FTC rules not to pursue word-of-mouth industry

WASHINGTON: The Federal Trade Commission ruled last week that it will not pursue a wholesale investigation of the word-of-mouth marketing industry, but acknowledged the practice could be classified as "deceptive" in some cases that lacked disclosure of the source of the communications.

WASHINGTON: The Federal Trade Commission ruled last week that it will not pursue a wholesale investigation of the word-of-mouth marketing industry, but acknowledged the practice could be classified as "deceptive" in some cases that lacked disclosure of the source of the communications.

The FTC's decision came in response to a request for an investigation of WOM tactics by Commercial Alert [CA], a nonprofit group that works to stop the spread of commercialism. The group's original request, which was sent to the FTC in October of 2005, said some buzz marketers were "perpetrating large-scale deception upon consumers" and harming children, and called for government regulation of the practice.

The FTC, though, rejected that call, saying that "it is not necessary to issue guidelines at this time." The agency said it will rule on potentially deceptive WOM practices "on a case-by-case basis."

Gary Ruskin, executive director of CA, said via email that his group now plans to pursue individual marketers it believes are violating guidelines that govern deceptive advertising. He also said that the Word of Mouth Marketing Association (WOMMA), despite its call for full disclosure from its members, is not a friend to his cause.

"Word of mouth marketing is a commercial plague unto our land, and WOMMA is its mouthpiece," said Ruskin. "It encourages teenagers and others to treat their family and friends like financial assets suitable for manipulation."

But WOMMA CEO Andy Sernovitz said WOMMA and CA agree on the fundamental issue. "They want stealth marketers out of the game, we want stealth marketers out of the game, the FTC wants stealth marketers out of the game," he said.

Sernovitz, who announced last week that he will be leaving WOMMA early next year to return to consulting and writing, said executive director Susan Tibbitts will likely run the group after his departure.

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