Keeping Bloggers Honest

The latest news that has sent the online community abuzz is the decision by the US Federal Trade Commission to regulate bloggers starting December 1, this year.

It’s nothing to do with censoring content, so it’s not a free speech issue. Rather, it’s a new rule requiring bloggers to disclose either cash or freebies that they receive for product reviews.

In its new guidelines, the FTC provided an example of a college student with a popular gaming blog who receives a free copy of the latest game, and posts a positive review. Under the new rules, the student would have to inform his readers that he received the game for free and the game-maker also has an obligation to inform him that he has to disclose the freebie.

The new FTC rules are part of revisions to the agency's Guides Concerning the Use of Endorsements and Testimonials in Advertising. The last time these rules were updated was in 1980, before the advent of the Internet (much less, blogging).

“The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement,” according to the FTC. “Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.”

Although bloggers are mentioned several times in the FTC’s 81-page guideline (for PDF version of the text, go to http://tr.my/8xp), there are no specific requirements with regard to how the disclosure should be made.

“That's left up to the endorser,” says Richard Cleland, assistant director of the FTC's division of advertising practices. “It can be a banner, part of the review. The only requirement is that it be clear and conspicuous.”

There are also no penalties directly associated with violating the rules. However, if a blogger regularly violates them and there are complaints filed, the FTC could issue a cease-and-desist order. If that is violated, the blogger could technically be charged US$11,000 for each violation.

While such a fine might seem excessive or even draconian, a couple of things need to be noted.

Firstly, these new rulings would at most affect a very tiny percentage of bloggers because very few bloggers are prominent enough to get cash or freebies from companies. Look at your blogroll or bookmarks of favourite bloggers. How many of them are sponsored by companies? I’m not talking about advertisements but actual cash or free products.

Secondly, the FTC has made it clear that it will focus its enforcement initiatives on advertisers not bloggers. “In terms of bloggers, we're primarily focused on education,” Cleland says. “There are hundreds of thousands of bloggers out there. It's just not practical to deal with them on a case-by-case basis."

If the FTC receives multiple complaints against a specific blog, it's not likely to go against it. And even then, they will look at the context of the situation before taking any action. “If we receive complaints, we'll look at how serious the representations are,” Cleland says. “Are there other possible violations? What kind of blog is it? We might be more concerned about a blogger who was writing a review of a medical device that’s used for a serious disease than we would be about someone who's writing a restaurant review.”

It’s worth mentioning that the rules do not apply just to bloggers but extends to forums or message boards and social media outlets like Twitter and Facebook. “We were looking and seeing the significance of social media marketing in the 21st century and we thought it was time to explain the principles of transparency and truth in advertising and apply them to social media marketing,” says Cleland.

Is this a good move? It is, for two key reasons. Firstly, it’s an acknowledgement that online platforms and social media have come of age. They are today as popular and influential as mainstream media, if not more so (in some cases).

Secondly, I don’t see how increased transparency can be a bad thing. If I’m reading a blogger’s review of a product, I would like to know if he or she was paid for it or was given a free unit of the device or copy of the software. It keeps the blogger honest and accountable.

Will our MCMC do the same thing?

Oon Yeoh is editor of New Media at The Edge. He invites you to follow him at www.twitter.com/oonyeoh.