UPDATED – Eliminates $11,000 per event penalty originally published and later retracted by The Associated Press.
The United States Federal Trade Commission has published new guidelines requiring much greater transparency regarding endorsements and testimonials. In the first updating of its rules since 1980, the new guides clearly define that that it is not acceptable to provide an endorsement or testimonial regarding a product or service without revealing “material connections” – i.e. payments or free products received in exchange for the endorsement. The new rules go into effect December 1, 2009.
photo credit: Alex ClarkNew US trade rules will help clean up misleading travel & hotel reviews, blog posts and twitter updates by requiring disclosure of compensation.
These guidelines cover more traditional advertiser / celebrity endorsements, but also specifically include any testimonials made via social media. The FTC press release provides blogging as a example, stating: “the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.”
That example leaves very little to the imagination for those seeking a loophole.
The FTC’s intention is to protect consumers from being misled by individuals having a potential conflict of interest. If any relationship involving compensation exists, disclosure will be required. Additionally, it also protects against claims that would not be “reasonably expected” by a consumer using the product or service. The FTC has put some teeth into the new rules, with fines up to $11,000 per post for breaching the guidelines. continue reading →
