The Federal Trade Commission (FTC) plans to update its long-unchanged Guides Concerning the Use of Endorsements and Testimonials in Advertising to be more in line with the digital age. The proposal includes some suggestions that many marketers have already incorporated into best practices, such as requiring bloggers to disclose payments and other compensation within posts. However, the FTC has also proposed that marketers would be “subject to liability for false or unsubstantiated statements made through the blogger's endorsement.”
The FTC provided an example of marketer liability within its proposal in which a blogger might claim a skin lotion can cure skin conditions without asking an advertiser for substantiation. In that case, the marketer would be subject to liability for false or unsubstantiated statements about the endorsement. The blogger could also be held responsible.
The proposal is not a regulation, only a guideline, so there are no civil penalties. Yet, if a marketer does not follow the guidelines, “the FTC may choose to investigate,” according to Betsy Lordan, public affairs specialist at the commission.
“With the guides, what you do is set up the general principles... like a speed limit,” says Rich Cleland, assistant director of the FTC's division of advertising practices. “And just because you can't catch every speeder doesn't mean you don't pass laws on speed limits.”
But in holding marketers responsible for what an individual says on a blog, the FTC is putting an unwieldy burden on the companies, one akin to holding doctors accountable if a patient chooses not to follow the practitioner's advice.
“It… puts the idea out there where a marketer would be held liable even if they have done everything in their power to ensure the blogger has the correct information,” says Paul Rand, president-elect of the Word of Mouth Marketing Association (WOMMA), and president and CEO of Zocalo Group, a subsidiary of Ketchum.
The public comment period on the matter recently ended after being extended an extra two months, and the FTC's staff has fielded public comment on the issue and heard from industry sources, including WOMMA. The FTC's board of commissioners is expected to take up the matter this summer, says Lordan. Based on industry feedback, the guides could change from their current form.
Some in the marketing community hope that is the case.
“The First Amendment has viewed commercial speech as protected speech,” notes Harris Diamond, CEO of Weber Shandwick. “So you want to make sure that any rules that are adopted don't infringe on marketers and their ability to communicate their message to consumers.”
Rand adds there will likely be logistical difficulties in the FTC trying to employ such a plan, as well.
“The FTC has some suggestions that are not only difficult to enforce, they also get to the point of being impossible to monitor and manage – the biggest one being the proposal that advertisers and marketers be liable for false or unsubstantiated statements that bloggers or any endorsees make in relation to a brand,” he adds. “I think it does translate into questions. Does it become a free speech issue? Does it become unenforceable?”
Maria Bailey, CEO of Marketing to Moms, an agency specializing in reaching mothers and mommy bloggers, says some of her clients have suggested they will “pull back on how much they do with bloggers [if the FTC passes the guidelines as is].”
She also notes that the proposal raises a number of questions about word-of-mouth marketing practices now frequently in play, such as the liability of blog commenters or consumers using Twitter or Facebook applications.
If bloggers feel threatened by the new rules, Bailey suggests that moms and other frequent bloggers will “find new ways to share information, I assure you.”