New FTC Rules to Promote Full Disclosure for Websites, Bloggers

Washington, DCOnce upon a time everyone thought that the Internet, given its global reach, was beyond the need for regulation. But not so, given the proliferation of Internet fraud and the all-too-common Internet scam. The Internet has become home to everything from online gambling to e-commerce. It was soon apparent that the virtual world could not be left to its own devices.

To that end, the US Federal Trade Commission (FTC) will bring the hammer down December 1st wielding a series of updates to existing regulations in other media, but soon to be transferred to new media.

Specifically, the issue relates to product endorsements and testimonials. There are regulations in place for print and over-the-air media that have been around since 1980. However, in the face of new social media like Facebook and Twitter—and bloggers as far as the eye can see—the FTC felt compelled to act. Signaling its intent last November, the FTC will tighten the noose on the virtual world a few weeks before Christmas.

The goal of the new regulatory environment for new media is full disclosure when it comes to product endorsements. In other words, if a blogger is writing about a product provided to him by the manufacturer, full disclosure of any ties to companies are now required.

The reason why this is necessary has to do with the explosion of blogging in recent years and the need for advertisers to reach new customers. Bloggers have become the new frontier for advertisers. Thus, bloggers who write and specialize in a particular subject will often—and without invitation—be inundated with free products or services from companies hoping that a blog post targeting, or including that product will spur sales.

Most bloggers are already fully transparent. And manufacturers have been known to encourage bloggers to be brutally honest when reviewing a product. In other words if it sucks, say so.

However, beyond everyday bloggers the new rules target celebrities who endorse products and manufactures that have set up web sites "formatted as independent product-review blogs," says the National Advertising Review Council. The New York Times recently referenced supplement vendor Urban Nutrition, which established product review blogs that appeared to be independent. WeKnowDiets.com currently includes a disclaimer identifying its affiliation with Urban Nutrition and that reviewers that write for the blog are compensated by the company.

With the new regs you're going to see more of that—and endorsements will be regulated on celebrity blogs. For example, Valerie Bertinelli's blog is little more than an ongoing sales pitch for Jenny Craig.