Are You Disclosing? What You Need to Know about FTC Rules and Social Media

social media how toHave you wondered about U.S. Federal Trade Commission (FTC) disclosure regulations? Wondering whether you’ve been compliant?

Keep reading for a detailed understanding of FTC rules and regulations on endorsements and testimonials in social media.

Some background…

Any time the US Government implements new regulations, there is discussion, debate, information and plenty of misinformation.

Nearly 2 years ago, in December 2009, the FTC revised, for the first time in 3 decades, its rules and regulations about endorsements and testimonials in advertising.

The prior rules were made long before the Internet and needed to be updated to account for this new type of media. Since implementing the new FTC Disclosure Guidelines PDF for endorsements and testimonials in advertising, bloggers have been given a multitude of interpretations, rules, best practices and how-to’s. Sadly, most of the information has been more scare tactics than useful.

disclosure

Disclosure: Good for you, good for your audience. Image: iStockphoto

When do you have to make the disclosure?

The FTC guidelines for endorsements and testimonials in advertising say if there is a connection between the endorser and the seller of the product or service, full disclosure is required.

What is a connection?

There’s no specific definition of what is meant by connection. However, if there is a contractual obligation—whether written or verbal—to post something about a product or service, there is definitely a ‘connection’ that should be disclosed.

If, however, you bought the product and just wanted to talk about it, that might not be sufficient to establish that there is some connection with the seller of the product or service. If your readers (or viewers, if you’re doing a video; listeners, if you’re doing a podcast) believe you may have received a product or service for free or are being paid to talk about it, a simple reference that you paid for the item, while not required, would help the reader understand that a connection to the brand or company does not exist.

What is an endorser?

An endorser can be an individual, group or institution. By providing information about your experience, belief, findings or opinions, you are now taking on the role of “endorser,” and therefore you would need to somehow communicate your relationship with the product or service you’re sharing about.

When you think of an endorser, you may immediately picture celebrities or people in those paid infomercials shown late at night. Just like those compensated celebrities or actors, each of us takes on a similar role of spokesperson many times a day. In talking to our friends and family about the things we like or don’t like, we’re the same those celebrities.

compensated endorser

Here we see Colonial Penn Life Insurance is endorsed by a television celebrity.

Companies, educational institutions, civic groups, professional groups and the like communicate with their public. If they share information about a product or service, the organization itself—in encouraging its public to use or buy the item—may be taking on the role of a spokesperson.

Even though we may not think an organization can give a recommendation about a product or service, they do and would need to disclose any relationship. For example, a dental practice only recommends a certain brand of toothpaste. Maybe it’s just a personal preference of the dentist. If, however, the toothpaste company pays the dental practice or provides free product, the practice would need to tell the patients about their relationship.

What is full disclosure?

FTC guidelines do not give example of what full disclosure means. There are no magic words or specific phrases suggested. It also does not say if the disclosure must be within the text of a written post or at the end, or where specifically it must be. The language states that the disclosure must:

“… clearly and conspicuously disclose either the payment or promise of compensation prior to and in exchange for the endorsement or the fact that the endorser knew or had reason to know or to believe that if the endorsement favored the advertised product some benefit, such as an appearance on television, would be extended to the endorser.”

As you can see, there’s a lot left open for interpretation as to the “how” and “where” this disclosure must be made. The focus is on what the consumer or average reader understands to be a disclosure. The average reader is not going to know that he or she needs to click on an icon and navigate to other pages or read a page of disclosures to try to figure out if the link is an affiliate or if the awesome widget you’re telling them they can’t live without was given to you for free.

To quote the marketing genius Joe Dirt from the 2001 movie of the same name, “It’s not what you want, it’s what the consumer wants!”  This couldn’t be truer.

To whom do the rules apply?

The FTC guidelines apply to both traditional advertisers and those of us in new media. There is no significant distinction between a major brand and blogger. If you talk about products or services (either in written form or spoken word), then you are either providing advertising or a testimonial and these rules apply to you.

These voluntary guidelines apply to anyone who’s providing an advertisement or testimonial. In addition, though, social media strategists, consultants, gurus, masters, superheroes and PR agencies and their employees should be well-versed on this topic because they, too, may become liable if they are advising clients or bloggers to engage in action that is clearly contrary to the guidelines.

What does voluntary mean?

While we’d all like to think that voluntary means you can choose not to comply, that’s a bit of a misunderstanding. Voluntary in this sense means that there is no police system that will come after you.

However, advertisers and those providing testimonials do run the risk of having administrative action taken against them for noncompliance. This is not like other laws where failure to comply means a bright line consequence. Keep in mind, though, that choosing not to comply can produce a number of expensive consequences.

Why did these rules come about?

accountable

Complaints: A way to hold businesses accountable. Image: iStockphoto

As with most laws, these disclosure guidelines came about because the FTC began getting complaints from consumers who felt duped or misled. Enough people complained that bloggers and those with websites were leading them to purchase products or services because the writer was getting some type of compensation to give their review, insight or testimonial.

Rather than getting honest information, consumers felt they were being lied to by what was portrayed as an unbiased source. In fact, though, the bloggers and content providers were hawking goods and services and singing their praises while being compensated. Were they lying? Probably not. Did the consumer feel lied to? Many did.

As a result of the desire for what was seen as greater consumer protection, after almost 30 years the FTC updated their rules. They now apply to pretty much anyone who would be deemed an endorser of a product or service.

Consequences of noncompliance

As with most governmental regulations, noncompliance carries with it some sort of fine. The FTC administrative procedures are handled within the Commission. Penalties for noncompliance can range from a written warning and request to provide full disclosure to the maximum of an $11,000 civil fine (per incident).

Noncompliance

Noncompliance is a failure to follow regulations. Image: iStockphoto

Keep in mind that the FTC must follow due process and that an alleged violator will not just get handed a bill for $11,000. First he or she will receive a written letter detailing the FTC’s position regarding noncompliance. In addition, the $11,000 fine is a maximum penalty. There are many other options for compliance enforcement.

