Paid Reviews Subject to Fines Under New FTC Rule

The recently announced changes to the Federal Trade Commission’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising” are prompting ecommerce merchants to take a closer look at how they advertise and interact with bloggers and reviewers.

The changes address endorsements by bloggers and others who accept payment to review a product. Those material connections (financial payments or free products) must be disclosed to the consumer. Otherwise, both parties-the advertiser and the blogger-can face fines of up to $11,000. (In recent days the FTC has sought to calm advertisers and bloggers by saying there would be no monetary penalty, even in a worst case, for an initial violation of the act.)

Even so, online merchants should take steps to protect themselves. Towards that end, I spoke with Julie O’Neill, with the Washington D.C. office of the law firm Morrison & Foerster and a former staff attorney for the FTC in the New York regional office. Here are some guidelines from O’Neill pertaining to your business relationship with bloggers and reviewers.

Guidelines from Merchants to Bloggers and Reviewers

1. Get Something in Writing

   Have a written agreement (even in email) with bloggers you have a material connection to. The agreement should specify that the blogger will disclose your arrangement to the consumer, that you will be notified of where their review is (blog, website, Facebook, Twitter), and that the blogger will remedy any erroneous claims made in the review.

2. Review Blogs

   Since the FTC will be watching, you should watch too. Make it a habit of reading through posts that are made about your company or product. Outrageous or misleading claims can get you into trouble, even though you personally did not make them.

3. Find Middle Ground

   Some bloggers may be reluctant to allow you to critique their work. A written agreement could be seen as a way of stifling their creativity or censoring their posts. But keep in mind it’s in their best interests. Under the new guidelines you’re both on the hook. If a violation occurs, advertiser and blogger can be held liable.

A Final Thought

Blogging has grown in popularity, in part, because readers enjoy getting a personal account of a product or service in a manner which is seen to be less tainted than traditional media and advertising. Encourage bloggers you work with to talk about their personal experiences rather than overly broad claims. In that way, you can preserve the quality of the content without getting your business in legal trouble.