Make Money Online: FTC’s New Rules of Disclosure

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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?

Mihaela LicaMihaela Lica
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