Is the FTC reading my blog or visiting my website?

With millions of blogs and websites under the jurisdiction of the FTC—these include all US-based domains, hosts and servers—the task of monitoring every one of these sites falls on a small number of people. Because these are real people who work for the FTC, even on their own time they are often on the Internet. As such, they may come across your blog by happenstance.

When compliance is your job, everything you encounter is often read through that lens. This means that even if the FTC monitors are not coming to your site based on a complaint, they may very well be checking out your site for other reasons.

What should bloggers do?

There has been a lot of discussion about how to comply with these disclosure laws. I’ve heard of bloggers hiring lawyers to get guidance, I’ve seen companies start up just to provide some type of third-party notification system and I’ve listened as bloggers lament feeling like they’re losing a competitive advantage because they disclose but their competitors do not.

The problem here is that so many want to comply but don’t really want to be “clear and conspicuous.” The rule is not aiming for sending readers on a scavenger hunt around your blog to find a disclosure page; using icons that are neither standardized, recognized nor understood by the consumer to be a type of disclosure; or burying the disclosure.

Disclosure is evaluated through the eyes of the consumer, not what we think we can get away with while being as vague as possible.

The “how to” is tricky because much will depend on your readers, your content and how the information is presented. The basic KISS principle goes a long way with this, however. Keep it simple, smarty! If not for our readers, we’re nothing. Why not trust that they want to support the site?

What exactly should a blogger do? Just tell your readers in some way how you obtained the product, if you were provided a complementary service or if clicking a link within your post could somehow mean you get a commission or some type of compensation.

Honestly, it’s not very complicated. If you can seamlessly disclose within the text (e.g., “Company A sent me this widget to try,” “I received a complementary or reduced-cost stay at Hotel XYZ,” “Affiliate links are used and I may receive a commission if you click”) that is the best. However, including a disclosure at the bottom of the post is easily done as well. What I don’t think is a best practice is the use of incomprehensible icons or a generic “see my disclosure policy” link.

The disclosure policies I’ve seen on a vast majority of sites are inadequate. Using a general boilerplate disclosure policy is fine if you actually read it and understand what it says. One of the 26 ways to enhance your blog includes having a good disclosure policy. A succinct and accurate disclosure policy, if nothing else, can go a long way in offering some protection if ever the FTC reviews your blog.

As of this writing, no individual bloggers have been fined or sanctioned by the FTC. That’s not to say everyone is complying or that what is happening now is acceptable to the agency. All it means is that the FTC has chosen not to formally sanction bloggers at this time.

Why brands and PR reps need to know about disclosure rules.

First, education is key. In my experience, brands and PR reps take a hands-off stance when working with bloggers. To ensure that bloggers have autonomy in what they write, brand and PR reps often provide little direction. In fact, those running a campaign should set out the requirements very clearly. A simple disclosure at the end of a post would be all that is needed. Although, I think icons such as these might just make disclosure much more interesting.

money

A humorous way of disclosing you were paid cash for your testimonial. Image: Louis Gray

schwag

Witty disclosure about stuff we all get. Image source: Louis Gray

Shortly after implementing the guidelines, the FTC began an investigation of a blogger outreach program by Ann Taylor stores. The company held a private fashion preview for select bloggers and expected those bloggers to post content in exchange for gifts.

After an investigation, the FTC did not recommend enforcement action against Ann Taylor. The decision was based on a number of factors; one being that during the investigation process Ann Taylor implemented a blogger disclosure policy. It’s important to note that Ann Taylor had engaged a PR agency to carry out this blogger outreach program but the FTC chose to deal directly with the brand.

More recently, though, the FTC fined Legacy Learning Systems $250,000 for having affiliates write reviews under the guise of being ordinary consumers or independent reviewers. While the Legacy situation was unique because it involved a company specifically soliciting its affiliates for what were advertised as “unbiased” reviews, it is important in that no affiliates were fined.

Rather, the company was held responsible and must, in addition to paying a significant fine, monitor many of its affiliates for a period of time. Whether the company knew of the disclosure laws pertaining to its affiliates is irrelevant. The fact is the company was held responsible for its actions in directing compensated affiliates to pose as unbiased.

For brands and PR agencies, the key to compliance is setting standards. Some bloggers do a great job with disclosure. For the most part, though, they don’t. Ultimately, it is your brand or your client, and you should feel comfortable setting out basic expectations as to how you will protect your company or your client.

Do the disclosure rules apply to social media?

Absolutely! While it is slightly more complicated because there are often character or word limits, some type of disclosure or notice to readers is required. When anyone other than the brand itself touts a product or service, the FTC disclosure laws require disclosure so that the potential consumer knows there is some relationship and the recommendation or information could be biased.

Twitter is the biggest challenge because of the 140-character limit. There have been suggestions to use certain hashtags such as #sp, #spon #ad, #aff or the like. There’s no single set standard though, which makes it difficult for consumers. So far, the FTC has not gone after allegedly misleading tweets. They may in the future, so it’s something to be mindful of. That being said, given the pervasiveness of pushing blog posts to Twitter, using retweet buttons, retweeting and losing space it might be a bigger challenge than anticipated.

Facebook offers more characters, so there should be no excuse not to include some type of disclosure. However, as with Twitter, there are a multitude of automated programs that post blogs, tweets or other types of status updates or shares that make disclosure standards difficult. They key here, though, is if you can make a disclosure in some way, you should.

Location-based and location review/rating mobile apps bring a new set of challenges. When the FTC disclosure rules were promulgated there were one or two, if any, location-based mobile apps. Checking in to a location may lead someone to believe you are endorsing it. You may even write something or offer a tip to others who go there in the future. If you’re compensated to write about the location or experience, that should be disclosed.

