Much has been written this past week about the Federal Trade Commission's "Guides Concerning the Use of Endorsements and Testimonials in Advertising" which goes into effect December 1st, 2009. These guidelines effect all persons providing commentary (reviews) on products for which they have received any form of material compensation in exchange for their commentary. The FTC seems to be giving a pass to traditional media outlets such as newspaper, television, radio and magazine news outlets and concentrates on "real" individuals who give testimonials in exchange for money or products. Going forward these individuals have to disclose when they are receiving material compensation or face fines for not doing so.Personally I think people should have been doing this all along and some have. Better bloggers will not risk ruining their credibility by endorsing a product which is substandard. Most consumers are smarter than the FTC seems to think. Consumers who are naive enough to grant credibility to a sponsored review on a blog or an infomercial are as likely to believe the same sort of fluff from a "valid" news organization or a magazine which has to print "advertisement" over a rave review for the next big thing.
Since they don't appear to be doing much with these guidelines to protect consumers from themselves, what is the FTC really doing? Are they now in the business of regulating what qualifies as news? Several articles I've read have expressed this concern and I think it is valid. It deserves close scrutiny to examine how that all plays out. When Government gets involved in judging what is legitimate news and insinuating citizen journalism is illegitimate they are walking dangerously close to censorship similar to the Chinese model. I'm not sure that is what they are attempting to do nor do I think, if this were the FTCs motive, they could get away with it long term. There are too many individuals and lawyers to challenge them.
What I have seen curiously absent is any mention of material compensation being monitored as income. At least I find it curious and I am not much of a conspiracy theorist. The United States is in the midst of an economic recession and the United States budget is running a previously incomprehensible deficit. Anyone would be foolish to think the United States Federal Government doesn't need as many tax dollars as it can get its hands on. You're likely thinking bloggers who collect Adsense revenue and the occasional freebie in exchange for a review are making peanuts for their efforts and in many cases you may be right but there is no doubt some freelancers are making a living from web content.
Freelancers are self employed and it is generally easier for the self employed to juggle their books to appear as though they are making less income than they actually are. I can attest to this since part of my profession is to indemnify people for loss of income. The cost of these policies are partially based on the amount of income a person makes which is determined by how much the individual claims on their income taxes. When it comes time to collect on these indemnity policies it is not at all unusual for the policy holder to miraculously present alternate proof their actual income is greater than previously stated.
As the public turns away from traditional media in favour of the internet and advertisers turn from conventional print advertising to viral and guerrilla internet marketing techniques there are increasingly more opportunities for individual freelancers to profit from new media. If PR firms are seeing this, I am seeing this, and freelancers are seeing this wouldn't it be naive to think the United States Federal Government isn't? Rather than wondering whether the FTC is crawling into bed with the FCC why isn't anyone wondering whether they are crawling into bed with the IRS?
Perhaps such un-enforcable legislation wouldn't be on the books if the tax code wasn't so strange and unusual in the first place.
ReplyDeleteDISCLAIMER: This comment is not intended as an endorsement to or an advertisement for this blog, it's creator or any product or service offered by the aforementioned. However, I will gladly accept a cup of coffee if someone chose to provide one to me with no cost, no obligation, no collection of personal information or use of me, my company or my likeness endorsing said coffee beverage.
I don't think they're crawling into bed with anyone. Income is income (always has been), and the FTC is issuing new "guides" (not new law, just new guides) on how existing law applies to new media. It has always applied - they're just explicitly telling us it does so bloggers and others can't say, "hey, hang on, wait a sec, we didn't KNOW this meant US!" Still, it'll be interesting to see if it changes enforcement, and a number of foreign bloggers are wondering how, if at all, it will apply to them. I think it will apply to their income sources, and thus to them, whether it's directly enforceable against THEM, or not. It may mean less offshoring of cheap advertising if ALL bloggers don't comply.
ReplyDeleteChris, you crack me up!
ReplyDeleteThanks for commenting Holly. What got me thinking was the question of, why now? It could be coincidence, of course. If not now, when?
I've seen a great deal of compliance - almost to the point of overkill. Steve Garfield has four different types of disclaimers depending on the post but given he's now a published author and under more scrutiny, I understand.
I'll be interested to look at the first lawsuit where this is enforced and to see the circumstances surrounding it.