US FTC tells bloggers to disclose payments, freebies for reviews

Some bloggers may soon have some fessing up to do.

The U.S. Federal Trade Commission (FTC) today released new guidelines requiring all bloggers to disclose any payments or freebies they get from companies in exchange for writing reviews of their products.

The new rules come as part of an update to the FTC's guidelines on keeping advertisements and testimonial ads in line with the FTC Act, which was set up to prevent unfair competition methods, as well as deceptive acts that would affect commerce. The FTC noted that this is the first update to guidance for advertisers since 1980.

Given that time span, this also is the first time the FTC's guidelines have specified rules for bloggers.

"Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect," the FTC said in a statement. "The revised Guides also add new examples to illustrate the long standing principle that 'material connections' (sometimes payments or free products) between advertisers and endorsers -- connections that consumers would not expect -- must be disclosed.

"These examples address what constitutes an endorsement when the message is conveyed by bloggers or other 'word-of-mouth' marketers," the FTC said. "...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. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service....

Dan Olds, an analyst with The Gabriel Consulting Group, said this new rule easily could affect a lot of bloggers.

"While there are a lot of tech bloggers who will be impacted by this, there are lots of sites and bloggers reviewing things like kitchen mixers, power tools, and exercise equipment who will also be effected," said Olds. "This new policy could have big impact on the bloggers and review sites that post glowing reviews without disclosing that they have been paid to have that opinion or have received free products in exchange for their praise."

Olds went on to say that the FTC requirement is a good move. "I think that forcing them to disclose in their reviews the compensation they received for that review is important and will provide greater consumer protection."

If the new rule is followed, Olds said, readers will be able to more accurately gauge the credibility of the reviewers and bloggers they follow. He also noted that this could lead to some very red-faced bloggers if they have to come clean about payments or gifts that they may have kept quiet about for years.

"We might need to see some people prosecuted and embarrassed before it's taken seriously," he said. "It's very difficult to know just how common this is because compensation can take several forms. It's not so rare for a so-called reviewer to receive a steady stream of free products in tacit exchange for positive reviews, or for a company to buy advertising on the reviewer's site in exchange for good buzz on their gear."

The rule was approved by the FTC in 4-0 vote.

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