In addition, while some mobile apps of this sort will prevent you from checking in or offering recommendations if you are not actually at the location, keep in mind that if you don’t actually have the experience, don’t write about it regardless of whether the app allows you to or not.

social media

It's important to follow all disclosure guidelines in social media. Image: iStockphoto

Final Thoughts

The reason the rules exist is to protect consumers. Consumers have a right to know the information they read online is truthful and accurate. The FTC disclosure guidelines are not onerous, overly detailed or difficult to understand. There are few ethical standards when it comes to blogging. In some ways it’s still the wild west on the Internet. Brands and many PR agencies were already aware of disclosure needs for advertising and testimonials when it related to traditional media. The new guidelines moved those same standards into the new media realm.

Readers are essential to every blogger’s success. FTC disclosure rules for bloggers are easy to comply with, if you’re willing to trust that your readers want you to be successful. This is an opportunity to raise the bar. We just have to be willing to see this as a good thing.

What are your thoughts? Do you think the FTC disclosure rules are easy to comply with whether you’re a blogger, a brand or a PR rep? Leave your comments in the box below.

Disclosure: While Sara Hawkins is an attorney, this article is for informational purposes only and is not to be considered legal advice.

Images from iStockPhoto and Louis Gray.

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About the Author, Sara Hawkins

Sara Hawkins is a lawyer, blogger and doer. No longer happy waiting for someday to find her, she's finding ways to make her somedays happen. Other posts by »




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  • http://customresearchpaper.net/ custom research paper

    what a great post! thanks a lot to the author for sharing!

  • Melanie

    Excellent article, as usual, Sara! I’m going to share with my audience.

    Could you clarify the info about the fine for me? When I researched this topic just before it went into effect (2009 — http://www.blogher.com/new-ftc-guidelines-and-what-they-mean-you), CNN reported that they’d talked to an FTC rep who said there would be no fines. Then, in 2010 Susan Getgood wrote that there were no fines b/c these are guidelines, not true regulations or laws (http://www.blogher.com/eleven-urban-myths-about-ftc-guidelines-endorsements-testimonials). Both of those articles are more than a year old, so I am wondering if things have changed given the info you share today. Is there a fine for noncompliance?

    Again, I appreciate all the information you’ve provided today and I look forward to clarifying this one issue. Thanks!

  • http://twitter.com/ellamedia Ella Media

    Appreciate the detailed information. Definitely a great read.

  • http://www.puredriven.com Patrick Garmoe

    Thanks for the excellent post.
    One question:

    So ad agency reps “Like” the page of a hotel client, and perhaps a member even stays at a client’s hotel and talks about what a great experience it was on his or her personal Facebook page or blog.

    No written or verbal agreement is made to do this between the hotel and the ad agency, nor is this something the ad agency encourages in any way.

    Employees simply do it on their own.

    If I’m reading your post correctly, then the agreement between the client and the ad agency would not have to be disclosed?

  • http://howtomakemoneyonline.org.uk Jon Simons

    It is a worrying time for anyone marketing online, particularly in big markets like ‘make money’, ‘lose weight’…

    It used to be just the large advertisers/publishers were targeted, but now I’ve heard of even small time affiliates (a few thousand a month) being targeted by the FTC.

    It’s too risky right now I feel not to consult with a lawyer experienced in these matters if you have any kind of significant business online, especially if you’re in a high risk market.

    It will all settle down in time, and in the long run I feel it’s a good thing since some of the scams being run (Acai, Biz Op…) were ridiculous in their incredibly aggressive billing tactics.

  • Melanie

    The links I share above are trying to read the end parentheses. They should be
    http://www.blogher.com/new-ftc-guidelines-and-what-they-mean-you and
    http://www.blogher.com/eleven-urban-myths-about-ftc-guidelines-endorsements-testimonials respectively. Thanks.

  • http://remarkablogger.com Michael Martine

    Disclosure is not a competitive disadvantage. It is very much an advantage because honesty wins trust and gets sales. People who like you will even go out of their way to purchase through your affiliate link. I’ve had people ask me for one when I did not present one in an article or if I simply mention a resource in a conversation. I tell them I can email or DM the affiliate link to them and when I do, they buy through it.

    What I would suggest is that if you feel like you’re hurting chances of a sale because of disclosure, something’s wrong in your business. Does anyone really think the words “compensated endorser” limit the sales of Colonial Penn Life Insurance. It’s Alex Freakin’ Trebek, for crying out loud.

  • raisingrealmen

    We always disclose on product reviews — it’s just right.

    That said, I am really puzzled how to disclose on Twitter (I’m so wordy, just getting essentials in 140 characters is a killer) and how to disclose on endorsements that aren’t on my site. For example, if a publisher sends me a book, hoping for a back cover endorsement, how does disclosure work? I’ve never seen a back cover endorsement that said, “Endorsers given free copy of book.” It just seems obvious! 

  • http://www.jmlalonde.com/ Joseph Lalonde

    Thanks for the great post on this murky area.

    I’m a new blogger who will be using affiliate links and I was wondering about disclosures. Looks like I may need to make something up.

    Joe Lalonde
    http://www.jmlalonde.com

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Melanie,

    The FTC can, and does, fine people and companies for non-compliance with any of their thousands of different rules. As an administrative agency, there is an entire body of law that they follow when they’ve determined someone has violated a rule. Fines are often the last resort, as they’d much rather get the person or company to change their method of operation. If an investigation determines there is a violation, the first step is written notice. That’s what happened in the Ann Taylor blogger case. The FTC understands that there are some who just don’t realize the rules exist. Unlike laws, where we’re assumed to know they exists even if we don’t, the FTC knows that sometimes we negligently stumble into their territory. It is the egregious cases, the continued violations and the complete disregard for the consumer that merit the fines.

    The $11,000 fine is a bit of a misnomer actually. 15 U.S.C. § 45(l),(m) sets out the fine at $10,000 but the Federal Civil Penalties Inflation Adjustment Act has allowed it to be adjusted to $11,000 in 2000 and then to $16,000 in 2009. 

    The average blogger is not likely to be fined, however depending on the situation they may get communications from the FTC advising of how to comply. Bloggers who hire themselves out to companies to manage campaigns really need to be on top of this though, because at that level of involvement and directing other bloggers under the umbrella of corporate management the stakes are higher.

