Thursday, October 6, 2011

Update on FTC actions concerning blog post disclosures

Jeannine Schafer's and Louis Gray's FTC disclosure graphics live on.

Most recently, they surfaced in a Sara Hawkins post entitled "Are You Disclosing?" Hawkins not only covers the FTC regulations themselves, but also covers the reasons behind the regulations - as well as what has happened since the regulations went into effect.

Hawkins links to an April 20, 2010 letter from the FTC (File No. 102-3147), addressed to a lawyer for Ann Taylor Stores Inc. (The letter is also available at the FTC website.) In this case, "bloggers who attended a preview on January 26, 2010 failed to disclosre that they received gifts for posting blog content about that event." However, the FTC noted several things regarding this event:
  • There was a sign at the preview telling bloggers to disclose gifts, although it was not clear how many bloggers actually sold the sign.
  • In their blog posts, several of the bloggers did voluntarily disclose the gifts.
  • In February 2010, a written policy was adopted "stating that LOFT will not issue any gift to any blogger without first telling the blogger that the blogger must disclosre the gift in his or her blog."
Under the circumstances, it is understandable why the FTC did not pursue enforcement action. Ann Taylor may have made mistakes, but it appears that Ann Taylor did not intend to have bloggers mislead their readers.

That was not the case with Legacy Learning Systems, also mentioned by Hawkins. Here are excerpts of the 3/15/2011 FTC news release on its $250,000 fine levied against Legacy Learning Systems:

The Learn and Master Guitar program promoted by Legacy Learning and Smith is sold as a way to learn the guitar at home using DVDs and written materials. According to the FTC’s complaint, Legacy Learning advertised using an online affiliate program, through which it recruited “Review Ad” affiliates to promote its courses through endorsements in articles, blog posts, and other online editorial material, with the endorsements appearing close to hyperlinks to Legacy’s website. Affiliates received in exchange for substantial commissions on the sale of each product resulting from referrals. According to the FTC, such endorsements generated more than $5 million in sales of Legacy’s courses.

The FTC charged that Legacy Learning and Smith disseminated deceptive advertisements by representing that online endorsements written by affiliates reflected the views of ordinary consumers or “independent” reviewers, without clearly disclosing that the affiliates were paid for every sale they generated.

Hawkins notes that in both cases, the FTC chose to go after the promoting companies, not the bloggers. However, there's obviously no guarantee that bloggers will get off scot-free in the future.

These two cases serve as a reminder that the FTC is taking its new regulations with some degree of seriousness, and that bloggers should do the same.
blog comments powered by Disqus