WASHINGTON: The Federal Trade Commission said October 5 that bloggers, celebrity endorsers, and other word-of-mouth marketers must now disclose their connection to advertisers or risk being found liable for failure to reveal those relationships. The new guidelines, "Guides Concerning the Use of Endorsements and Testimonials in Advertising," are the first update to the rules since 1980.
The FTC now specifies that bloggers, word-of-mouth marketers, and celebrities will be held liable for not making "material connections" such as payments or free products clear when, for example, blogging or appearing on a talk show. Both advertisers and endorsers are now liable for any false or unsubstantiated claims they make as well.
"We think that these guidelines are pretty consistent with what the self-regulatory groups are already calling for and what some of the biggest companies are already doing. It is likely we'll get a very high-level of compliance and violations are likely to be relatively inadvertent," said Richard Cleland, assistant director of the division of advertising practices for the FTC. "If we see problems come up, just as we've done in the past, our focus is likely to be on the advertisers and not on the bloggers."
Cleland also told PRWeek that contrary to some reports that there will be an $11,000 fine, there will be no fine for violations, "it would be in the form of a cease-and-desist order," he said. "The FTC Act does provide for a civil penalty, but it's for violation of trade regulation rules and/or administrative orders. With regards to a blogger and failure to disclose, that wouldn't fall into either of those situations."
The new guidelines, which go into effect December 1, also include a new provision that states advertisers must describe the typical effects of a product or service, rather than the previous rule that allowed them to add a "results not typical" disclaimer when discussing a consumer's individual experience.
The Word Of Mouth Marketing Association plans to release its full analysis of the guidelines later this week, Paul Rand, president-elect, told PRWeek, but he said the guidelines "are consistent with the WOMMA guidelines."
Mike Manuel, GM at Voce Communications, was glad to see the new guidelines come out and said, "I think there's always been a gray area around what does and does not qualify as appropriate disclosure and now legally-speaking, there is criteria for that."
The commission passed the rules 4-0. They are intended to help affected parties comply with the FTC Act, and the burden of proof for proving a violation rests with the FTC, the agency said.
Updated October 5, 6:17pm