How will new FTC rules affect sampling?

Yesterday, the Federal Trade Commission announced that it had approved final revisions to their Guides Concerning the Use of Endorsements and Testimonials in Advertising, which address endorsements by consumers, experts, organizations, and celebrities, as well as the disclosure of important connections between advertisers and endorsers. These Guides were last updated in 1980 (i.e. pre-internet).

A key point of the new changes is that they are being applied to new media, including bloggers. The revised Guides 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.

On the surface, this would seem to indicate that any blogger who receives a wine sample from a winery, distributor, or agency would have to disclose this fact or possibly face penalties. The question, however, is what constitutes an “endorsement”? Here is an excerpt from the guide.

The Commission does not believe that all uses of new consumer-generated media to discuss product attributes or consumer experiences should be deemed “endorsements” within the meaning of the Guides. Rather, in analyzing statements made via these new media, the fundamental question is whether, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and therefore an “advertising message.” In other words, in disseminating positive statements about a product or service, is the speaker: (1) acting solely independently, in which case there is no endorsement, or (2) acting on behalf of the advertiser or its agent, such that the speaker’s statement is an “endorsement” that is part of an overall marketing campaign? The facts and circumstances that will determine the answer to this question are extremely varied and cannot be fully enumerated here, but would include: whether the speaker is compensated by the advertiser or its agent; whether the product or service in question was provided for free by the advertiser; the terms of any agreement; the length of the relationship; the previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and the value of the items or services received. An advertiser’s lack of control over the specific statement made via these new forms of consumer-generated media would not automatically disqualify that statement from being deemed an “endorsement” within the meaning of the Guides. Again, the issue is whether the consumer-generated statement can be considered “sponsored.”

Thus, a consumer who purchases a product with his or her own money and praises it on a personal blog or on an electronic message board will not be deemed to be providing an endorsement. In contrast, postings by a blogger who is paid to speak about an advertiser’s product will be covered by the Guides, regardless of whether the blogger is paid directly by the marketer itself or by a third party on behalf of the marketer.

Ok, fine. That covers direct payment and independent purchases, but it is still unclear whether free wine samples would qualify. Additionally, the Guides follow up with:

Even if that consumer receives a single, unsolicited item from one manufacturer and writes positively about it on a personal blog or on a public message board, the review is not likely to be deemed an endorsement, given the absence of a course of dealing with that advertiser (or others) that would suggest that the consumer is disseminating a “sponsored” advertising message.

This is not to say that use of a personal blog means that the statements made therein would necessarily be deemed outside the scope of the Guides; the Commission would have to consider the rest of the indicia set forth above to determine if the speaker was essentially “sponsored” by the advertiser.

Ok, how do we interpret this?

I must relay that the following statements are my opinion alone and do not constitute, in any way, legal advice. If you have concerns, I recommend that you seek legal counsel.

If, as a winery or their representative, you send a sample to a wine blogger, will an article written by that blogger be considered an endorsement? If you only ever send ONE shipment to that blogger, perhaps not. But, if you have regular contact with a blogger and send them samples on a regular basis, perhaps so.

This may all be moot, considering the difficulty the FTC will have in enforcing the new rules. Caroline McCarthy at CNET makes some good points. There are thousands and thousands of blogs out there. “[N]ot to mention a lot of different kinds of bloggers, and a lot of marketers,” she says. “And as some media critics have pointed out, undisclosed endorsements of freebies have plagued some sectors of the magazine industry for decades now.” What would happen if Wine Spectator had to indicate where every wine they review comes from? I bet Marvin would have a fit.

If you are a blogger, I would strongly caution you to err on the conservative side and disclose the source for any samples you may review. I have recommended this in the past anyway, but now there is extra incentive.

These rules go into effect as of December 1, 2009.

Tags: Bloggers, blogging, FTC, regulations