FTC says bloggers must disclose payments and freebies when reviewing products or risk being fined $16,000

[Editor’s Note, 24 April 2016: This post was written in 2009. The FTC has a website that answers questions people are having about whether mentioning a product or service online constitutes an endorsement and if so, how to say that. See https://www.ftc.gov/business-guidance/resources/ftcs-endorsement-guides.]  Updated

This article raises a lot of questions. I wonder if this includes corporate sponsors of nonprofit organizations? Is it reportable advertising to have affiliate links such as the Amazon.com Associates Program on a Web site? Is it reportable advertising to have logos and links back to corporate sponsors and donors of chapter sites? If so, how do we go about reporting it to the FTC other than how it is already designated on a site as a corporate sponsorship/donation?

Blog post on the Orlando Sentinel http://blogs.orlandosentinel.com/etan_on_tech/2009/10/ftc-says-bloggers-must-disclose-payments-and-freebies-when-reviewing-products.html

posted by Etan Horowitz on Oct 5, 2009 2:54:12 PM

UPDATE 3:50 P.M.: As Jessica Gottlieb points out in the comments, I neglected to mention in my original post that advertisers could also face fines.

Bloggers who receive payments or free merchandise in exchange for reviewing a product or service must disclose that relationship, the Federal Trade Commission ruled today. New language is being added to the FTC’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising“, (.PDF) which were last updated in 1980.

In its announcement of the revised guidelines the FTC wrote:

"The revised Guides also add new examples to illustrate the long standing principle that 'material connections' (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service."

The FTC did not specify exactly how bloggers should disclose the relationships, and it's important to note that violating the new guidelines does not automatically result in a fine. The guidelines are meant to help advertisers and bloggers avoid breaking Section 5 of the Federal Trade Commission Act, which governs deceptive advertising.

"These are not regulations, these are guidelines," said Betsy Lordan, a spokeswoman for the FTC. "We are saying, 'We think it's a good idea if you do this.' If you violate the guides, you are not doing yourself any favors because you could have to pay a civil penalty. There are a lot of steps that have to happen."

In order for a blogger to be fined for not disclosing they were being paid by an advertiser to review a product, there would have to be a complaint, an investigation and ultimately a court ruling mandating a fine. Violations could result in a $16,000 fine, Lordan said. The fine used to be $11,000 but Lordan said it was increased to $16,000 within the past year. All possible violations will be reviewed on a case by case basis.

Lordan also said that the guidelines apply to Twitter, Facebook and other forms of new media advertising.

Ever since word spread earlier this year that the FTC was looking to crack down on bloggers, there's been a lot of debate about if guidelines were necessary and if so, what form they should take.

Orlando-based IZEA, which helped pioneer the sponsored blogging industry requires its bloggers to disclose when a post is sponsored. But that wasn't always the case. IZEA recently launched "Sponsored Tweets," which allows people to get paid to send Twitter messages on behalf of advertisers. Disclosure is also required in Sponsored Tweets, but not everyone thinks the disclosure will be apparent to everyone who reads a sponsored tweet.

IZEA CEO Ted Murphy actually met with the FTC and he has said he is in favor of stricter disclosure requirements.

Here are some reactions from local bloggers on Twitter.


See the original of this article for reader’s comments.

I guess this also puts an end to the tweets about products as a participation in a contest to win the product?

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