Category: Civil Liberties

Overlawyered has a good summary of exactly how the new FTC regulations are going to affect bloggers, but in his comments, we get an idea of what an FTC action looks like. I have done a bit of research, which seems to confirm this:

Let’s also understand the process by which the FTC will enforce its rules. FTC regional offices will be spending their days combing the Internet looking for “violators”. Blog operators will then get a “demand letter” from the regional office demanding they either post certain disclaimers or remove offending posts. These letters will include a “consent order” admitting guilt without any sort of due process, as well as a lengthy financial disclosure form that provides the FTC with a complete picture of your personal and business finances.

The FTC doesn’t negotiate. You can’t call them up to straighten things out. Once the demand letter is issued, you have already been judged guilty. If you want to contest the charges, you’ll be hauled before an FTC administrative law judge, not a regular federal court. Even if you convince the ALJ to side with you, the FTC commissioners hear any appeals — and the FTC has a 100% reversal rate when the ALJs rule against FTC staff.

You can appeal from the FTC commission to the US Court of Appeals, then to the Supreme Court, but that much lawyering isn’t exactly cheap. This is chilling. I’d like to blame Obama for this, but the rule change was started under Bush. Congress should eliminate the Federal Trade Commission and replace it with an agency it retains more control over. The FTC, under our system of Government, is a pseudo-legislative, pseudo-judicial body that should not be constitutional. It is a relic of the New Deal, and needs to go.

Reviewed the Federal Trade Commission’s new rules regulating blog content, and unfortunately, they look to be far worse than I originally imagined. Jeff Jarvis points out some of the problems with the new rules here, but let me go into how they will affect gun bloggers specifically, since more than a few of us have gotten free stuff from companies, and not always because we were bloggers, or because we were given something with an expectation we’d write about it.  But it turns out that largely doesn’t matter.

As Sigivald initially thought, most of the reports indicate that only bloggers who are paid by companies or marketing agents are at risk of prosecution by the FTC. However, the FTC is clear that payment need not be in the form of cash, and even merely providing a review copy of a product itself may be considered compensation. But, just to keep things interesting, review copies may not always be compensation. The bureaucrats admit to being intentionally vague because they may or may not consider the value of the product as evidence against bloggers in the decision to prosecute.

For example, a blogger could receive merchandise from a marketer with a request to review it, but with no compensation paid other than the value of the product itself. In this situation, whether or not any positive statement the blogger posts would be deemed an “endorsement” within the meaning of the Guides would depend on, among other things, the value of that product, and on whether the blogger routinely receives such requests.

Confused yet? Well, that depends on how often you get offers to review. There’s no minimum standard for which you must begin reporting such “compensation.” And the mere presence of “offers” may possibly be enough to trigger an investigation even if you turn most review offers down. If that’s not bad enough, there’s liability on the part of companies who choose to work with blogs as well.

Marketers or sponsors would be obliged to monitor all the content of the blogs they have ever worked with. If a blogger gets a key fact or claim about the product wrong, marketer or sponsor would be liable.

The Commission recognizes that because the advertiser does not disseminate the endorsements made using these new consumer-generated media, it does not have complete control over the contents of those statements. Nonetheless, if the advertiser initiated the process that led to these endorsements being made – e.g., by providing products to well-known bloggers or to endorsers enrolled in word of mouth marketing programs – it potentially is liable for misleading statements made by those consumers.

Imposing liability in these circumstances hinges on the determination that the advertiser chose to sponsor the consumer-generated content such that it has established an endorser-sponsor relationship. It is foreseeable that an endorser may exaggerate the benefits of a free product or fail to disclose a material relationship where one exists. In employing this means of marketing, the advertiser has assumed the risk that an endorser may fail to disclose a material connection or misrepresent a product, and the potential liability that accompanies that risk. The Commission, however, in the exercise of its prosecutorial discretion, would consider the advertiser’s efforts to advise these endorsers of their responsibilities and to monitor their online behavior in determining what action, if any, would be warranted.

Bloggers and sponsors could all be facing potential fines of up to 11,000 for a failure to disclose. The practical impact is that a wise lawyer would advise companies to avoid pitching anything to bloggers unless a blogger can bring a profit greater than $11,000 to the company. Very few of us are capable of doing that.

And the liability does not just exist for mistakes in product claims, but also for disclosure itself. If S&W wants to give Caleb another hat after December 1, and he posts about it or any S&W product again in a way that may be interpreted in perceived as positive, they are liable if he forgets to add a note that they are compensating him in some way. It doesn’t matter if they didn’t even email him about that specific product, it’s a potential violation. It’s worth noting that traditional media won’t have to live up to the same standards as blogs:

The Commission acknowledges that bloggers may be subject to different disclosure requirements than reviewers in traditional media. In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e., where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages. Accordingly, such reviews are not “endorsements” within the meaning of the Guides. Under these circumstances, the Commission believes, knowing whether the media entity that published the review paid for the item in question would not affect the weight consumers give to the reviewer’s statements. Of course, this view could be different if the reviewer were receiving a benefit directly from the manufacturer (or its agent). In contrast, if a blogger’s statement on his personal blog or elsewhere (e.g., the site of an online retailer of electronic products) qualifies as an “endorsement” – i.e., as a sponsored message – due to the blogger’s relationship with the advertiser or the value of the merchandise he has received and has been asked to review by that advertiser, knowing these facts might affect the weight consumers give to his review.

The free speech implications of this are serious. but I think there’s even some free press implications. Why should bloggers not enjoy the same rights the regular media does? Does it matter that my press is Apache and PHP, rather than some huge, expensive offset printer? I don’t think so.

Because the rules are not clear, a blogger or marketer can have no idea whether his writing about a particular product will trigger an investigation, or worse, bring about civil penalties. The safe move will be for bloggers to not mention products or companies in a positive light, and for advertisers to stay away from blogs altogether. This will have a chilling effect on speech and free expression, so it’s difficult for me to believe that the FTC’s new guidelines are not a violation of the First Amendment. Hopefully the courts will agree.