Companies should monitor bloggers for disclosure of gifts, says FTC

Consumer regulator the FTC published guidelines to force publishers to be clear about anything that might influence their coverage of a company or event. The guidelines say that bloggers should disclose gifts so that the reader can judge whether or not an article functions as a paid endorsement.

Women's clothing company AnnTaylor Stores was investigated by the FTC over an event it held to promote its LOFT range. Attendees, some of whom were bloggers, were given gifts.

The FTC has dropped the investigation, though, partly because the company has adopted a policy which commits it to telling bloggers to disclose any gifts and to monitor blogs to ensure this happens.

"LOFT adopted a written policy in February 2010 stating that LOFT will not issue any gift to any blogger without first telling the blogger that the blogger must disclose the gift in his or her blog," said the letter announcing the end of the investigation. "The FTC staff expects that LOFT will both honor that written policy and take reasonable steps to monitor bloggers' compliance with the obligation to disclose gifts they receive from LOFT."

The FTC said that it began the investigation because Section 5 of the FTC Act might have been broken by the provision of gifts to bloggers.

"We were concerned that bloggers who attended a preview on January 26, 2010 failed to disclose that they received gifts for posting blog content about that event," its letter said. "Section 5 of the FTC Act requires the disclosure of a material connection between an advertiser and an endorser when such a relationship is not otherwise apparent from the context of the communication that contains the endorsement."

"Depending on the circumstances, an advertiser's provision of a gift to a blogger for posting blog content about an event could constitute a material connection that is not reasonably expected by readers of the blog," it said.

The FTC said that the company had in fact displayed a sign at the event telling bloggers that they should disclose the gifts in any material they published about it. Though the FTC said that "it was not clear … how many bloggers actually saw that sign", it conceded that disclosure did happen.

"Only a very small number of bloggers posted content about the preview, and several of those bloggers disclosed that LOFT had provided them gifts at the preview," said the letter.

The closure of the investigation suggests that notice at events and a policy of insisting on and checking on disclosure would be enough to clear US companies of charges that they broke the FTC's rules.

Those rules have come under heavy criticism. Technology and marketing law blogger Eric Goldman, who is associate professor of law at Santa Clara University School of Law in the US, said in his blog  that they unfairly punish bloggers when traditional media outlets are often in receipt of gifts or products to review.

"The FTC does not clarify what constitutes a disclosable conflict of interest. For example, if the post qualifies as an endorsement, 'disclosure of the connection between the speaker and the advertiser will likely be warranted regardless of the monetary value of the free product provided by the advertiser'," he wrote earlier this month. "The guidelines define an 'endorsement' as 'any advertising message…that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser'."

"This is a circular definition! Conflicts of interest become disclosable only when the content qualifies as an 'advertising message,' but editorial content can become an advertising message based on the author's conflicts of interest. Stuff like this makes my brain hurt," he wrote.