    With the fine as the final form of enforcement, the FTC at that point has likely exhausted all other efforts to obtain compliance. It’s like with baseball, in general you get at least 3 tries. However, if on your first try you aim to bean the pitcher in the head you may not get that 2nd or 3rd chance. Same with the FTC. 

    The FTC is not photo-radar – you don’t just go to the mailbox one day to find a letter telling you to pay up.

    If you have other questions, please let me know.

  • http://www.convinceandconvert.com/ jaybaer

    Good stuff, and not talked about enough. I’m a big fan off http://cmp.ly to help brands tackle this topic. 

  • http://www.limekwat.com Limekwat Media

    Great post, thank you!  I’ll keep this in mind during face time with my PR clients.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    This is an interesting question Patrick. Just like a lawyer to give you the answer ‘It depends.”

    As an everyday employee of the ad agency with Hotel ABC as their client, likely no disclosure would be needed. If, though, the employee works on the Hotel ABC account there may be some intent questions that need to be addressed. This is why the ad agency should have a clear policy about what employees should do.

    If the employee, however, is also a partner/principal of the ad agency there may be a high standard applied to the need for disclosure that Hotel ABC is a client. 

    This further creates issues with confidentiality. Many ad agencies keep their client lists confidential and in doing so may face a situation where an employee may want to ‘help’ but knowingly should disclose the relationship but due to confidentiality would risk his/her job. That is why having a clear policy for how employees share information about clients should be in place.

    Hope this helps. Of course if it creates more questions, let me know.

  • http://www.theelusivefish.com/ Rob Clark

    An excellent overview of the rules and the reasons for disclosing.  The one thing that I think is missing in regards to connections is that it is usually a ‘material’ connection; that is any exchange of goods, services or monies. 

    Also it’s not just an immediate transfer but if you are hoping to land a contract with a big company and are writing good things about them… that ought to be disclosed as well. 

    Rule of thumb: if you have to take a moment to ask yourself “should I disclose this?” then the immediate and only answer is “YES”.

    The other thing to remember is that your disclosure has to appear to be a disclosure.  If you were looking at a tweet on its own, will people recognize #ad as being a disclosure that it’s a paid placement?  Make sure your disclosure can pass the ‘grandma test’ … if grandma looking at your post doesn’t know that you’ve disclosed something, then for all intents and purposes you have not.

    Cmp.ly and my own company http://disclz.me offer shortened url that lead to full text disclosures for those needing to disclose in a tweet or status update.  The offering on DisclzMe for professionals lets you group all of your disclosures on a single page so it is clear where you stand.  Anyone visiting my own disclosure at http://disclz.me/RobClark knows my position with regards to any company I discuss in a way that a standalone disclosure message can’t convey.  We also offer – though not yet advertised on our site – options for agencies/brands to provide a customized and branded experience for online influencers they work with. Happy to talk about it offline with anyone interested.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Jon,

    It will settle down. The thing is scammers are never in for the long haul. They’re in and they’re out before being detected (or in many cases found) and on to their next scam. It’s the legitimate marketers who bear the brunt of the enforcement.

    The reason we have these is because some people can’t help themselves from taking advantage of others. The ‘good guys’ left behind then have to deal with the fall-out while the scammers have already moved on to their next thing.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Completely agree, Michael. If companies would just be upfront and trust their customers to want to support them. I’ve heard from a number of people that, just as you said, they’ll get DMs or emails from friends, customers, readers asking for the affiliate link so they can support you.

    People buy from those that they like. Honesty and integrity are foundational to people liking us.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi RRM! 

    On twitter, using #ad #spon #client has become the practice for disclosure. It’s not as common because it’s still new and, like you said, trying to get it all in with 140 characters can be a challenge. If you’re touting something with a link back to your blog that does disclose there is an argument that is sufficient because they can’t really do much w/o actually going to the link.

    Books are a different animal, as there is a long history in the publishing industry of providing complimentary books to potential reviewers and endorsers. The average person reading a dust jacket with an endorsement on it likely knows that the endorser got a free advance copy. Inside the book, though, there may be a general disclosure. Not always true, but for some it is.

    If your endorsement is used and you want to share it with your readers, followers, friends, likers, etc. the disclosure is simple. When you toot your own horn of “Look at me! I’m on XYZ book!” in the narrative you’re probably disclosing you received a complimentary advance copy of the book. Easy way to disclose.

    In the world of law and compliance, obvious doesn’t really exist. *sorry to burst your bubble*

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Joe, congratulations on your new blog. You’ll do fine! Just be natural and tell your readers if you have a connection. I saw you went to a movie recently. If you got in free as part of a screening just tell your readers you were invited to a screening. If you just went to a movie with friends no need to say anything. However, if you start doing a lot of movie reviews and then begin getting invitations to screening just remember to note which ones you pay for and which ones you get free.

    Last month I wrote an article about giveaways, you may want to bookmark it for future reading – http://www.socialmediaexaminer.com/social-media-promotions-and-the-law-what-you-need-to-know/

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Correct that if you have to ask ‘Should I disclose?’ then likely you should.

    Honestly, I’m not a fan of any disclosure that takes the reader to a 3rd party site. Why take traffic from ones own site?  I have not, however, used your service so I can not speak to it personally. 

  • http://empoprise-bi.blogspot.com/ John E. Bredehoft (Empoprises)

    Louis Gray has shared your post on Google+. Thank you for providing comprehensive coverage of the topic, along with some suggestions.

    One thing has struck me – are bloggers actually ahead of more traditional journalistic outlets in this regard? For example, I can’t recall any movie review columnist explicitly stating that he or she was invited to an exclusive premiere screening of a movie. Or do the traditional outlets assume that this is common knowledge that does not need to be disclosed?

