Event Organizers Investigated For Not Following FTC Guidelines
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.
Why the investigation?
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.
Event Organizers Investigated Not The Bloggers
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.
Who Is The FTC?
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.
What Are The FTC 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.
Endorsement + Compensation = Required Disclosure
(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.
Who Do FTC Guidelines Apply To?
Any company or organization that is reaching out to specific WOM agents with sponsored trips and free products. The compensated relationship must be disclosed.
- Do the FTC Guidelines apply to those that attend hosted buyer shows and share their experience in social media? Yes!
- Do the FTC Guidelines apply to those on FAM trips that share or post about the experience? Yes!
- Do the FTC Guidelines apply to bloggers who get free or discounted registration in exchange for writing about the event? Yes!
- Do the FTC Guidelines apply to events that offer affiliate marketing? Yes!
- Do the FTC Guidelines apply to those that receive free books or apps to review? Yes!
- Do you have to disclose in tweets when writing about a sponsored event or travel? Yes!
According to Mary Engle, FTC’s associate director-advertising practices, “You have to disclose that the trip was compensated or the product was free in tweets containing the endorsement of the sponsor/advertiser. When you are tweeting about something unrelated to the sponsor — for example, your experience at a local museum or farmers’ market, there’s no need to disclose because you are not endorsing the sponsor.”This means if you receive any type of compensation to tweet from a conference about that conference experience, you need to disclose the relationship.
- Are mainstream magazine travel and event journalists held to the same standard as other WOM, new media, print, radio and TV writers? Sort of but in most cases no. Why not?
As Susan Getgood states:
The brief version is that it’s about the consumer reading the item, not the person writing it. If the consumer would understand that the endorsement was compensated – in the case of a journalist, by his salary and probably the subsidy of his paper for the trip, no further disclosure is required.
- Is there more I should know about the FTC Guidelines, social media, events and the hospitality industry? Yes. Look for more in upcoming posts.
Lessons Learned From Ann Taylor Loft Event
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?