Yes, new FTC guidelines extend to Facebook fan pages
(Credit:
Josh Lowensohn/CNET)
Prominent users of Twitter and Facebook won't be exempt from controversial new Federal Trade Commission guidelines that keep tabs on blogger freebies and giveaways, according to Richard Cleland, associate director for the FTC's advertising division. The agency absolutely plans to keep tabs on social networks as well as blogs in accordance with revised regulations that could see violators fined up to $11,000, he said.
Here's a sample scenario: a celebrity or other prominent figure with loads of friends on Facebook receives free hotel says from Hotel Chain X in exchange for running Hotel Chain X ads on his or her blog. If that person then signs up as a Facebook fan of Hotel Chain X--which, remember, could mean that the person's name can show up for his or her Facebook friends alongside Hotel Chain X display ads on the social network--he or she could be held liable by the FTC.
"It would be the same thing if you were going to pay the celebrity a thousand dollars to go register as a fan," Cleland said. "In that case, there wouldn't be any question about it."
Facebook spokesman Barry Schnitt told CNET News that the social network doesn't have anything concrete to say in reaction to the new regulations just yet. "I don't think we have anything to say other than that we've had an ongoing dialogue with the FTC and we'd love to talk to them more about what this means," Schnitt said. "I think we're already consistent with the spirit of it."
Schnitt added that some of the practices that may be encompassed by the new FTC guidelines are already banned by Facebook. "We say in our statement of Rights and Responsibilities, and people actually applauded this when we added it in a few months ago, that you will not use your personal profile for your own commercial gain such as selling your status to an advertiser." This is contained in section 4.2 of the document, he said.
As for Twitter, the FTC isn't letting you get a pass with the excuse that 140 characters--Twitter's famous text limit--is simply too short. "There are ways to abbreviate a disclosure that fit within 140 characters," Cleland said. "You may have to say a little bit of something else, but if you can't make the disclosure, you can't make the ad."
The question still remains as to exactly how the new guidelines will be enforced, given the sheer scope of online media--not to mention the millions upon millions of active Twitter and Facebook users.
"As a practical matter, we don't have the resources to look at 500,000 blogs," Cleland said. "We don't even have the resources to monitor a thousand blogs. And if somebody reports violations then we might look at individual cases, but in the bigger picture, we think that we have a reason to believe that if bloggers understand the circumstances under which a disclosure should be made, that they'll be able to make the disclosure. Right now we're trying to focus on education."
That's worth highlighting. Small-time bloggers freaking out over whether the FTC will really crack down on them may be pleased to know that the FTC at least claims its aim is to make everyone aware of what's right and wrong rather than to hunt down every Twitter user who may have been given a free toaster or something. Unless, that is, somebody rats them out--and at least one blogger is already raising concerns that angry readers may use the regulations to attempt to get back at blogs they don't like.
Industry blogger Peter Feld of Brandchannel thinks he can see another outcome. "A safe prediction for 2010: some big scandal when the first celebrity to run afoul of the new rules, by promoting a product on Twitter or a talk show, gets fined by the FTC."
This post was updated at 5:13 p.m. PT with comment from Facebook.
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos. E-mail Caroline. 
The FTC guideline is reminding us is that in the new world of blogs, Facebook, and Twitter, you still can't deceptively advertise a product. If you're going to tweet how nice a hotel is because the hotel is giving you free rooms to make the tweet, then you better disclose that fact.
We're seeing a lot of scams where bloggers through "affiliate networks" are being paid to favorably blog/twitter about "work from home" or "get Google cash" services which are basically fronts for money laundering. The other favorite blogging topic is "lose weight fast" type of products, and again bloggers are getting paid to promote these products without disclosure. The FTC are cracking down these guys and I for one are grateful for it.
On the other hand, would I need to disclose that Apple gave me a free iPhone at the end of a negative blackberry, palm or nokia review?
Remember deceptive advertising is different from false advertising. In this hypothetical case, you are pretending to your readers that you're an objective reviewer, but in reality you only wrote that review because Apple paid you with a free iPhone. Whether or not your review was accurate is irrelevant; you're still lying to your users about your conflict of interest.
That's different from Apple giving you a loaner iPhone for review -- even a long term loaner -- without restrictions on what you write about, positive or negative. But that's not the issue here.
The issue is today have an underground industry where bloggers/twitterers/whatever are PAID by "affiliate networks" to write glowing reviews for products which (in many cases) they've never even seen or personally used. To me that's blatantly illegal, and everyone taking part on this type of scam should face legal consequences.
I'm glad that they are finally doing something about these people who get paid for giving some freak product a glowing review. After they made Joe Namath wear panty hose because he promoted it, should have been enough to cover the internet too. I mean, you shouldn't talk about a product you haven't tried, but then just because they gave it to you - or maybe along side a Ferrari - shouldn't rate such a positive review.
Almost like the spam/posts on forums like this.
Wow!