  • myactivechild

    Hi! Great article thank you! I have just started up a blog affiliated with my website and have giveaways going that give a possible entry if the user leaves a review of one of the listings on my site. I don’t say what type of review it needs to be, just a review of one of the listings they have knowledge of. Does this seem ok to you? As for the disclosure I have it in my terms of use which is in the footer of the site. Do you think there should be an additional disclosure on posts with affiliate links once I start to use them or does the link within footer suffice? Thanks so much!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Jay,

    Thanks for stopping by and commenting. I’m not a fan of comp.ly for a number of reasons. I think the concept is great but the execution is wrong. As a destination, I don’t want to move traffic away from my site unless there is a legitimate purpose. Disclosure can be accomplished without moving traffic to a 3rd party. Moving traffic to a 3rd party site may not be in the best interest of the original destination site and it may leave readers confused or, worse, not coming back to the original destination.

    You are a very savvy web user and much of this is very intuitive to you now. I’m sure you have clients that have varying degrees of expertise with internet usage. The questions, though, is not what you, me or our clients think of as disclosure but rather what would the reader understand. Disclosure to other web professionals can look very different than that to the average 50-something, or even 20-something.

    I have seen comp.ly in use. And any disclosure is better than no disclosure. I’d just like to see it stay on the originator site and be more understandable. The one size fits all solution isn’t right either b/c the disclosures may not tell the whole story.

    If you ever want to discuss this in more depth, I’d be happy to.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Completely agree, Michael. If companies would just be upfront and trust their customers to want to support them. I’ve heard from a number of people that, just as you said, they’ll get DMs or emails from friends, customers, readers asking for the affiliate link so they can support you.People buy from those that they like. Honesty and integrity are foundational to people liking us.

  • http://sarafhawkins.com/ Sara F. Hawkins

    Hi Jon,It will settle down. The thing is scammers are never in for the long haul. They’re in and they’re out before being detected (or in many cases found) and on to their next scam.

    It’s the legitimate marketers who bear the brunt of the enforcement.The reason we have these is because some people can’t help themselves from taking advantage of others.

    The ‘good guys’ left behind then have to deal with the fall-out while the scammers have already moved on to their next thing.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    This is an interesting question Patrick. Just like a lawyer to give you the answer ‘It depends.”

    As an everyday employee of the ad agency with Hotel ABC as their client, likely no disclosure would be needed.

    If, though, the employee works on the Hotel ABC account there may be some intent questions that need to be addressed. This is why the ad agency should have a clear policy about what employees should do.

    If the employee, however, is also a partner/principal of the ad agency there may be a high standard applied to the need for disclosure that Hotel ABC is a client. This further creates issues with confidentiality. Many ad agencies keep their client lists confidential and in doing so may face a situation where an employee may want to ‘help’ but knowingly should disclose the relationship but due to confidentiality would risk his/her job.

    That is why having a clear policy for how employees share information about clients should be in place.Hope this helps. Of course if it creates more questions, let me know.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi there and congratulations on starting a separate blog associated with your website.

    To get add’l information about giveaways, you may want to read my article from last month – http://www.socialmediaexaminer.com/social-media-promotions-and-the-law-what-you-need-to-know/

    I am of the school of thought that affiliate links should be disclosed when they are used. Unless every single link is an affiliate link, separate disclosure should be made. It would help your reader to understand that by clicking on a link they are or are not being taken somewhere that you have a material and possibly monetary connection.

    If your website is a retail site and you want to link to your own product on the blog the disclosure can be very natural –  “check out our widget” – with widget being linked.

    I can’t comment specifically if what you are doing is OK b/c I don’t offer legal advice to non-clients. But if you think you should tell people then just so in your own voice and make it natural.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello John,

    Thank you for letting me know how you got here. 

    Journalistic ethics do not apply to bloggers and are not governed by law. The journalism field as it once existed in traditional media is starting to blurr with new media and the disclosure issue is become a sticky wicket for them.

    Traditionally, journalists can only accept things of nominal value which help facilitate their reporting. To review a movie you have to see a movie. To write about the newest piece of technology you’d have to have used it. Movie screenings are pretty well understood to be free to journalists so they can write about it to create a reason for people to see (or in some cases not see) the movie. The average movie review reader would know that the reviewer saw the movie for free. With products, many traditional media companies have long-standing policies about what happens to real product after they’re been used, and the policy does not usually incude the journalist keeping it for themselves.

    Because bloggers are not subject to the same journalistic ethical standards, it became unclear as to why bloggers were writing about products, services or events. And, more specifically, what is happening with the booty gleaned from these discussions.

    Now, the lines are starting to blurr between traditional media and journalistic ethics and new media and its lack of standardized industry ethics. When industries are unable to self-police then the government steps in. That’s exactly what happened .

    I’ve been to movie screenings and it’s usually pretty easy to tell who works for a traditional media outlet and those who blog – those who blog are the ones taking the post-screening swag while those who consider themselves to be journalists just keep walking.

    We might be seeing some changes soon if people are feeling mislead.

  • Joanna

    Do you have any suggestions for Wikipedia? It seems as though marketers are not encouraged to correct information on pages due to disclosure issues. I would love to see a blog post on the greater topic of disclosure and ethics surrounding some of the UGC sites.

  • http://www.theelusivefish.com/ Rob Clark

    Thanks for the reply Sara.  With regards to my service and cmp.ly, I would say they are not so much for use with blogs as they are with Twitter or Facebook or any other social property with short updates.  As the FTC said shortly after releasing the guides, if you don’t have room to disclose in your tweet you don’t have room to talk about it.  

    On a blog you’ve room enough to disclose and elaborate greatly. But in 140 characters, not so much so.

    That’s where dropping a link that serves as notice of a disclosure helps.  disclz.me/giftk speaks better to there being a disclosure moreso than http://bit.ly/o8jaCx or some such pointing to a general disclosure statement would.  Better for me to send them to disclz.me/RobClark which links to my other social presences than to send them to the general search results on an ‘ad’ or ‘disclose’ hashtag.  And for an agency or brand that may have some very specific verbiage they wish used, it ensures compliance of such.  Lets face it, if the FTC ever made a move to enforce, it would be against a brand who got a little too loose in what they allowed in an outreach program.

