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FTC: Bloggers must disclose payments for reviews

October 06, 2009|David Colker

Bloggers have gotten so big that they're about to be regulated -- at least when they accept money or in-kind services from a company whose products they review.

A blogger who reviews a new product -- but leaves out the fact that he or she received payments, high-value gifts or free vacations from the company -- could run afoul of new federal regulations on advertising.

The blogger rules, announced Monday by the Federal Trade Commission, are part of a broader effort by the agency to crack down on misleading endorsements and testimonials in advertising. They also mark the first major revision to the FTC guidelines on the topic in nearly 30 years.

"The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement," said the agency in a statement. "Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service."

Celebrity endorsers are also covered in the new rules. The FTC said they won't be off the hook if they knowingly make a false statement in an ad.

According to the new rules, "both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement," the agency said.

They also have to disclose a monetary connection with a company in other situations.

"Celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media," the agency said.

The new rules are part of revisions to the agency's Guides Concerning the Use of Endorsements and Testimonials in Advertising. The last time these guides were revised was in 1980, when there was no such thing as a blogger.

There is nothing in the rules that specifies how a blogger's disclosure must be made.

"That's left up to the endorser," said Richard Cleland, assistant director of the FTC's division of advertising practices. "It can be a banner, part of the review. The only requirement is that it be clear and conspicuous."

The new rules go into effect Dec. 1.

There are no penalties directly associated with violating the rules. But the FTC could seek a cease-and-desist order.

Violating such an order could cost real money -- civil penalties of as much as $11,000 per incident.

But Cleland said the agency didn't plan on actively seeking out violators, at least at first. "Right now we're concentrating on education, not enforcement," he said.

Bloggers have long praised and panned products and services online. But some companies reportedly pay online reviewers for their write-ups or give them free products such as toys, computers or trips to Disneyland.

Los Angeles Times policy is that staff members, including reviewers, "may not cover individuals or institutions with which they have a financial relationship."

The FTC's new rules had been under consideration for months, so they came as little surprise to many bloggers.

Blogger Linsey Krolik, who is an attorney, said she has always disclosed any freebies she's received on products she writes about, but has stepped up her efforts since last fall.

Krolik said she adds a notice at the end of a post, "very clear in italics or bold or something -- this is the deal. It's not kind of buried."

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david.colker@latimes.com

The Associated Press was used in compiling this report.

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