Potential FTC Fines Raise Big Blogging Questions

Doc · #1 (**permalink**) 10-06-2009, 03:45 PM

Chris Crum wrote a piece in today's WebProNews, entitled Potential FTC Fines Raise Big Blogging Questions. If you haven't already read it, you should: Potential FTC Fines Raise Big Blogging Questions | WebProNews

My biggest issue with this is (and I have a few!) is this: What is the FTC (Federal Trade Commission) thinking, that they can believe their authority extends outside the realm of TRADE?

**wige** · #2 (**permalink**) 10-06-2009, 04:19 PM

How is regulating endorsements outside of that realm? Product endorsements and advertising have traditionally been under the FTC.

My question I suppose would be, why do bloggers get a free pass? Magazines have to identify articles they publish which are paid for by the subject (generally by marking the page with "Special Advertising Section" or "Paid Advertisement"), television stations have to note visually on-screen when a program is a paid program, newspapers have to mark advertisements as such, but there seems to be no such restriction online.

Doc · #3 (**permalink**) 10-06-2009, 04:30 PM

Quote:

Originally Posted by wige

How is regulating endorsements outside of that realm? Product endorsements and advertising have traditionally been under the FTC.

My question I suppose would be, why do bloggers get a free pass? Magazines have to identify articles they publish which are paid for by the subject (generally by marking the page with "Special Advertising Section" or "Paid Advertisement"), television stations have to note visually on-screen when a program is a paid program, newspapers have to mark advertisements as such, but there seems to be no such restriction online.

Okay, I see your point...I was thinking more in terms of a blog post, rather than a specific endorsement piece, such as would have to be identified as a paid advertisement in a magazine or newspaper.

At what point does it become an issue? For instance, I'm signed up for giveawayoftheday, which every day, gives away a free piece of software, to any and all takers. If I get one, and really like it, and mention it on my blog, should I have to mention that GOTD gave it to me free? The software company didn't, GOTD did. So GOTD is deriving no benefit from my endorsement. The software company would benefit, but then, THEY didn't give it to me, either, so it can hardly be said that I'm writing the endorsement for their benefit. At what point does it start being a TRADE issue, ie. commercial interest, and stop being a simple opinion?

And at $11K per post, I think that's something that ought to be pretty well defined. Not to mention, administered by a body that has a track record of success, rather than failure, in business.

**wige** · #4 (**permalink**) 10-06-2009, 05:13 PM

In that case, aren't you simply giving your opinion on something that you obtained? I don't see that as being different than buying something on sale and writing about it. The store is giving you a sale price so you will buy that product from them, not so you will review it; GOTD is giving you the product to use, not with the expectation that you will review it.

In the same way, I think there is a difference between a company sending you a product with a prepaid return box, or a software product with an expiring key and requesting a review, and giving you the product to keep along with the same request for a review.

Doc · #5 (**permalink**) 10-06-2009, 05:41 PM

Quote:

Originally Posted by wige

In that case, aren't you simply giving your opinion on something that you obtained? I don't see that as being different than buying something on sale and writing about it. The store is giving you a sale price so you will buy that product from them, not so you will review it; GOTD is giving you the product to use, not with the expectation that you will review it.

In the same way, I think there is a difference between a company sending you a product with a prepaid return box, or a software product with an expiring key and requesting a review, and giving you the product to keep along with the same request for a review.

I agree, there is a difference. My concern with this venture is that there is little to no definition of the differences. They are saying that if you endorse, you must disclose, which in a pure sense, I have no problem with. But government efforts like this always seem to err on THEIR side of the fence, and I can see this becoming a situation where they will fine you because they think you are failing to disclose. Faced with a fine of $11K, or a legal bill of $50K+ to take it to court, what will you do?

And they have the clout to force your ISP to cut you off at the knees, if you don't pay the fine.

How many bloggers do you think they'll nail to the wall, making "examples" of them, in order to force compliance with the supposed advertising issue?

danlefree · #6 (**permalink**) 10-06-2009, 06:46 PM

A lengthy examination of the subject from the Ludwig Von Mises Institute blog:

Quote:

... The FTC dragged an 84-year-old small business owner through two years of litigation because a foreign website made statements about a legal product that mid-level staffers at the FTC personally disapproved of. These same staffers couldn't be bothered to ascertain the actual owner of a website before spending tens of thousands of taxpayer dollars to ruin a man who earned a few thousand dollars in a completely legal manner. These are the people who now claim the unrestricted authority to regulate every corner of the internet, including blogs, in the name of "consumer protection."