  • http://twitter.com/CMPLY CMP.LY

    Hi Sara,

    First of all, thank you for a great post updating bloggers on the current status on disclosure issues.  As you point out, it is important that we discuss these issues with regard to responsibility as opposed to unfounded fear or confusion.

    I am sorry that you feel that way and I urge you to take a closer look.  I would be happy to clear up any confusion.  I am not sure if you have see recent updates to our solutions and to our web site.  We believe that our updated icons are quite readable and easily understood by all.  Our disclosures are far from one-size-fits-all and, in fact, offer incredible flexibility with regard to policies, disclosures and applications for individual users.

    As Rob pointed out below, there are specific challenges to short-form messages that we address specifically.  It is a significant distinction that a link that is readable on its face and always provides legal or disclosure language is far more suitable than a generic link.  The same follows for a clear indication of a disclosure in the body of a post, regardless of space constraints.  With standardized disclosures that work across platforms, it is significantly easier for consumers to understand the true meaning of disclosures and for the advertiser to monitor for, and confirm, compliance with their policies.

    To be clear, the FTC has maintained throughout that their focus is on the advertisers who create and leverage marketing programs to 1) Inform program participants of disclosure requirements and policies, 2) to document process and monitor for disclosure in their programs and 3) to
    be able to identify participants for follow up if there are issues around compliance with their policies. 

    Our mission, from the inception of CMP.LY within hours of the FTC announcing updates to the guidelines, has been to simplfy and standardize disclosure statements in Tweets, Status Updates, blog posts and more.  For advertisers to address the points above, standardization
    will be key to connecting the dots and for monitoring programs for compliance.  Hashtags, other ad hoc solutions and leaving it up to each individual to write their own disclosures make it nearly impossible to track posts or to ensure any level of compliance (in particular in monitoring for the omission of a required disclosure).

    While it is true that a visitor to your site can opt to follow the disclosure link off your site to get more information on the specific disclosure that you make, the CMP.LY disclosure URL, text and/or disclosure badge displayed on your site are readable on their face, indicate the type of connection being disclosed and the link provides additional detail and documentation for those who want to better understand those relationships.

    Disclosures need to be visible, readable and actionable within the body of a post (Tweet, Update or Post).  Disclosure pages and policies that are posted on a blog are helpful in being open and transparent with your audience, but they do not make a clear disclosure at the individual post level.

    Futhermore, advertisers are responsible (under FTC in the US and ASA in the UK) and potentially liable for the representations made about their brands, products and services. 

    Ultimately, advertisers and their agencies will adopt policies and process that manage their risk and protect consumer trust in their brands.  We have been on the forefront of these disclosure issues and it is our strong belief that we address these concerns for advertisers, agencies, bloggers, affiliates and consumers with transparency, simplicity and clarity that is unmatched. 

    We look forward to discussing in more depth and we are happy to answer any questions that you might have.

    Tom Chernaik
    Founder and CEO
    CMP.LY

  • http://www.jmlalonde.com/ Joseph Lalonde

    Sara, thanks for sharing your article. I think I stumbled upon it a couple of weeks ago when my employer was running a Facebook contest and we were trying to figure out the ins and the outs of contests, giveaways, etc…

    Also, thanks for the information on whether or not to disclose about the movie. For this movie, we paid to get in. Who knows, maybe in the future I’ll get offered some free screenings. Wouldn’t that be cool?

    Joe Lalonde
    http://www.jmlalonde.com

  • http://www.directionstech.com.au April Neylan

    Great article Sara! Thanks very much for this information.

  • http://www.tallongonline.com/ Aleta

    I’m going to share this – thanks!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Rob, thank you for the additional information. I’ll have to think about this some more. I believe the concept is a good one. However, I’m still not certain that the ‘average’ user would understand that disclz.me/ is more meaningful than #ad or #spon. I don’t think the hashtags are the best solution either, so it’s not like I’m giving one more weight than another. 

    I’m very pro-disclosure, as you can see. If it means clicking on a link to get a more complete picture of what’s going on – especially on limited character platforms – then that is better than something that is arbitrarily assumed to be understandable. 

    My challenge is to take myself out of the role of attorney, MBA, blogger, content provider, author, etc., and into the role of ‘average consumer’. It’s a challenge to do, but it’s something marketers, PR people, brand folks and all the consultants and service providers need to do as well. We assume that others know what we do.

    And yes, from history, we’ve seen that the FTC has sought compliance with a brand (Ann Taylor) and not the individual bloggers or even the outside agency hired to run the program. That’s not to say that ‘big time’ bloggers would be immune.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Tom, thank you for your detailed reply. I’ll definitely need to learn more. I can see how cmp.ly can be useful. I do not doubt that the reasoning behind the method is sound. For me, it’s the method and while it would be terrific if there was, in fact, a standard (similar to the journalist code of ethics) it woud make it easier for consumers and I’m all for that.

    As I mentioned to Rob, below, its not my peers I’m concerned about but rather ‘the average consumer’. And with that, I realize that the ‘average consumer’ varies from industry to industry and from company to company. 

    The fact is that something needs to be done to get brands, agencies, consultants on board with the fact that disclosure is good. Additionally, the fact that there was no standard set is a significant challenge to many organizations. In addition, there are many disclosures out there that are boilerplate and people slap ‘em up and think they’re covered without actually reading what they’re putting out there.

    I appreciate you reaching out to me personally, as well, to offer additional insight. I’ll probably take you up on it because I think why is very sound.

    Kindly,
     Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Thank you for your kind words, April!

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Aleta, thank you for taking time to read, comment, and share my article.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Joanna,

    Ah, UGC. There have been a number of situations where employees, consultant or principals of organization have gone in and ‘beefed up’ content to improve the public presence of themselves or an organization. Amazon has been taken to task for paid reviewers posting content. Some brands are especially careful and set out clear social media policies. Whether it’s an employee posting positive (or negative even) information, it’s a challenge to control what unauthorized people do on third party sites.

