September 2, 2010 by Jeff Hurt
Adapted from original image by London Permaculture.
Did you know that at a January 2010 event held by Ann Taylor Loft was investigated by the U.S. Federal Trade Commission (FTC) for possible violation of new marketing guidelines which apply to WOM, Social Media, TV, radio and print?
That’s right, the event organizers were investigated.
Ann Taylor Loft event organizers invited bloggers to preview their summer collection. They asked them to write about the collection and their experience. In exchange for their blogging they received a free gift and a gift card worth up to $500. 31 bloggers attended the event and received gift cards.
The FTC was concerned the new media writers did not disclose that they received gifts for posting about the event. Some did disclose the relationship. Some didn’t. The new rules require disclosure.
As reported in Ad Age:
The event and the unusual request for posts to be submitted for a prize received media scrutiny and caught the eye of the FTC. “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,” Mary Engle, the FTC’s associate director-advertising practices, wrote in a letter dated April 20 to Ann Taylor’s legal representation.
What’s interesting to me is that in this case, the FTC did not investigate the bloggers that did not disclose. They investigated the event organizers for securing social media sharers in exchange for gifts and not telling the bloggers they needed to disclose the relationship.
If you plan events, conferences or meetings, that should send up a host of red flags! If you secure social media influencers and give them a free or discounted registration to attend your conference in exchange for blogging, tweeting, posting in social media networks or any other act of WOM, it is your duty to explain to them that they must disclose the relationship. The FTC expects the organization to provide guidance to WOM agents about the requirements. You as the marketer are held responsible for informing the writers about disclosure. In the Ann Taylor Loft case, there was not any guidance.
The U.S. FTC is a federal government agency charged with consumer protection and competition jurisdiction in broad sectors of the economy. They can pursue law enforcement, administer a wide variety of consumer protection laws and establish effective guidelines.
The new FTC Guidelines that went into effect December 2009 apply to truth-in-advertising principles to all marketing including WOM, Social Media, TV, radio and print. They were updated from previous practices to include the Internet and WOM.
Here’s the best way I’ve seen the FTC Guidelines articulated.
(Thanks Susan Getgood for this succinct explanation.)
Fact: The Guidelines explain how the FTC would apply Section 5* of the FTC Act to endorsements and testimonials. They are not rules or regulations, and there are no fines. Any penalties would be assessed by the courts as the result of a legal enforcement process during which the FTC would have to make its case for deceptive advertising. (From Susan Getgood’s post 11 Urban Myths About FTC Guidelines)
Has the FTC pursued legal enforcement of anyone since the guidelines became effective?
Yes. August 27, 2010, the FTC settled a case with a PR Firm that was posting fake reviews on the Internet.
Any company or organization that is reaching out to specific WOM agents with sponsored trips and free products. The compensated relationship must be disclosed.
The lessons for companies and organizations:
Keep WOM outreach programs simple, easy to understand and include direction about disclosure. Provide guidance and training to your WOM agents. Make sure employees responsible for WOM programs know the FTC guidelines too.
The lessons for WOM agents:
Think twice about using your social media and WOM influence for organizations that do not inform you about the need to disclose. If you are not getting the information or support you need, push back and don’t do it. Read agreements carefully, especially those published as expectations, even if you don’t sign something. If you apply to be a WOM agent based on a written document in exchange for some type of compensation, there is an implied acceptance of their expectations. Do you really want to get entangled in a lawsuit where an organization tries to push their liability on you?
And what happened to the organizers of the Ann Taylor Loft event?
The FTC did not pursue a lawsuit. Ann Taylor subsequently adopted a written policy for blogger outreach. Perhaps your organization should too.
What other implications do you see with the FTC Guidelines, events and the hospitality industry? What questions does this raise in your mind?
Filed Under: Social Media
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WOW. This should be a wake up call to all. Many who blog or use other forms of social media simply do not know the rules (others choose to ignore them).
What many who choose to ignore the rules do not understand is that full disclosure not only keeps you above the law, it can help boost your credibility. People like it when someone says that they have a relationship with a product or brand, they want to know.
If you align yourself with products or brands that you have faith in, disclosure should not even be an issue, you should be proud to be aligned with them!
I’ve always taken the position that if you have to ask, ‘do I need to disclose this?’ then the answer is automatically ‘yes – disclose’.
Disclosure is more than adhering to a set of rules – it’s a sign of respect to your audience. It shows that you are willing to deal openly and evenly with them.
It’s important to remember, though, that status updates and tweets need disclosures as well. And not simply the tweet after – but therein the 140 characters.
My service DisclzMe offers a number of links to general purpose disclosures – and unlike other link shorteners, this one indicates upfront that it’s a disclosure.
If you opt for the professional account, however, you can customize the URL and have a unique page that presents all of your material disclosures in one spot. Disclose with ease and show your readers the respect they deserve.
I like your last sentence: If you align yourself with products or brands that you have faith in, disclosure should not even be an issue, you should be proud to be aligned with them! Good point. Thanks for adding that!
Thanks for reading and adding your thoughts. Your link shortener disclousre service looks really cool. I’ll be checking that one out.
This is great information Jeff. Thanks for sharing. Rob, thanks for the disclosure statements and introduction to the disclz.me site.
“…if you receive any type of compensation to tweet from a conference about that conference experience, you need to disclose the relationship.”
How would you do this? Does each tweet need to disclose this or does an introductory tweet/blog post cover it?
Good question. Each tweet that talks about your conference experience needs to have some type of disclosure in it. Abbreviations like #spon, #paid, #affiliate, etc work well. WOMMA has created a Social Media Marketing Disclousre Guide to help with some of the best practices.
[…] a product to try without paying for it, receiving a coupon or free product for your time, etc. Jeff Hurt of Velvet Chainsaw also wrote a great post about this last year. Here’s a copy of my The Special Event Show […]
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