FTC Poised to Regulate Blogs’ Product Reviews

Published July 1, 2009

The Federal Trade Commission is considering a plan to hold bloggers and online marketers liable for claims and reviews the agency finds to be misleading. The move would put millions of bloggers in danger of expensive lawsuits.

The FTC, which is expected to decide on the policy this summer, is looking to update its 30-year-old guidelines to reflect changing technology. The agency says it has the authority to police bloggers who receive payment from companies either through direct compensation or for paid advertisements.

Fungible Definitions

Robert Stacy McCain, a former editor at The Washington Times and now an independent journalist and blogger, questions how the FTC will define compensation.

“What counts as ‘payment’? If a publisher sends me a free book with a retail value of $30, and invites me to a reception for the author where I consume $20 in hors d’oeuvres and drink $25 in beverages, the publisher has expended $75 in promoting the book to me, correct?” McCain said.

“However, if the publisher pays me $50 in cash to promote the book, that’s income?” McCain asked. “Are print and broadcast journalists more ethical than bloggers? Ask yourself how many meals or drinks a network TV news anchor has to pay for when he goes to cover the Democratic National Convention.”

Establishing ‘Safe Harbors’

Walter Steimel, a shareholder at the international law firm of Greenberg Traurig, agrees with McCain.

“There is a difference between a company sending a blogger a video game to try out and review, and a company giving a blogger a new car and gas,” Steimel said. “I believe the FTC needs to be sensitive to the infancy of the blogosphere and establish ‘safe harbors’ for bloggers who have no experience dealing with the FTC or their guidelines.”

Experts agree the FTC has the power to regulate actions that trade compensation for reviews of products. The question, however, is whether the FTC can properly distinguish between professional reviews and independent expression of opinions.

“If I [earn] a check by writing specifically about a company’s product in any medium, that isn’t free speech,” said Craig Settles, president of Berkeley, California-based Internet marketing firm Successful.com. “My opinions in that blog environment are part of the company’s marketing message. And at that point, the laws regarding deceptive practices come into play.”

Warning Against Regulation

Steimel cautioned against the FTC imposing too much regulation on bloggers.

“Stricter guidelines cause an entire industry to live in fear of inadvertently violating” them, Steimel said.

McCain is skeptical of the FTC’s claimed role and need for extending guidelines in this area.

“Whatever happened to ‘caveat emptor’?” McCain asked. “Why empower federal bureaucracy and create a new bunch of regulatory loopholes? If someone is engaging in outright fraud online, fraud is already a crime and can be investigated and punished as such.”

Troy Stouffer ([email protected]) writes from Baltimore, Maryland.