    I have seen both sides where people are clear about who they represent (such as Tom above who identifies himself as the CEO of the company he’s talking about) and those who go into stealth-mode to bash a competitor or promote their own company under the guise of an independent party.

    It is possible for the FTC to become involved if it is an especially egregious case, but for the most part the site Terms of Service (which most people don’t read anyway) are the controlling guide.

    Ethics becomes a challenge because there are many shades of gray, and it often varies from person to person. It would make for an interesting discussion though.

  • Nancy

    Definitely a very informative article and I’m sharing with my friends…

  • steveestro

    I think the biggest challenge the FTC has regarding the rules on social media is themselves.  As seen in the FTC About Us, “The FTC deals with issues that touch the economic life of every American.” | http://www.ftc.gov/ftc/about.shtm

    The Internet aka world wide web is global in nature.  How can the FTC operate in it’s silo and govern sites that might stem from international domains?  

    On a domestic matter: how much regulation is too much?  The FTC is still governed by the US Constitution.

    In reference to the Pharma companies and Financial Institutions: If the FTC does not give “you” an answer, then it is up to “you” to come up with one. 

    The bus already left the building.  Don’t wait for the FTC to get started with your social media strategy.  

    ____

    Excellent Post Sara.  What Say You?

    Steve Estro
    http://www.estrocommunications.com/
    @steveestro:twitter | #socialmedia

  • Jen McGahan

    I learned as much from the comments section as the actual post. You and your readers are very helpful Sara; thank you. I believe it’s natural to lead into any sort of testimonial with a comment on where or how you were introduced. If a reader/consumer doesn’t see that, the promotional language probably wouldn’t pass the sniff test anyway. 

  • http://twitter.com/MomsGetReal MomsGetReal

    I maintain a page on my site, http://momsgetreal.com, with a general FTC disclaimer, and then in each individual blog in which I am reviewing something that was provided to me for free for the purposes of review, I clearly disclose it at the end of the post by saying, “X provided me with a copy of her book/sample of her product so that I could provide my honest review. No monetary compensation was provided.”

    It’s not that hard to be compliant, and if you want to be seen as trustworthy by your readers it is important to do.

  • Joel Skretvedt

    Yes, Great article – very informative and well written. Bookmarked! Thank you.

  • MartyThompson

    Nicely done, Sara. Folks need to understand that these guidelines didn’t appear out of nowhere, just for the sake of social media. Might you write something about social media and NLRB concerns in the near future? This is another area many in this space need to understand.
    Marty Thompson
    Chief Banana
    http://www.twobananasmarketing.com

  • Sunil Gandhi
  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Steve,

    The global nature of the internet has posed a variety of problem for enforcement not just for the FTC but pretty much all law enforcement around the world. The most egregious of violators often do something that touches the US, giving jurisdiction to the US agencies. Getting to the people in charge may require additional steps but when US funds are involved there are a variety of means available to stop the violators. As mentioned above, though, those are the people who laugh in the face of the law and move on to the next scam.

    How much regulation is too much? It is a slippery slope. One often scaled because industries fail to police themselves and set viable standards that are applicable across the board. Many industries do an exceptional job of self-monitoring, but that is because the penalties can be extremely high because the risk to consumers is seen as too great not to regulate.

    We’ve seen the problems surface in the mortgage industry the last few years. Predatory consumer practices abound and trying to reign them in after they’ve been unleashed has proven troublesome. 

    When it comes to social media, there is no standard across all industries. The who idea behind it is engagement and that will often bring out both the best and worst in people. There are those who truly engage and there are those that spam timelines left and right. As a blogger, my best friend is my spam filter. Some of the best features of Twitter are the ability to filter the ‘noise’. 5 years ago there was no such thing as Social Media and we now don’t have the luxury to take a ‘wait and see’ approach. A good deal of the strategy is to throw it out there and see what sticks. Not always the best way to do it, but someone has to be the first.

    Thank you for your comment and for reading my article so closely.

    Regards,
    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Jen,

    Thank you for your kind words. There should be no embarrassment in disclosing how we got something. If the item or experience was worthwhile to share, then why not be up front about it. All people want is honesty. If they dont like it, then, that’s really a ‘them problem’.

    Kindly,
    Sara 

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Shanda,

    You’re absolutely right, it’s not that hard to be compliant. People often spend more time figuring out how to get around the rules than just putting the truth out there and moving on.

    Many people also just use boilerplate disclosures that don’t fully set out their business practices, but instead are general and overbroad. A well-crafted disclosure statement can go a long way.

    Regards,
    Sara

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Glad to know you found it informative and well-written, both of which are goals of mine.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello Marty, thanks!

    There are some cases going on about how far employers can reach to employee’s outside time and activities when it comes to Social Media policies. The NLRB has taken up a few but there have only been a few (I believe less than 5) public opinions on these situations – one as late as 10/3/11.

    It will continue to be a growing concern as more people take to Social Media platforms as the modern-day water cooler.

    Kindly,
     Sara

  • Kassy Killey

    What about offering customers an incentive for a testimonial or for tagging your business on Facebook. They are not likely to be up on this as its a one time thing. And they would have purchased whatever they are “reviewing” but getting a thank you gift of sorts. Plus they wouldn’t be doing this on their own blog. Just their facebook page or for use on the company’s marketing materials. Or what about the Companies who give a discount for sharing their page? Thanks 
    PS I couldn’t post from my android phone as the login boxes wouldn’t load right :-(

  • http://twitter.com/CyberCelt Eileen Trainor

    I have always disclosed. I started disclosing in the post. A pay-you-to-blog company that just went public told me to remove the disclosures.  No more than a month or two later, they were saying we needed disclosure policies on our blog. So, I have both, in post and blog wide disclosure. I went one step beyond and adopted the word of mouth marketing ethics for blogs. This was in 2006, and I have never had any problems regarding disclosure.

    Most of the bloggers I know are honest and transparent. I wish truth in advertising were the rule rather than the exception.

