OCTOBER 6, 2009
U.S. Seeks to Restrict Gift Giving to Bloggers
By AMY SCHATZ and MIGUEL BUSTILLO
WSJ
WASHINGTON -- The government wants to make it a little harder for bloggers to shill products online for fun and profit. New guidelines released by the Federal Trade Commission say bloggers must disclose any money or freebies they receive in exchange for writing product reviews, a fast-growing and loosely regulated way for companies to market everything from diapers to movies. The move is an effort to apply the same rules that already cover broadcast stations, newspapers and magazines to the Wild West marketplace of the World Wide Web. Separately, the FTC also updated its guidelines for celebrity endorsements, saying that celebrities must "disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media." It also eliminated one loophole used in many diet and fitness ads, which allowed marketers to tout massive weight loss by some subjects as long as they included the disclaimer that the "results not typical." In the future, the FTC said, those testimonial ads will also have to include some information about what the typical weight loss might be.
The question of how and whether bloggers should divulge their relationships with companies has been hotly debated in recent months. It is a particularly controversial issue online, where the traditional division between editorial and advertising found in newspapers and magazines is harder to maintain. As blogging has grown, more users are opining on topics ranging from their jobs to their dinner on social-networking and other Web sites. Big companies are increasingly using these forums to build buzz, sending bloggers products to review or even helping them host parties to encourage others to try their wares.
The new FTC guidelines represent the latest in a series of efforts by the government to respond to the needs of consumers who increasingly spend time online. Congress is mulling new legislation to regulate targeted advertising online. Meanwhile, the Federal Communications Commission is looking at how to adapt its children's TV rules to cover online videos.
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Some First Amendment advocates worry that the guidelines could represent a restriction of free speech. They point out that, while the FTC has long regulated advertising claims in traditional media, the agency generally has allowed publications to police themselves when it comes to editorial content. For instance, newspapers generally prohibit reporters from accepting gifts from a company they write about to protect their credibility with readers.. The new guidelines are a response to complaints about bloggers writing positive reviews of freebies they have received from corporations, including Wal-Mart Stores Inc., Ford Motor Co. and Microsoft Corp., which came under scrutiny a few years ago for giving away free laptops to potential reviewers. Bloggers and others who are paid or give freebies to promote products online will be required to offer some sort of written disclosure for readers, the FTC said, or face possible fines of as much as $11,000 per violation. The guidelines reaffirm that making false and misleading claims about products in print, broadcast or on the Internet violate federal laws. They also clarify that advertisers and publishers can be held liable if a sponsored blogger makes false or misleading statements about a product.
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The FTC regulations target such bloggers as Christine Young of California, who parlayed a personal Web site detailing her experiences home-schooling her six children into a significant commercial enterprise. She is one of the Elevenmoms, a cadre of bloggers organized by Wal-Mart Stores Inc., which receives free merchandise from the retailer's suppliers, and has been flown to special events by Frito Lay, Johnson & Johnson and other companies. Ms. Young said she has toughened her standards and discloses the relationship when she writes about the items. "The brands and companies directly working with bloggers need to be held accountable," she said. "While some companies may choose not to work with us now, I would much rather work with companies that wanted us to be open in the first place."
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Enforcing the guidelines could be difficult, because the agency has limited authority and staff. With a broad mission to protect consumers from deceptive trade and anti-competitive business practices, the FTC investigations generally originate with consumer complaints.
http://online.wsj.com/article/SB125475547130664753.html (Subscription)
Printed in The Wall Street Journal, page A1
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