The FTC’s new Guides Concerning the Use of Endorsements and Testimonials in Advertising (“the guidelines”), regulating blog postings that endorse products, take effect December 1, 2009. These guidelines represent the first time since 1980 that the FTC has updated its policies to adapt to new social media and the ever-growing presence of advertisement on the Internet. The guidelines seek to provide consumers with enough information to allow them to distinguish between an online reviewer’s personal opinion about a product and a reviewer’s opinion whose objectivity may be questionable. The guidelines require bloggers to disclose any material relationship they might have with a company whose product they are endorsing online. Failure to disclose could result in disciplinary action (probably a fine) not only for the blogger, but also for the advertiser or manufacturer whose product the blogger is rating. Though the guidelines also address celebrity endorsements, this Comment will focus on the guidelines’ effect on blogging and other online social media.
The guidelines have received a lukewarm reception. Though some commentators have noted that the regulations are long overdue, bloggers and advertisers alike have voiced concerns and objections. This Comment evaluates the new guidelines by acknowledging their necessity, exploring their reach to determine whether they have gone beyond optimal regulation, and finally concluding that they have not. Part I establishes consumers’ need for additional information when reading cyber reviews. By examining the language of the relevant guidelines and the illustrative examples provided by the FTC, Part II explores the guidelines, their breadth, and the parties affected. Part III analyzes the leading arguments against the guidelines and identifies additional arguments touching upon their regulatory efficiency. Part IV concludes, finding the guidelines a necessary and benign constraint given the lack of information available to online consumers. (more…)