    If you wish, you may view the disclosure policy and ethics statement.
    -disclosure policy: http://advertising-for-success.blogspot.com/2006/11/disclosure-policy.html
    -WOM blogging ethics: http://cooladzine.blogspot.com/2006/11/word-of-mouth-marketing-ethics-for.html

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hi Kassy,

    The FTC Guidelines require a material connection and the scenarios you describe likely would not rise to that level. There are many who want to blog about things they’ve purchased and they usually mention that they paid for it themselves just to be clear. I have blogged about things I’ve purchased at a discount and it’s very natural to using the narrative for disclosure.

    Just ‘liking’ a page or participating in a general promotion is not likely to be sufficient to create a material connection. There really is no relationship.

    Hope this helps.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Thank you for visiting and sharing your experience, Eileen. IF – a big word for just two tiny letters. I know ‘big time’ social media consultants/strategists/gurus/whatevers who preach it but don’t do it themselves. So when they’re acting as mentors, whether knowingly or just solely due to their stature within the social media field, and people don’t find disclosures on their sites then there is no ‘best practice’ being formed. People will preach a lot but until they put into practice what they preach the battle will continue to be uphill.

  • http://jcdawkins.com/ JC Dawkins

    Thank you very much for this informative post.  I’m glad for the reminder about FTC guidelines.  Sara, is there any “suggested” language for affiliate marketers to use?  I didn’t see that above, but I may have missed it.  ;`)

    myhomebusinessmarketing.com

  • Mbc1163

    Excellent article!

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  • http://twitter.com/SaraFHawkins Sara Hawkins

    Hello JC,

    There is no suggested language for affiliate marketers with regard to the FTC disclosures. If every post contains affiliate links you can likely add a static footer or other more permanent disclosure. Also, as an affiliate marketer your site disclosure policy should be carefully crafted to clarify this fact. I would think your audience would support your affiliate links if you are providing them with useful content. 

    Sara

  • http://twitter.com/WeisiPR weisili

    Excellent post!! Thanks for the elaboration on the new FTC Disclosure Guidelines. Before reading your post, I actually considered the new guidelines as some sort of loose regulations that people can choose to comply or not. BUT I WAS WRONG.
    Indeed, “there’s a lot left open for interpretation as to the “how” and “where” this disclosure must be made,” as you said in the post, and especially in the social media realm, with everything changing so fast, it’s hard to set a unified standard that can be applied to every situation. However, after careful review, I do agree with you that the new guidelines are “not onerous, overly detailed or difficult to understand.” FTC makes a clear point that businesses and individuals must HONESTLY and CLEARLY disclose the relationship between them and the seller of the product or service IN WHATEVER WAY and make sure the average readers can understand the disclosure without difficulties.

  • http://www.healthymarketingideas.com Sarah

    Great post, Sara, thank you for putting this together. I especially appreciate your emphasis that this all boils down to helping your readers feel like they’re getting the full story. Kind of makes the whole thing simple.

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  • http://twitter.com/SaraFHawkins Sara Hawkins

    Thanks for reading and sharing your comment, weisili! Glad you found the article helpful.

  • http://twitter.com/SaraFHawkins Sara Hawkins

    Thanks for your kind comment, Sarah. Really appreciate you taking the time to read as well as share your thoughts.

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  • http://www.pvariel.com Philip Verghese Ariel

    Hi Sara,
    This is fantastic.
    Great info.
    Well researched one and well presented.
    I appreciate your ability to present the things
    in a systematic way.
    I am here via g+
    best regards
    phil

  • http://twitter.com/SaraFHawkins Sara Hawkins

    P V Ariel, Thank you.

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  • Voltage Spike

    How do you make a disclosure in a tweet?  There’s not enough room to make a recommendation.

  • http://sarafhawkins.com/ Sara F. Hawkins

    To disclose in a tweet you can use the #spon or #ad hashtags. #spon = sponsored and #ad = advertisement, both of which indicate you are being compensated in some way. Another way is to give a link to something that has a disclosure. 

    In addition, any links should clearly contain some type of disclosure.

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  • http://www.carriedils.com/ Carrie Dils

    Hi Sara,
    Great, thorough explanation of FTC rules and how it impacts bloggers! I came across your article via Google while researching an article formy site (on the topic of affiliate marketing) and included a link to your post. Great info.

    Cheers,
    Carrie

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  • Garet

    Hi Sarah,
    I am working on a project at school and was wondering when commercials use the caption “real people. Not actors” what does that really entail. Is there a legal loophole which allows these “real people” to still get paid for their appearance?

  • http://motherbabychild.blogspot.com LC Hunt

    Does this apply distributors in direct marketing companies or ambassadors for a brand?

  • http://www.facebook.com/endorseme.co Robert Robinson

    Great post

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  • http://sarafhawkins.com/ Sara F. Hawkins

    It applies to anyone who has a “material relationship” with the company. It would be easily argued that both a direct marketing company and brand ambassador would fit the definition of “material relationship”.

  • http://sarafhawkins.com/ Sara F. Hawkins

    Advertisers have to distinguish between actors and real people due to truth in advertising laws. It doesn’t matter if they do or do not get paid, the laws relating to advertising dictate how advertisers may need to distinguish the people in their advertisements for the public.

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  • NCBrian

    “There is no fine for not complying with an FTC guide.”

    FTC.gov

  • http://sarafhawkins.com/ Sara F. Hawkins

    @NCBrian:disqus correct. The Guide is not a law, but merely a tool the FTC has created to assist those who may need to make such disclosures. The FTC levies fines and pursues legal action for non-compliance with rules, regulations, and laws. Non-compliance with the information set forth in the guide may or may not rise to the level of non-compliant or illegal activity for which the FTC has oversight.

  • http://www.extraincomeblogger.com Suné @ ExtraIncomeBlogger

    I was just wondering, I don’t live in the U.S. (I live in South Africa) – therefore this would not be applicable to me, right? Or would it be applicable seeing as I promote U.S. services and products?









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