Make Money Online: FTC’s New Rules of Disclosure

ftcThe American Federal Trade Commission (FTC) made an official statement on Monday, that starting on December 1, 2009, all bloggers and prominent tweeters have to disclose any paid endorsements to their readers.

An endorsement means ANY advertising message, including reviews, statements, demos, signature or any other elements that consumers could potentially believe that reflect the opinions, beliefs, findings or experiences of a party other than the sponsoring advertiser. On blogs endorsements usually appear as images, video, reviews, links, giveaways, etc.

Note that a consumer who purchases a product with his or her own money and praises it on a blog will not be deemed to be providing an endorsement. However, a blogger who is paid to write about a product, by an advertiser or a third party, is covered by the Guides. So if you are a blogger who receives any type of compensation for reviewing a product/service/web site and writing a blog post about it, the FTC rules apply to you, regardless of your geographic location and nationality – expect that all countries will soon release similar rules.

Any form of compensation is regarded as payment (money, merchandise, coupons, freebies, etc.) and any form of compensation should be disclosed. While the FTC does not require bloggers to post the exact amount of money received by a blogger to endorse a product, the commission expects bloggers to clearly and conspicuously disclose their relationship with the advertiser and what they have received to endorse a product. These rules affect mommy bloggers and tech bloggers who are given products because their core readership represents a key demographic group targeted by the advertisers.

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.

According to CNN Money, since the FTC won’t be hiring new personnel to monitor blogs, the commission is more likely to go after advertisers. However, my advice to bloggers who have any type of endorsements on their sites is to comply with the guides. As they say: better safe than sorry.

If you want to read the FTC document in full, you find it here (.pdf).

What is your opinion about paid posts? Are they ethical, and more importantly, were rules and regulations by a higher authority necessary?

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  • http://lovemikeg.com mgirouard

    Personally, I’m a big fan of this. For anyone who is information addicted (such as myself), the quality of that information is important. All of my sources I trust to some degree. If they make a recommendation, I’ll believe it. The moment that paid endorsements come into play, my trust for them is compromised.

    Now, with that said, I still believe that paid endorsements have a place on the web. When the author of the post or tweet (or whatever content) fully discloses his or her relationship with the information, I appreciate it. In fact, I’d go so far to say that it reinforces my trust with them.

    I mentioned this in one of my blogs yesterday after reading another article (linked in my post). Whats interesting about this whole thing is that the FTC seems to be pushing this harder on web-based content but traditional media doesn’t really seem to be getting any more attention. I’m certainly no expert on this matter, but find this to be really concerning.

  • http://halbrooktech.com mhalbrook

    How does this affect affiliate links I wonder? If i use something, and I like it and plan to refer people to them, I always check for affiliate programs, because I posted about a deal I got onetime on a forum, and had I used an affiliate link, the people who also took advantage of the deal would have paid for my purchase and then some :)

  • Ketira

    mhalbrook: that’s a good question! Maybe they’ll turn it into another article, or a follow up to this one? (I am thinking of doing that for my website when I get it going – just to bring in some $ –and maybe items on my Amazon Wish List.

  • http://www.brianswebdesign.com skunkbad

    It might clean up a lot of trash on the internet, but I think the big motivator of anything the US government does is their greed. I have a hard time believing they do it for me and you. If they create a program or a new law, guess who gets to fund it? When they collect fines, will they pay us back? Not likely.

  • http://www.mikehealy.com.au cranial-bore

    So if you are a blogger who receives any type of compensation for reviewing a product/service/web site and writing a blog post about it, the FTC rules apply to you, regardless of your geographic location and nationality – expect that all countries will soon release similar rules.

    What? The F in FTC stands for Federal, not Global. I can’t see how a US Government department has authority over the rest of the world. If other countries do introduce similar legislation that would be another matter.

  • http://www.optimalworks.net/ Craig Buckler

    It sounds interesting and is a good idea but, realistically, how can it be enforced? Are the US Government going to verify every blog post? What if the content is hosted outside the US? What legal rules will be applied to cases? I’ll be amazed if anyone is ever prosecuted.

  • http://www.atulthanvi.com atsa

    I really want to know is this a global declaration or just for US ?

    Please if anybody can help in answering this question.

    Thanks in Advance

  • http://www.ewriting.pamil-visions.com/ Mihaela Lica

    Thank you for all your comments. Let me reply to some of the questions:

    @cranial-bore; @atsa FTC’s rules obviously apply only for bloggers in the countries where FTC has jurisdiction. Although they cannot enforce these rules globally, we can expect other countries to follow lead and implement similar regulations. The smart thing to do, for bloggers anywhere in the world, is to comply with these rules and to disclose their relationships with advertisers. After all, why not? Not disclosing such affiliations means only deceiving the readers.

    @Craig – I don’t think they will verify each blog post – they don’t have enough staff to do it. I suppose they will monitor advertisers and go to bloggers based on campaigns. Maybe they will also have a “report paid post” kind of link, pretty much like Google with “report paid links.” As far as people being prosecuted, we will soon hear about such cases. After all, advertising is a money-making business.

    @mhalbrook – affiliate links like Amazon don’t fall under the Guides. Anything you buy with your own money and then endorse is not considered a “paid endorsement” so if you want to make money by reviewing Amazon products, you are good to go. :)

  • hairybob

    ludicrous!

  • Anonymous

    @mhalbrook – affiliate links like Amazon don’t fall under the Guides. Anything you buy with your own money and then endorse is not considered a “paid endorsement” so if you want to make money by reviewing Amazon products, you are good to go. :)

    But many (if not most) affiliates do not try the product or service… they just make a “review” out of the provider description…
    And how the FTC or similar organisation will know that a product reviewed was under an advertising agreement?
    See the traditional media, like a tech magazine. A company sents a graphic card for review, should this be considered “paid endorsement”? Silly… Same on the music industry, a label sends thousands of promo cds to magazines, should the reviews fall under “paid endorsement”… silly again… :)

    Antonis @ 01-Global.NET
    Thank you

  • http://www.ewriting.pamil-visions.com/ Mihaela Lica

    @Antonis – I hear you, but the guides are pretty clear concerning all these issues. :)

    Besides, I think it is sillier not to disclose sponsorships, in any form. After all, what do we have to hide? And who are we trying to fool? The audience is smart enough to “read between the lines.” Personally I couldn’t care about the FTC less: I am in Germany. However, I believe in transparency and disclosure.

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  • kempozone

    Im sure many of you are like me and one of the first things you do in the morning is head here and check out the new post. Along with seeing the new posts, I’m also always checking out the blog roll rss feed and watching them grow, or shrink sometimes. In one of my past …but all in all excellent site. Keep it up!

  • Donnieboy

    Just wanted to drop you a line to say, I enjoy reading your site. I thought about starting a blog myself but don’t have the time.
    Oh well maybe one day…. :)

  • David