for payment or other consideration.

Fines for failing to disclose such connections can reach $11,000.

"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," the FTC said in a statement. "Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service."

The case of "a consumer who purchases a product with his or her own money and praises it on a personal blog or on an electronic message board" does not represent a commercial endorsement in the eyes of the FTC.

However, a blogger paid to post about advertiser's product is covered by the rules, whether payment comes directly from the marketer or from a third-party acting on behalf of the marketer.

There are a handful of online sites designed to help bloggers connect with sponsors, including PayPerPost.com, ReviewMe.com, and Blogsvertise.com, to name a few. Some of sponsored posts coordinated by these sites include notices that they're paid advertisements and some do not.

The FTC said that it had made several additional changes to its Guides Concerning the Use of Endorsements and Testimonials in Advertising, which govern endorsements made by individuals and organizations.

The Guides were last updated in 1980, about 15 years before the Internet and online advertising took off.

The revised rules remove a "safe harbor" that allowed advertisers to present consumer testimonials featuring atypical product functionality or results if accompanied by a disclaimer. The revised rules require advertisers to disclose typical results of product use.

The updated rules also clarify that both advertisers and endorsers -- celebrities in particular -- may be held liable for making false of unsubstantiated claims in an endorsement or for failing to disclose material connections.

Anil Dash, chief evangelist for blogging software company Six Apart, said that he was still reviewing the revised rules and that it was too early to tell whether the rules would change the way people blog.

"In a broad sense, anything that encourages transparency and disclosure is great," he said.

Dash said that hidden commercial influence on bloggers isn't a very broad concern yet, but noted that it's more of an issue in certain online communities. "Some blogs in the parenting space have a lot of contention about this," he said.

He said that many of the commercial speech controversies in the blogosphere have really been about other issues and that claims of hidden influence may serve mainly as a tactic to undermine the credibility of opposing viewpoints.

Whether the FTC will be able to effectively police millions of online posts and comments remains to be seen. The FTC's published discussion of its rules indicates that the agency will rely mainly on self-regulation, with enforcement action only in the most egregious cases, much as it does in dealing with online fraud.


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