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New Ftc Guidelines


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#1 Randy

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Posted 07 October 2009 - 09:50 AM

Has anybody else started reading and processing the new FTC Guidelines (it's a PDF) regarding the use of endorsements and testimonials? Most seem to be focusing on the use of blog marketing, where the blogger is getting compensated in some way to recommend a product or service but is not clearly disclosing this compensation to readers. The FTC is finally putting some teeth into it by introducing some pretty healthy penalties in place for those who don't toe the line.

That's probably the way it should have always been. Bloggers who are recommending products or services and are being paid (in any way) should have been disclosing that they're being compensated. I have no issue with this whatsoever.

That said, when I read through the doc I found that the scope went a lot farther than simply blog poster recommendations. So I sent it over to one of my attorneys to have a look at it. An attorney who just happened to work at the FTC in the past so has good insight into these things. He's already coming up with several other Gotchas he says I'll need to watch out for. The main issue being the use of customer testimonials on any web site, or specifically what those testimonials say.

The gist of it being there is no longer a Safe Harbor provision after these Guideline changes. Meaning if you use a testimonial where a customer gives specific results you can no longer simply include the old blanket statement about their results may not be typical for the average consumer. Instead, now you have to say they're not typical and spell out what the typical results are! The Heat Pump example they give in the documentation (Page 66) is one I find to be pretty instructive as to what they expect.

The bottom line as I'm seeing it at the moment is that you simply cannot have specific results in your testimonials anymore because Safe Harbor is gone. If you do include any of these types of testimonials (I saved $XXX or I made $XXX) you need to also take great care to actually know and explain what typical results should be expected. You need to spell it out in full detail, which in my world means I simply won't use such testimonials, or in the case where user comments are enabled allow anyone to make such a testimonial that appears on any of my sites.

On the other hand if you have testimonials that simply state that someone loves you or loves your product service, with no mention of specific results, you're probably pretty safe. Thankfully that's what 99.9% of my testimonials are since I started moving this direction years ago.

To put it another way, Opinions in testimonials are still okay. Specific results aren't.

Of course I'm not a lawyer and this is not legal advice. I'm just throwing out there what I'm reading in the new guidelines and being told by my attorney, as well as asking what others what they're seeing in the new Guidelines and/or are being told by their legal representatives.

If they enforce the new provisions, and I think we have to assume they will, this marks a huge shift in how some have been marketing their products. Every time in the past I've seen something like this happen it seems to open up huge opportunities for those who take the time and make the effort to do the right thing. Usually competition takes a fairly large hit because too many who don't want to make the effort simply close up shop or get driven out of business for not minding the new rules. So at the very least you'll want to make sure you're on the right side of the law if you do business in the US. And if play your cards right you could see some pretty substantial improvement in your business over the next couple of years as those who don't or don't want to abide by the rules fall by the wayside.

#2 Jill

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Posted 07 October 2009 - 10:05 AM

I think it's great that they've finally updated the guidelines. I believe it said they hadn't done so since 1980 so this was long over due.

It seems that many marketers today, especially online marketers, have gotten farther and farther away from following FTC guidelines. It will be interesting to see if these new rules change the way online marketers do business.

#3 Randy

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Posted 07 October 2009 - 10:25 AM

I agree Jill. Some had gotten way far away from anything that remotely resembled good business practices with some of the claims being made. And frankly the paid blogger stuff needed to be dealt with.

FWIW, I do think you'll see a fairly significant change happen over the next year or two. The little birdie who is my lawyer apparently put in a call to some folks he knows who are still at the FTC. Word inside the walls there is that the fines will allow them to spend a lot more time and resources, so they'll be hitting them hard as soon as it goes into effect December 1. In fact, the word was that they'd already identified several dozen large and small folks to go after right away to start making an example of to encourage everyone to toe the line.

It sounds like we won't be waiting long to see the first action happen. Anybody who chooses to ignore the new guidelines or thumb their nose at the FTC is asking for trouble. And it sounds like it's probably going to find them.

#4 Michael Martinez

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Posted 07 October 2009 - 01:29 PM

The open comment period extends to January 2010 so the guidelines are not yet in effect. Furthermore, the document stipulates that the guidelines do not carry the weight of law. Rather, they are the standard the FTC will use in deciding when and how to enforce the laws that apply to endorsements (they reference the various statutes and a number of court cases).

I think another gotcha in the document, but probably a good one, is that they require organizations to define a process whereby more than one individual is involved in creating or approving any endorsement by the organizations on behalf of others. That is, simply being the "spokesperson" for your company or NGO or whatever won't be sufficient if you're going to endorse something on behalf of the company -- you'll need to be able to show that other people in the organization were involved in making the decision to endorse whatever was endorsed.



#5 LizardSEO

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Posted 09 October 2009 - 02:05 PM

The nice thing about the regulations means that blogs and web content will be help to more of a journalistic standard than before. Hopefully the improved quality will help build credibility for quality blogs over the long run. I guess we will see what happens.




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