FTC to Bloggers: Disclose Payments for Reviews

The FTC issued rules for bloggers and celebrity endorsers.

The Federal Trade Commission announced plans to require bloggers and celebrity endorsers, an interesting mix if there ever was one, to disclose what the FTC refers to as “material connections” (which could be direct payments or some free products).  The revised FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising specifically state that “the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement” therefore covered by this rule.  (Another revision requires companies to disclose whether the findings of a research organization that conducted sponsored research are mentioned in an advertisement, the advertisement must disclose the connection between the two entities but this is fodder for another day and another column.)

If bloggers want to be taken seriously, they can’t cross certain lines.  These lines include accepting fees or gifts in exchange for positive “ink.”  Part of my job as an industry analyst involves authoring reviews of various technologies and I also write product reviews from time to time for several print publications.  Most of the products I test come “on memo,” which means they go back after they are reviewed.  Occasionally, the manufacturer will offer the opportunity to purchase the item at a price that could best be described as low retail (no hidden discounts here).  And for very inexpensive items, some manufacturers don’t want to even pay the cost of shipping the item back so I get to keep a few things now and then.

On the other hand, I sometimes review items that I am paying full price for (Verizon FiOS is a recent example).

Regardless of the situation, behind-the-scenes financial arrangements are simply not acceptable if the writer (blogger) is representing himself to be unbiased.  A Wall Street Journal article from April of this year references “Blogger Jessica Gottlieb of Los Angeles” who writes that she “would only write about their products in return for cash” (as the article put it).  Gottlieb (quite inexplicably and implausibly) believes that her opinions are “unbiased” despite the crystal clear failure of the wall between editorial independence and advertising dollars (sometimes referred to as “church and state”).  Ironically, Gottlieb does get one thing right in her site’s disclaimer: “This blog… should not be considered factual.”

Blogger Colleen Padilla, covered in a July 2009 New York Times article, is doing her readers a disservice if she does not run “bad” reviews, as she told the reporter.  If she tests as many products as the article indicates, she would be in an excellent position to provide authoritative feedback on what doesn’t work and what does in fact need improvement.  Apparently, she does neither.  And that’s a real shame.

On the other hand, Melanie Notkin (mentioned in the same New York Times article), is deceiving herself and her readers.  “[Cable network] TNT never told me and will never tell me what to say,” Ms. Notkin stressed.  The fact is, however, that TNT is telling her to say “something” and that is significant enough in my view to create a clear conflict of interest.  While labeling her posts with “[sp]” may, in her mind, absolve her of this, I would wager that few people reading her posts equate “sp” with a sponsored message.

I do think that Katja Presnal, quoted in the same New York Times piece is on the right track, providing candid reviews and opinions to her readers.  Those who follow this path will be the ones whom readers can trust and seek out for more than just a puff piece.

Finally, keep this in mind: bloggers aren’t in this by themselves.  Companies are (apparently) paying them for reviews.  As far as I am concerned, companies that do this should rethink why they believe they need to pay cash for good reviews in the first place and perhaps use that money to improve their products.

For further details, consult the FTC News Release.

Jonathan B. Spira is CEO and Chief Analyst at Basex.

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