Can The FTC Enforce Honesty As The Best Policy?

from the Truth-Be-Sold dept

Wed, Apr 15th 2009 4:20am — Michael Ho

The FTC's advertising-practices division is considering an update to ad guidelines that would hold bloggers liable for false or misleading statements, if they are compensated to promote or review a product. The FTC will vote on changes to its guidelines this summer, and the agency says it will review public comments beforehand. But is additional regulation really necessary?

While some ad agencies are worried about the "chilling effect" new regulations might have on nascent viral campaigns, other groups point out that transparency should be at the core of any social media campaign in the first place. And this is concept that should be recognized before any word-of-mouth ad campaign is even started: transparency and authenticity are the keys to a brand's marketing reputation. If a company thinks it can fool consumers with astroturf campaigns, it should really think twice about the potential damage such dishonesty can do. In fact, ultimately, running honest marketing efforts will be much more effective for winning over consumers. So although the threat of new regulations might force some companies to reconsider their sneaky viral ads plans, the more realistic penalty for disingenuous ads is the loss of trust from valued customers.

Assuming, though, that additional gov't regulations are actually instituted -- holding bloggers liable will not necessarily solve the "problem" of paid blog reviews. Presumably, the objection to paid reviews is that such content misleads consumers and that companies behind the fabricated opinions are free to create as much false info as they want. However, if the liability for this unsavory behavior is laid at the feet of bloggers, then the blame is shifted from the company (that is more justly at fault) to a possible multitude of bloggers. An evil corporation bent on promoting misinformation would love to spread the liability around, since the legal burden would be on individual bloggers. The unintended consequence might be that even more dishonest ad campaigns are encouraged since the liability does not lie with the corporations backing them.

So before the FTC begins regulating blog posts, some thought to the ramifications will hopefully be brought up. The goal of protecting consumers may be a noble one, but the side effects of bad regulations could potentially make things worse.

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Filed Under: bloggers, ftc, viral marketing

18 Comments

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Anonymous Coward, 15 Apr 2009 @ 4:29am

Crock
What I think is funny is that I can turn on my television for a few hours and see any number of misleading advertisements and celebrity endorsements of products that make rediculous claims, but the FTC isn't doing anything to clean that mess up. Maybe they should start with the big boys first.
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Anonymous Coward, 15 Apr 2009 @ 5:08am

Misleading vs. Lying
There is a big difference between misleading and lying. Politicians do both.
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NullOp, 15 Apr 2009 @ 5:16am

Lying and Misleading?
Telling lies and misleading customers is at the VERY HEART of advertising! How can the FTC be against that when most everything you hear on TV is misleading? I looked at an ad last week for a printer and the mfg stated that it would make you thinner and better looking just to have the printer in your house!
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Anonymous Coward, 15 Apr 2009 @ 5:36am

Why hold bloggers feet to the fire when Madison Ave is basking about the pool?
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Just Another Moron in a Hurry, 15 Apr 2009 @ 5:59am

Who's Fault?
"the blame is shifted from the company (that is more justly at fault) to a possible multitude of bloggers"

I'd like to know under what circumstances the company is more justly at fault. In a situation where the company tells its hired bloggers to engage in this sort of dishonesty, then the company should still be held liable.

However, if the company only told the blogger to promote their product, but didn't encourage dishonesty, then is the company really to blame? If so,why?
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Kelly, 15 Apr 2009 @ 6:10am

personal responsibility
If a blogger (or anyoone else) wishes to take money to influence public opinion, then he should be responsible for what he writes / says. (He should be responsible even if he's not paid, but that's a whole different argument.)

I don't object to holding the companies liable for misleading campaigns, but neither do I object to holding the bloggers responsible, either.

"But that's what they paid me to do," or "The other guy behaves much worse than I do," are not defensible excuses.
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DS, 15 Apr 2009 @ 6:38am

I love the "Dur, tv always lies" reaction to anything like this. The fact is that there are regulations currently on TV against such things. Of COURSE the don't have to do with artistic license (Pepsi won't make my life better), but it does have to do with factual claims about products. That's why you see so many disclamers in adverts. If the proposed regulations just expand this out to 'viral' campaigns, I'm all for it. There's already more than enough people/situations that slip through loopholes, we don't need more.
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Anonymous Coward, 15 Apr 2009 @ 6:46am

Guilt
However, if the liability for this unsavory behavior is laid at the feet of bloggers, then the blame is shifted from the company (that is more justly at fault) to a possible multitude of bloggers. An evil corporation bent on promoting misinformation would love to spread the liability around, since the legal burden would be on individual bloggers.

Huh? That sounds like Mike Ho thinks "guilt" is some kind of zero sum game where there's only so much "guilt" to go around and that by making one party more liable then some other party must somehow be less liable to compensate. Like guilt has to be rationed or something. That's just wacky and things don't work that way. Guilty parties create their own guilt so there is always plenty.
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Anonymous Coward, 15 Apr 2009 @ 6:57am

Fraud
Yeah, we don't need laws against fraud. The market will take care of it all through "reputation". In fact, we don't really need laws at all because concern about "reputation" will cause people to automatically behave appropriately. Uh huh. Hey, don't bogart that pipe.
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Overcast, 15 Apr 2009 @ 7:19am

If they are looking to enforce 'honesty' could we start with politicians first?

After all - they are lying... Lying on the web, lying on the TV, lying on the radio, lying in the newspapers.

And most of the time, it's quite provable.

considering an update to ad guidelines that would hold bloggers liable for false or misleading statements

What about 'Change we can believe in' - there's been no change. - So start there.
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Michael Lockyear, 15 Apr 2009 @ 7:42am

mmmm...
How do they expect to apply the proposed rules...not all bloggers are based in the US? Hopefully politicians will NOT realize that the internet is global and pretty much beyond current attempts at regulation.
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Overcast, 15 Apr 2009 @ 8:03am

How do they expect to apply the proposed rules...not all bloggers are based in the US?

Well - eventually through a "Global Government" - but alas; they are still working on that Fiasco.
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Anonymous Coward, 15 Apr 2009 @ 8:39am

"Transparency" has my 1,234,643 votes for Most Overused Word of 2009. As sson as I see that word, my eyes glaze over and my mind shuts down.
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Anonymous Coward, 15 Apr 2009 @ 8:56am

the problem is with the way its set up.
companies are required to hire auditors to "verify" that there accounts are clean but those auditors arent held accountable if they give a clean report when it isnt + if they do give the company a bad report they loose business, so what really happens is auditors end up helping there clients any evidence there is.
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mikeho, 15 Apr 2009 @ 11:58am

Re: Guilt
I agree guilt is not a zero-sum game. But someone could definitely try to game the legal system to isolate the liability, right?
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Anonymous Coward, 15 Apr 2009 @ 12:51pm

Who elected these people?
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Surrey Automatic Gates, 1 Jun 2009 @ 7:53am

Power to the people
How can these people get elected?
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Guildford Web Site Design, 1 Jun 2009 @ 7:54am

free the internet
How can you enforce the internet?
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