FTC Seeks to Regulate Bloggers

Published October 1, 2009

The Federal Trade Commission is considering a controversial rule that would require bloggers to disclose any connections they have to marketers or products they review online. Critics of the proposal say such a rule raises important constitutional questions and would treat bloggers differently from print journalists.

“The FTC’s plans to ramp up its scrutiny of the blogosphere raise serious free speech concerns,” said Ryan Radia, an information policy analyst at the Washington, DC-based Competitive Enterprise Institute. “Expanding the scope of consumer protection rules to encompass bloggers would subject anybody who posts content on the Web to onerous new disclosure requirements.”

If the FTC’s new guidelines are implemented, “bloggers would be forced to reveal their income sources to yet another agency of the federal government, with noncompliance resulting in possible criminal penalties,” Radia noted.

Updating an Old Rule

The FTC is reviewing guidelines in place since 1980 that require disclosure of payments and incentives given in exchange for testimonials in traditional media. In the proposed revisions, designed to catch up to the Internet age, bloggers would be required to disclose any commercial ties they have to products they review.

The new standard would apply not only to bloggers but also to those in chat rooms and bulletin boards who receive payment for advertising a product.

“A material connection between a consumer promoting a product and the company that makes the product might affect the weight or credibility of the consumer endorsement, and therefore should be disclosed,” said David Vladeck, the FTC’s consumer protection chief, in prepared testimony at a Senate hearing in July.

Double Standard Criticized

Under the proposed regulations, bloggers would have to disclose when they’ve received “review copies” of products—although newspapers, magazines, and other mainstream media outlets aren’t subject to such requirements.

Eric Goldman, an associate professor of law at Santa Clara University, sees the FTC’s proposal as “doomed to fail” because the logic of treating “citizen journalists” and “professional journalists” differently cannot be sustained.

“In general, regulatory attempts to distinguish between bloggers and ‘mainstream media’ are illogical,” Goldman said. “If the FTC’s real goal is to provide transparency, then it should consider why any media would be excluded from the regulation.”

Market Polices Bloggers

Marshall Van Alstyne, an assistant professor of management information systems at the Massachusetts Institute of Technology, sees the FTC’s plan as unnecessary for two reasons.

“By their nature, blogs are very public and long-lived, so competitors can fill the whistleblower role,” Van Alstyne said, noting the free market of ideas is an effective mechanism against dangerous and misleading information online.

“If competitors have an incentive to identify behind-the-scenes compensation, in time they probably will,” Van Alstyne said. “Besides, law enforcement will be difficult and, in the extreme, can be counterproductive because unenforceable laws will reliably breed scofflaws.”

Blog Readers Beware

Radia agrees, seeing consumers as the ultimate arbiters of the reliability of blogs.

“Blogs typically aren’t reflexively viewed as trustworthy,” Radia said. “Blogs derive their credibility by building a reputation over time as a reliable source of information.”

A competitive online marketplace will handle “blogs offering questionable assessments or too-good-to-be-true claims of products” thanks to “smart customers,” Radia added. “As the blogosphere continues to expand, accuracy is of value, and people will flock to sites that fact-check and make reasonable claims.”

Case for Regulation

Sam Bayard, assistant director of the Citizen Media Law Project at the Berkman Center for Internet & Society at Harvard University, supports the proposal. And even if it is not implemented, he thinks bloggers should disclose the information voluntarily. People who spend a lot of time online tend to put as much trust in other “citizen journalists” as they do mainstream outlets, he says.

“My sense is that bloggers come off to the ordinary consumer as ‘one of them’ because of the informality of the blog format,” Bayard said. “As a matter of journalist integrity, reporters should disclose the connection voluntarily if they receive valuable gifts from the product maker.”

Vladek told Congress the issue is “difficult and complex,” but he expects the FTC to issue final guidelines by the end of the year.

Nicholas Katers ([email protected]) writes from Wisconsin.