New FTC Disclosure Rules May Impact Your Social Media Activity

in Social Media Marketing

The United States Federal Trade Commission (FTC) on October 5, 2009 published new Guidelines Concerning The Use of Endorsements and Testimonials in Advertising, which will become effective December 1, 2009. The new Guidelines reference is 16 C.F.R. part 255 and available for download on the FTC website.

This action by the FTC was prompted by consumer complaints about the lack of disclosure related to websites, blogs and other social media content that pose as product/service reviews and ratings, but are actually paid endorsements. Consumers have no way of knowing whether bloggers or social media authors received endorsement or corporate payments for writing about various products or services such as nutritional supplements, exercise equipment, diet programs, financial services, Internet service providers, etc.

Although the rules in the new Guidelines aren’t really new, what is new is that the same truth in advertising rules that previously applied to TV, magazines and other advertising media, now equally applies to social media sources and consumer generated content. This means that bloggers and other social media content generators must adhere to the same professional standards as other businesses regulated by the FTC regarding endorsements or reviews for which they receive any exchange of value or quid pro quo consideration.

What this means is anyone who receives any type of exchange of value, including free products or services, whether solicited or not, must disclose the endorsement and/or material connections as part of the blog, article or content. This applies regardless of whether the endorsement is negative of positive. If you are receiving any consideration in any form for writing a product/service endorsement or review, you must disclose it in the endorsement or review.

Another aspect is that you must be a bona fide user of the product/service to review or endorse it. Being paid to write a review about a book you didn’t read or a product you’ve never used is considered deceptive and not allowed. However, you can still write a review for a product you own and don’t need to make a disclosure as long as there no exchange of value or endorsement for doing so.

Violators of these new disclosure Guidelines face penalties of up to $11,000 per violation.

How to use this information to benefit your business

  • If you or your business receives any exchange of value, whether monetary or otherwise, for endorsing or reviewing a product or service on a website, blog or other social media property, you must provide disclosure of such consideration according to these new Guidelines.
  • If these new Guidelines apply to you in any manner, thoroughly review the Guidelines for applicability to your situation and seek legal and/or professional assistance if needed.
  • These new Guidelines are effective December 1, 2009 – ensure that you have revised policies and procedures in place to be in compliance.

Disclaimer: This article is just my brief interpretation and communication to make you aware of the FTC 16 C.F.R. part 255 Guidelines (81 page document) and should not be construed as legal or other guidance on dealing with these new Guidelines. The Guidelines are published on the FTC website and should be thoroughly reviewed to determine applicability for your or your business social media and/or blog activity. Please seek legal and/or professional assistance if you have any questions or concerns about these Guidelines.
Copyright © 2009 Ingistics LLC and Marketance™ www.marketance.com

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{ 3 comments… read them below or add one }

Mike January 6, 2010 at 08:55

Chip Cooper at DigiContracts.com posted “How to Write an FTC Guides Disclosure Policy” article with guidelines about how to write a Disclosure relevant to your situation to comply with the FTC Guides Disclosure Policy.
Disclosure: this website is an affiliate of DigiContracts.com and may be paid commissions for sales referred by this website.

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Mike October 27, 2009 at 07:54

Chip Cooper at DigiContracts.com posted “CliffsNotes For Bloggers To Avoid The FTC’s $11,00 Fine For Endorsements” article with guidelines about these rules.
Disclosure: this website is an affiliate of DigiContracts.com and may be paid commissions for sales referred by this website.

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Mike October 16, 2009 at 12:56

Update: Interactive Advertising Bureau says FTC blogging rules are unconstitutional – see article at Mediapost.com

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