The Federal Trade Commission has adopted revised guidelines on endorsements and testimonials by bloggers in its “Guides Concerning the Use of Endorsements and Testimonials in Advertising” (“the Guides”).  For the first time, the Guides explicitly address bloggers who promote an advertiser’s products on their personal blogs, requiring such bloggers to clearly disclose any freebies or payments they get from companies for reviewing their products. 

Although the blogger will have the primary responsibility for disclosing the connection between the blogger and the advertiser, the advertiser/manufacturer will have an obligation to advise the blogger at the time it provides the freebies or payments that the he or she should make the disclosure in any positive reviews of the product.  The advertiser/manufacturer should also have procedures in place to attempt to monitor the blogger’s statements about the product to ensure that the proper disclosures are being made and take appropriate steps if they are not (e.g., cease providing free product to that individual).

The revised guidelines will clarify that both the advertiser and the blogger will be subject to liability for misleading or unsubstantiated representations made in the course of the blogger’s endorsement.  Penalties include up to $11,000 in fines per violation.  This revised guidelines will be effective December 2009.

Technical details:

The Guides represent administrative interpretations concerning the application of Section 5 of the FTC Act (15 U.S.C. 45) to the use of endorsements and testimonials in advertising. They are advisory in nature, and intended to give guidance to the public in conducting its affairs in conformity with Section 5.  Under the Guides, statements qualifying as an “endorsement” (i.e. a sponsored message) require that certain disclosures be made.  An “endorsement” is defined as follows:

[A]n endorsement means any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.

Testimonials are treated identically as endorsements.  As applied to bloggers, the threshold issue to be determined is whether the speaker’s statement qualifies as an “endorsement.”  If not, no disclosure need be made. However, if the statement does qualify as an “endorsement,” disclosure of the connection between the speaker and the advertiser will likely be warranted, regardless of the monetary value of the free product provided by the advertiser. 

Example. 

A consumer who regularly purchases a particular brand of dog food decides one day to purchase a new, more expensive brand made by the same manufacturer. She writes in her personal blog that the change in diet has made her dog’s fur noticeably softer and shinier, and that in her opinion, the new food definitely is worth the extra money. This posting would not be deemed an endorsement under the Guides.

Assume that rather than purchase the dog food with her own money, the consumer gets it for free because the store routinely tracks her purchases and its computer has generated a coupon for a free trial bag of this new brand. Again, her posting would not be deemed an endorsement under the Guides.

Assume now that the consumer joins a network marketing program under which she periodically receives various products about which she can write reviews if she wants to do so. If she receives a free bag of the new dog food through this program, her positive review would be considered an endorsement under the Guides.  Because her review is disseminated via a form of consumer-generated media in which her relationship to the advertiser is not inherently obvious, readers are unlikely to know that she received the bag of food free of charge in exchange for her review of the product.  This fact would likely materially affect the credibility they attach to her endorsement. Accordingly, the blogger must clearly and conspicuously disclose that she received the dog food sample free of charge.

The advertiser/manufacturer should also advise her at the time it provides the product sample that this connection should be disclosed, and it should have procedures in place to try to monitor her postings for compliance.

Allen M. Lee  Mr. Lee’s practice focuses on business, corporate and intellectual property matters, including the creation, protection and exploitation of intellectual property assets.  He counsels clients on business formation, general corporate matters, trademark, copyright, trade secret, patent, licensing, internet and domain name issues, among other things.  For more information contact: Allen M. Lee, a Professional Law Corporation, Tel: (650) 254-0758, Fax: (650) 967-1851, Email: allen@allenmlee.com, Internet: www.allenmlee.com.