What You Don’t Know About The New FTC Rules On Disclosure

On Monday the FTC handed down some new rules that left most of the blogosphere very confused. And reading the actual FTC document does not help too much. I called an emergency Town Hall meeting on Tinychat and got some awesome people to show up. Shawn Collins, Mike Streko, Loren Feldman and even John Chow showed up within a moments notice to discuss this topic. We also took questions from the chat room where we had about 150 people in and out.

It was a great discussion and I loved the format. Its something we are going to pursue in the future.

Ok so lets dive into this.

Paid Endorsements on blogs

This is the one everyone is running with. Forbes.com does the best job on this because they actually have a semi interview with some agents from the FTC asking them to go into more detail.

The gist of it is if your compensated in any way need to disclose that relationship.

Did you get a free product to review? Then you need to disclose that the company sent you a free product.

Did you get paid to post something positive about X then you need to disclose that you did.

The FTC also says they are going after employees of companies. From the forbes article:

The FTC also plans to crack down on company employees posing as citizen bloggers, a practice known as “astroturf marketing” because of its fake grassroots style.

Its nice to see some company men immediately following this new rule ;). (by the way I work for shoemoney media)

While I am pretty sure Google will use this as a new weapon for combating paid links, the document in no way addresses paid links.

My questions:

I am curious where we stop? Lemme give you a few scenarios:

1) I do a paid $5000 paid post from Google about AdSense
2) I do a paid post from Google where I get paid $100 per new user I get to sign up for AdSense.

Those 2 posts could be written completely different. Maybe disclosing the exact amounts paid is where we are headed?

Again for instance if a certain Google employee making 100k/yr is blogging about his company on his personal blog thats one thing.

But if that same Google employee has stock worth hundreds of millions of dollars then perhaps that should be disclosed since he can single handily move the stock price up or down, do you think he is every going to blog negatively about his company

Where is this going? How in the world are they going to enforce this? I am guessing we will not see 1 case come from this.

Accuracy of statement of earnings

Now here is the part nobody is reporting on but I feel will have the most impact. If you are going to report earnings they now have to be accurate. This also goes for any sort of “results”. Obviously this is totally targeted at the fake news and blog websites. I think we will see heavy enforcement in these areas from these new rules.

From the actual document:

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. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor.

My thoughts:

In the last 48 hours I have been contacted by agents inquiring about fake blog and news sites. They are coming for these guys.

But lets be honest. $10,000.00 is nothing to one of these fake blog/news sites that are making that a day. But as it was pointed out in our town hall meeting it could be per instance and instance could be counted as per visitor.

Either way they are going to make an example out of these fake sites VERY soon and thats going to be interesting to see.