Online Reviewing May Be Dangerous To Your Bottom Line. FTC Says Bloggers Can Be Liable
By Elana Centor on April 05, 2009
BlogHer Original Post
For the first time since 1980,the FTC is changing it's guidelines and it could have a chilling effect on bloggers who write online reviews. The new guidelines basically say "word of mouth" advertising is not exempt from truth in advertising laws. According to the Financial Times, the main target of the new guidelines appears to be the widespread practice of viral marketing in which companies recruit non-employees to talk up products in exchange for samples or promotions. Under the new proposed regulations which are expected to go into effect,bloggers will be held liable for statements they make about products.
If a blogger received a free sample of skin lotion and then incorrectly claimed the product cured eczema, the FTC could sue the company for making false or unsubstantiated statements. The blogger could be sued for making false representations. “This impacts every industry and almost every single brand in our economy, and that trickles down into social media,” said Anthony DiResta, an attorney representing several advertising associations. Financial Times
Advertisers are none too pleased, saying the new rules are "too stringent." and thatit will" stifle innovation" in social media. Does anyone really believe that? While the new rules may have a chilling effect temporarily, if the Infomercial industry is any indication,the FTC doesn't have the resources to enforce the regulations it already has on the books. According To Remy Stern's But Wait- There's More!( which I read on my iPod Kindle Application, Thank You Denise),The FTC typically fines less than 10 infomercials each year for false claims. That's less than 10 out of 300,000 infomercials that air each year in the United States and Canada. That,however, may be changing. In the past couple of months,infomercial marketer Kevin Trudeau and QVC were fined millions of dollars for false advertising. Trudeau was ordered to pay $37 million for violating an FTC order.That's the amount consumers spent on his book, The Weight Loss Cure "They" Don't Want You to Know About. He's been banned from TV for three years. Of course, a previous conviction in the '90s banned him from infomercials for life except for information infomercials. That isn't stopping him from publishing and selling his books. His latest -Debt Cures They Don't Want You To Know About is available on Amazon.Karen Oakes of the Debt Law Network has an extensive review which she doesn't pan the book. In reporting the QVC fine, The ShoppingBlog.com quotes QVC as saying they don't believe the programs were deceptive but they were accepting the fines to avoid further legal fees.
The settlement requires West Chester-based QVC to pay $6 million to consumers who bought the products and a $1.5 million civil penalty. [...]According to the Commission, QVC aired approximately 200 programs in which false and unsubstantiated claims were made about For Women Only weight-loss pills; Lite Bites weight-loss food bars and shakes; and Bee-Alive Royal Jelly energy supplements. In addition, the complaint charged that QVC violated Section 5 of the FTC Act by making unsubstantiated claims about Lipofactor Cellulite Target Lotion.
Meanwhile, in the same guideline change that will impact online reviews,The FTC just changed the rules of how advertisers can use testimonials. From now on, advertisers have to show "typical results" instead of the approach used now, "individual results may vary." Think Jared in those Subway spots.
Under the new rule, marketers using, say, body builders to advertise weight loss pills are also going to have to show an average lardass whose results might be more typical. You can guess how advertisers are reacting to the change... The revisions have drawn sharp criticism from product manufacturers, advertising agencies and trade groups who say it is the "aspirational" theme of their ads that motivates consumers to purchase their goods. Show less than the ultimate achievement, they say, and consumers are less likely to buy.
As some who is in search of the perfect stain remover--can someone tell me why the builders put white carpeting in my town home?-- I have a cabinet full of promises. It would be so nice to find a product that actually works. Of course, I was introduced to OxyClean via an infomercial and that has become a standard in my laundry room. But, I am also the owner of Mighty Putty ( didn't fix the handle on my beloved coffee mug that broke) ShamWow the Magic Bullet and a set of really horrendous electric knives - what was I thinking that day?
When my daughter was around seven years old she came back from a weekend at her dad's and asked me to buy the Food Saver.Today you can get the latest model for just three payments of $59.99. I resisted that product for several months. But it seems every time she went to her dad's she saw the Infomercial and pretty soon she could recite all the talking points. I finally caved when she put it on her list of Hannukah gifts that year. Now several things here. I must have been cooking in those days which is just a fascinating fact in and of itself. But, now suspect my daughter crafted some "marketing skills" watching that infomercial.
While I did buy the Food Saver that year, I didn't make that her "big gift",proving that my daughter learned a lot more watching those infomercials than simply how to save food. As for that Food Saver, it's either in a box in my garage or it got tossed when I moved several years ago. However,if you come to my house and open the first drawer in the kitchen-- the one right below the toaster-- you will find a drawer full of Food Saver rolls. We must have said Yes when the operator standing by said, 'But Wait! There's More." I love infomercials. They're fun. They're entertaining, and once in a while they have a really terrific products. I want to buy products from infomercials and I want to trust the reviews I read online about the products that I see on infomercials. That does not seem to be an unreasonable request. As far as the FTC's ability to really crack down on online reviews that may be disingenuous- many are not holding their breathe. Elana writes about business culture at FunnyBusiness.
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