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article imageFTC to go after bloggers for not disclosing freebies, payments

By Bob Ewing     Jun 22, 2009 in Business
Consumers use the Internet to find independent product reviews and as they do, they encounter a multitude of bloggers. But how many of those bloggers disclose payment or product placement? To enforce stricter guidelines, the FTC is stepping in.
There is no shortage of product information and opinion out there. In fact, what may be hard to find is an unbiased perspective.
The rule of thumb for ethical journalists who write about products is to disclose any case where they're paid to do so, or if they've been given kick backs. Such is not always the case, however, with bloggers. High-profile bloggers are often offered (and have accepted) perks. For example: Free laptops, trips to Europe, $500 gift cards or even thousands of dollars for a 200-word post.
Some bloggers acknowledge they receive free gifts, while others do not.
This activity is so common, the U.S. Federal Trade Commission is starting to pay attention.
New guidelines are expected to be approved late this summer that would clarify the agency can go after bloggers — as well as the companies that compensate them — for any false claims or failure to disclose conflicts of interest.
If these guidelines are followed, it will be the first time the FTC has tried to systematically patrol what bloggers say and do online.
The practice of posting a graphical ad or a link to an online retailer is common and getting commissions for any sales from the ad or link would be enough to trigger oversight.
"If you walk into a department store, you know the (sales) clerk is a clerk," said Rich Cleland, assistant director in the FTC's division of advertising practices.
"Online, if you think that somebody is providing you with independent advice and … they have an economic motive for what they're saying, that's information a consumer should know."
Blogs vary widely in quality and content and for the most part there are few rules governing them.
"Rules are set by the individuals who create the blog," said Lee Rainie, director of the Pew Internet and American Life Project. "Some people will accept payments and free gifts, and some people won't. There's no established norm yet."
Bloggers are concerned the FTC oversight will cause them to worry innocent posts will get them in trouble, and they say they might simply quit or post less frequently.
Rebecca Empey, between ads on her five blogs and payments from advertisers who want her to review products, makes as much as $800 a month, paying the grocery bill for a family of six. She also has received a bird feeder, toys, books and other free goods.
She is now worried even a casual mention of an all-natural cold remedy she bought herself would trigger an FTC probe.
"This helped us. This made us feel great. Will I be sued because I didn't hire a scientist to do research?" Empey said.
Empey's blogs include New York Traveler and Freaky Frugalite, and she says she discloses compensation arrangements on a page on her blogs or through a "support my sponsor" logo. She said most of her readers understand she sometimes gets compensated.
In another scenario, a mommy blogger on Double Bugs praised Skinny Cow low-fat ice cream sandwiches and thanked a website called Mom Central for the chance to try them. But there's no clue that Nestle SA's Skinny Cow division was giving bloggers coupons for free products.
Some bloggers see a benefit and believe more uniform disclosure and practices would help instill trust and make advertisers more comfortable working with bloggers. They question whether the FTC should be the one crafting standards.
"It would always be better for bloggers to self-police," said Robert Cox, president of Media Bloggers Association in New Rochelle, N.Y.
"We have laws on the books. They apply to everybody, not just people who write blogs."
Yuli Ziv is a fashion blogger and is working on one such effort at self-regulation, helping craft an ethics policy for about 15 websites as part of the Style Coalition started in January to help bloggers become more professional.
"It's been an issue, regardless of the FTC," she said. "It's about trust."
Deceptive and unfair business practices are already banned under FTC rules. The proposed guidelines are an attempt to clarify the law and for the first time specifically include bloggers, defined loosely as anyone writing a personal journal online.
"It's sort of a recognition that word-of-mouth marketing in whatever form, whether electronic or not, is a significant part of the marketing strategy of modern companies," Cleland said.
"Because it's new, I think it is imperative that we provide some kind of guidance."
Under the new guidelines , bloggers would have to back up claims and disclose if they're being compensated. The FTC doesn't currently plan to specify how.
It is possible the FTC would order violators to stop and pay restitution to customers, and it could ask the Justice Department to sue for civil penalties.
Any type of blog could be scrutinized, not just ones that specialize in reviews, for example, parents keeping blogs to update family members on their child's first steps technically would fall under the FTC guidelines.
However, they likely would have little to worry about unless they accept payments or free products and write about them.
On the other hand if, for instance they praise parenting books they've just read, and include links to buy them at a retailer like Amazon.com Inc. the FTC is interested.
The guidelines will cover the broader and common practice of affiliate marketing, in which bloggers and other sites get a commission when someone clicks on a link that leads to a purchase at a retailer. In such cases, merchants also would be responsible for actions by their sales agents — including a network of bloggers.
The FTC is likely to concentrate on repeated offences that continue after a warning to stop.
The FTC's task will not be simple as advertisers now are paying some Twitter users to post short items through the increasingly popular messaging service.The guidelines would cover such arrangements, regardless of the medium.
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