At a minimum, the FTC should end this case, but that's unlikely. Since Judge Chappell is only an "administrative" judge, his findings are subject to appeal . . . to the Federal Trade Commission itself. In previous cases, the Commissioners have a 100% reversal rate when the ALJ rules against the staff. And there's no time limit on internal appeals, so the FTC could drag Mr. Isely through another two years of administrative process before ultimately ruling against him - and establishing a binding precedent that an individual is personally liable for statements made about his product on other people's websites. Not exactly an optimistic future.

Unfortunately, FTC enforcement of law will be heavy-handed and, apparently, clueless.

Spending taxpayer money to police the internet for false advertising is a fruitless and wasteful proposition when one considers the far greater problems facing our society, in my opinion.

deepsand · #7 (**permalink**) 10-06-2009, 10:40 PM

Quote:

Originally Posted by danlefree

Spending taxpayer money to police the internet for false advertising is a fruitless and wasteful proposition when one considers the far greater problems facing our society, in my opinion.

Is false/deceptive advertising an issue which does or does not have a significant impact on an economy and/or the well being of the people?

Is this an issue which the people can or cannot adequately deal with acting as individuals?

Is not the purpose of government to collectively do that which individuals cannot themselves do?

jxw · #8 (**permalink**) 10-07-2009, 11:57 AM

I am one of those concerned about the FTC doing the enforcement. In addition to being a government bureaucracy, it is also very political. On the otherr hand, there have been plenty of comments on forums, etc., about abuse by bloggers basically being paid shills but not disclosing their product relationships. The bloggers will not police themselves. So, without reading hundreds of comments elsewhere as I do not have the time to do that this week, has there been a viable suggestion for policing the situation without using the FTC? (Google, for example, can't seem to police spamming on it own search engine!) If the FTC is the only animal that can do this, then we here in the States are stuck. I am assuming FTC jurisdiction does not go elsewhere.

deepsand · #9 (**permalink**) 10-07-2009, 03:59 PM

FTC's New Rules for Bloggers: A Quick Guide - PC World

danlefree · #10 (**permalink**) 10-07-2009, 10:18 PM

Quote:

Originally Posted by deepsand

Is false/deceptive advertising an issue which does or does not have a significant impact on an economy and/or the well being of the people?

If consumers do not have the good sense to look into the claims of long copy testimonial-based sites which make outrageous claims, they're going to end up giving their money away to spammers just as soon as bloggers.

Quote:

Originally Posted by deepsand

Is this an issue which the people can or cannot adequately deal with acting as individuals?

If an individual chooses to make a purchase based upon a recommendation made by someone the individual does not know and does not have any reason to trust without doing any research into the respective merits of the recommendation or the product the individual is buying, that individual cannot adequately deal with the situation.

To say that we need to protect everyone from the availability of false information is to say that we do not believe anyone is capable of making rational and informed purchasing decisions. I would hope that most adults do not fit this description and, therefore, do not need to be taxed to pay for what is effectively a means for prosecuting those who prey upon the stupid... and note that the article proffered is an example of the FTC bringing a suit on flimsy and poorly-researched charges.

Quote:

Originally Posted by deepsand

Is not the purpose of government to collectively do that which individuals cannot themselves do?

An answer would get political quite quickly - could make for an interesting thread but I'd pass. If my views happen to be worth holding you'll arrive at them eventually on your own (and vice versa - I should add that it I think it a success whenever people think about what the role of government should be versus simply considering its de facto role to be appropriate).

deepsand · #11 (**permalink**) 10-07-2009, 10:58 PM

Unfortunately, none of the above directly addresses the questions set forth, questions which go to premises, but merely states conclusions.

From such conclusions one might induce that you believe that individuals, acting alone, possess all of the means for determining all relevant material facts regarding each and every transaction that they might contemplate entering into; i.e., that with respect to market transparency, we live in a perfect market.

Were that the case, then, how to explain the current economic climate and its causes?

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