Publishers Lunch on FTC

Publisher's Lunch on the new FTC regulations.



Today's Meal

FTC Requires Bloggers, Posters, and the Companies Who Woo Them to Disclose Free Review Copies

The Federal Trade Commission officially revised its "guides" which govern endorsements and testimonials, aimed squarely at the universe of online and word-of-mouth recommendations. The new rules have all the clarity you would expect from an 81-page government document, and in many instances they are either opaque, noxious or just ridiculous (the FTC wants disclosure within tweets as well).

The main point of essence for book publishers, and book bloggers and online reviewers, is the determination that "bloggers may be subject to different disclosure requirements than reviewers in traditional media." They judge that "a blogger's statement on his personal blog or elsewhere (e.g., the site of an online retailer of electronic products) qualifies as an 'endorsement,' -- i.e., as a sponsored message -- due to...the value of the merchandise he has received and has been asked to review by that advertiser," and that such a connection must be disclosed.

In other words, bloggers--as well as "reviewers" posting to sites like Amazon and LibraryThing, or receiving books through programs ranging from Bzz Agent to Nelson's 10,000-blogger initiative--who are writing about a book after receiving a free reviewer's copy are expected to disclose that information. And publishers who "sponsor these endorsers (either by providing free products - directly or through a middleman - or otherwise) in order to generate positive word of mouth and spur sales should establish procedures to advise endorsers that they should make the necessary disclosures and to monitor the conduct of those endorsers."

As the FTC admits, its "guides" are "interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act" rather than binding law, and the burden of proof is on the Commission--but they have the ability to seek fines of up to $11,000 per violation. Monitoring the internet and enforcing the new guides will also be difficult to say the least, given the agency's staff and size of the universe they wish to regulate. As Wired writes, "the new rules are confusing, ambiguous and likely unenforceable in the real world."

The FTC's Richard Cleland tells Ed Champion in an e-mail interview that "looking at individual bloggers is not going to be an effective enforcement model." (Legally, we're not sure whether selective enforcement weakens the FTC's case in any given instance.) Cleland indicates that if a blogger or online reviewer gives away the book after reviewing it, then no disclosure is required since in their view the reviewer has no lasting compensation. But the new guides do also apply to affiliate bookselling links that provide a commission. Cleland's indication is that enforcement will target advertisers as well as large platforms.

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I think that's fairly encouraging.