In Defense of the FTC’s New Endorsements and Testimonials Rules

By Dave Brinker
Bloggers are taking aim at the Federal Trade Commission’s (FTC) October 2009 revised “Guidelines Concerning the Use of Endorsements and Testimonials in Advertising” covering instances of online undisclosed compensated product endorsement.

Three common criticisms have emerged:

1) Critics contend the changes are over-broad, and thus the FTC will apply them subjectively. An article in Advertising Age argued, “In essence, what the FTC is saying is that it has defined the ruling so broadly that it will apply the law selectively at its pleasure. To pretend that politics won’t enter this picture at any point would be the height of foolishness.” (“FTC’s Blog Rules Excessive, Ridiculous and Hypocritical,” October 12, 2009).  The concern is that the threat of unpredictable enforcement will discourage Internet users from posting legal comments about products.

2) Critics also suggest that the FTC is unfairly imposing a stricter standard on Internet content than it does offline.  CNBC’s Media and Technology editor Dennis Kneal asks, “Can you imagine if the FTC were to force The Wall Street Journal’s god of gadget reviews, Walt Mossberg, to reveal in every column that the product he’s praising arrived free of charge for a tryout?”  New York Times Reporter Stephanie Clifford argues, “It’s analogous to a studio inviting critics to a free premiere. Taken to its logical conclusion, those critics would have to disclose in their review that they were allowed to see the movie for free…”  They may have a point; is it fair to subject the same review in print and online to different standards?

3) Finally, critics suggest that it is too difficult to police the ever-changing body of Internet content. A writer for The Washington Times commented that “a bunch of Washington bureaucrats think they are going to become the police in a neighborhood so big no one can measure it. Perhaps the company that did the last complete inventory of sand on public beaches will be available to help.”

Besides its vastness, critics also note that the interactive order of Internet is constantly changing, and the rules for associating personal and commercial content are in-flux and unpredictable for many who create content. “For one thing, thanks to tools like Google’s Ad Sense technology that matches ads and content, it’s easy to inadvertently blog about a sponsor brand…”  Internet users create content in a medium where the rules for how that content moves are uncertain.  Should the government subject them to potential liability in cases where they did not have complete control over their content?

These concerns are by no means frivolous, but they are a bit exaggerated. In fact, the new FTC Internet examples make it fairly clear that average unwitting users have little to worry about.
The revised guidelines include three examples specifically addressing the online space. I argue that taken together, the examples suggest a common rule; they assume a disclosure obligation and liability only for the endorser acting in a directed influential capacity by actively engaging in the creation of product-related content for the explicit purpose of doing so (as opposed to incidentally).

“Dog Food” (§255.0 Example 8): “Assume now that the consumer joins a network marketing program…”
“Skin Care” (§255.1 Example 5): “A skin care products advertiser participates in a blog advertising service. The service matches up advertisers with bloggers who will promote the advertiser’s products on their personal blogs.”
“Video Game” (§255.5 Example 7): “A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences.

The “Dog Food” and “Skin Care” examples involve people who have actively sought to create endorsements as a commercial venture.  The “Video Game” example describes a person who operates a web site specifically designed to disseminate his commentary and evaluation of commercial products.  Not only does the FTC offer a standard of active participation in product-related commentary, it also implies in the “Video Game” example that if the user is receiving products because they are known to comment about products online, the advertiser has the responsibility to alert them to the rules.

So yes, enforcement might be subjective, but only to the point that the FTC examples create a burden of proof to show that the person they wish to fine has a demonstrated history of commenting on products.

In the same way, the standard for the on and offline communities might be different; but as critics themselves have pointed out, the way users interact with and understand the online space changes rapidly. It is therefore reasonable to assume that consumers need more protection online. Surely, most reasonable people could identify the credibility difference between an endorsement in the New York Times book review and a pamphlet highlighting John Doe’s book pick of the week. They can do so because understood information credibility norms exist for the various offline media.  Online, however, the interchangeability of authors and host sites makes it impossible to apply normative credibility criteria to individual reviews. Even when they appear on credible websites, individual reviews are not necessarily vetted for the credibility of the (often anonymous) poster.

Yes, the FTC could not possibly police the entire wealth of posted content to identify potential abuses of endorsements or testimonials, but this should be a source of comfort for critics. Because they cannot pursue every case, enforcement will necessarily happen in larger forums where the abuse is most likely to be actually harmful.

Finally, concerns that increased regulation will discourage Internet use and innovation are unwarranted. The advertising practices in question are ethically dubious anyhow (otherwise disclosing them would be unnecessary), and if discouraging them results in a more cautious online consumer population it will at least improve the reliability of the endorsements and testimonials that remain. That would be far better for business than allowing the Internet’s commercial credibility to continue declining. The rules might even protect a few consumers and preserve the Internet’s competitive viability, which would mean the FTC is simply applying its offline mandate to the online space. This suggestion raises the more fundamental issue of the government’s general increasing interest in regulating the web, but that is another discussion entirely.

Dave Brinker is a senior in the Diederich College of Communication

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The opinions expressed here are those of the individual authors and do not represent the views of Marquette University or the Diederich College of Communication.

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