Brad West ~ onomoney
Looking at the business he's doing at that site you linked, I'd say he's learned very little from the experience except how not to get caught. He's still peddling get-rich-quick schemes using hyperbolic language.
Bottom line: if you take free junk, you have to disclose it before endorsing the free junk. The web promised to make everyone a journlist-- well, now we all are journalists. Welcome to the party.
Clearly, they won't be able to keep their eyes on everyone, all of the time, but if they do spot checks, investigate complaints & severely punish violators, it might be enough of a deterrent, to keep most people from crossing the line.
Hopefully, these guidelines cover "paid" bloggers who constantly spew out inaccuracies & FUD, in comments. Everyone (including myself) can have strong opinions, but if those opinions are shaped by a paycheck, it should be disclosed to other readers of the comments.
The issue here is a "celebrity" with a large online presence might endorse a product/service through a blog, Facebook or Twitter without disclosing that he/she is actually getting paid for it. That's simply deceptive advertising, and the FTC would be right to pursue egregious cases.
Scenario #1. Oprah Winfrey endorses an obscure book that a publisher GAVE to her. The FTC rule tells me that Oprah must disclose free receipt of the book that she is endorsing.
Scenario #2. Oprah Winfrey endorses an obscure book that she BOUGHT. The book becomes a bestseller. The publisher sends Oprah other free books to review. Oprah effectively gets paid after the fact for the endorsement. Must Oprah now disclose the receipt of those free books, even if she decides not to endorse any of those books?
Scenario #3. Oprah Winfrey endorses an obscure book that she BOUGHT. The book becomes a bestseller. The book's publisher buys advertising time in her time slots across the country. The local TV stations decide that their contracts to carry the Oprah show are worth renewing. Oprah's TV-syndication revenues rise. Must Oprah now disclose that her endorsement of a book has made her richer?
I have a new website at which I make available research reports for runners and walkers. Only one of over a hundred items mentioned in any of those reports was GIVEN to me as a review copy. Because of this new FTC rule, I revised that report today to mention this fact. But my long-term plan is now to avoid getting any review copies free. The disclosures are not worth the trouble.
As someone who likes to keep up with my own stats and Google standings, etc.. I've been extremely tired for a long time of people that clearly talk about products, services and other people MERELY and CLEARLY as a business transaction and get to disguise it as something they would have mentioned anyway.
I'm tired of hearing about how people stayed at such and such hotel, but they have no real-world stories of ANYTHING that hotel did as far as customer service or user experience to explain why they're pubbing the hotel.
I'm tired of people that every time they drop names on Twitter, it always happens to be a client of theirs, but they try to disguise it as random coffee table or water cooler conversation.
NOW... (supposedly), These people will be held accountable for their shilling. This might even out the playing field a bit, as people become scared to utilize their tens and hundreds of thousands of followers to pub businesses, lest they look like they're taking money/favors for it.
On the other side of the coin, this might force companies who have been utilizing these shills to create formal business deals with them, which would be good for the Social Media community as a whole. How much is it worth to blast a company's name to your 100,000 followers? How many sponsored comments are you responsible for under your formal contract with the company? How are rates determined? By number of followers? Quality of followers? Industry?
This is about to get good! :D
Does this reg transcend to twitpic and facebook pictures? If so-and-so celebrity is wearing all free clothing, jewelry and accessories, and posts a stylized picture of herself, will she be required to disclose?
Now, if that person were to start writing updates saying how great that business is, then yes, some disclosure is needed. But just becoming a fan? I don't see it.
If it were kept under the hat, then I would agree with you. Facebook might send something out that says "Do you know Tiger Woods?.. 5 of your friends are a fan", which is basically 5 endorsements.
should be
"receives free hotel stays from Hotel Chain X
STAYS
>>The issue is today have an underground industry where bloggers/twitterers/whatever are PAID by "affiliate networks" to write glowing reviews for products which (in many cases) they've never even seen or personally used. To me that's blatantly illegal, and everyone taking part on this type of scam should face legal consequences. <<
Here we have some misunderstanding and I also smell envy! Those "affiliate networks" Do pay me a commission but only AFTER I actually sell something. NOT before.
So if my understanding of English is correct this new bolshevik rule has Nothing to do with Affiliate Marketers. Otherwise they would have to crack down on anybody and everybody who gets paid After they sold something. (Real estate agents, insurances, and almost every other Sales people coming to mind...)
>>Yes, they will go after users who are not Americans. Collecting or enforcing a judgment against them is another issue altogether. But ask Roman Polanski how it feels to be a fugitive. <<
It feels GOOOOOOOOD right now Not to be an American!
- by ponce October 24, 2009 2:55 AM PDT
- If 'Hotel Chain X's' service/rooms are so good, why pay someone to say it? what is wrong with reading a review from Mr. and Mrs. John Doe? TV ommercials by William Shatner, Lee Mayors, McCoy (Law and order), etc, have 'compensated spokesperson' in the small print, and they're not complaining.
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