(Note: These are first impressions, and I’ll be updating this posting.)

The Federal Trade Commission noticed a while back that marketers of brands, products and ideas have used new media in some incredibly dishonest ways. These include paying people or giving them freebies in return for positive mentions and not requiring (or even encouraging) them to disclose that they’re being compensated.

So with laudable goals, the commission issued a document (390k pdf) aimed at better disclosure — with penalties of up to $11,000 in fines for violations. Basically, the FTC is saying that if you have a “material connection” to a product or service you’re praising, you are an endorser who must disclose that connection.

Sounds good, doesn’t it. But when you read the FTC’s ruling, published today, you get the sense of a government-gone-wild travesty. Why?

First, the new system is unworkable in practice, which is bad enough. Worse, the rules are worryingly vague and wide-ranging. Worse yet, they appear to give traditional print and broadcast journalists a pass while applying harsh regulations to bloggers (and others using conversational media of various kinds). Worst and most important, they are, in the end, an attack on markets and free speech, based on a 20th Century notion of media and advertising that simply doesn’t map to the new era.

The advertising of the past was a one-to-many system. Call it broadcasting. The Internet is a many-to-many system. Call that conversation. They are not the same.

The FTC would deal with this essentially by throwing sand into the gears of online conversations. The rules are explained through examples — which means that almost no one can be sure that what he or she is doing, at least at the margins, is allowed or forbidden.

Here’s an example of the practical unworkability of what the FTC demands.

I disclose my various affiliations with companies when I do blog posts relating to them (or at least I try; I don’t doubt that I’ve forgotten to do this from time to time). And I have a long “About” page that includes my various financial and other interests. That page notes, among other things, that Google has loaned me a bunch of Android phones to use with students for experiments.

I’ve posted a number of Twitter tweets about Android, including my preference for that environment than Apple’s restricted system. Where, exactly — in a post with a total length of 140 characters — should the disclosure go? Has the FTC, for all practical purposes, just forbidden all positive comments about products and services on Twitter when the person doing the posting has a relationship of any kind with the company? Do I want to be the FTC’s guinea pig in a lawsuit where the world works this out?

And what about the extremely common practices of traditional media? Every news organization covering technology gets freebies by the container-load. Book reviewers’ offices overflow with volumes sent by publishers. Subsidized or even complimentary travel, food and other things of this sort are common but too-rarely disclosed.

The answer is transparency. But do I want the feds enforcing it, especially when their rules can be interpreted narrowly or widely, depending on the circumstance?

Again, let’s be clear that the motives behind the FTC’s rules seem to be well-intentioned. I also loathe the odious practice of using bloggers and other online conversationalists as commercial sock puppets in a sleazy online word-of-mouth operation. Let’s also agree that disclosures are always better than hiding one’s affiliation with a company.

We already have laws against fraud. Let’s enforce those — first against the serious fraudsters, who keep getting away with it — before we even consider harsh regulations on speech.

We all want more transparency. I don’t see this as the right way to get it.

But I do predict one outcome of this FTC action: a slew of court cases. This is a full employment act for First Amendment lawyers, who have better things to do.

Note: Sam Bayard, assistant director of the Citizen Media Law Project at Harvard’s Berkman Center for Internet and Society (disclosure: I’m a co-founder of the project), corrected me on my initial language, in which I called today’s document “revised rules” from the FTC. He writes:

They are non-binding guidelines meant to help advertisers, bloggers etc comply with the FTC Act:

“The Guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.” (from FTC press release today).


As a matter of substance, you’re right that they will have much the same effect as rules because one would have to face an enforcement action by the FTC to challenge them — not a pretty prospect at all. And their status as guidelines doesn’t lessen your concerns with practical workability, vagueness, and lopsidedness because the FTC will use them itself as guidelines for when to pursue investigations and bring enforcement actions.

I’ll be updating as I learn more. Meanwhile, for more reactions, take a look at some of these postings:

14 Responses to “A Dangerous Federal Intervention in Social Media”
  1. SiliconCowboy says:

    Great post, looks like you were anxious to get this out but you did a thorough job.  Not sure how the rules will work on Twitter, so I agree with you there.  Personally I think sales pitches are easy to sniff out. More troublesome are lobbyists for industries such as health care, for example, who are paid to hide behind the websites of faux interest groups and think tanks to spread fraudulent claims. Will the new rules negate this practice?

  2. Dean Procter says:

    I would have thought that ‘traditional’ media and television with their advertorials and the many other less than open practices would be more of a target for the FTC. Given their policing of traditional media’s nefarious activities has been almost non-existent where are they going to find the manpower to police the internet? Of course I suppose in between arranging advertorials and such-like companies will find time to ‘dob in’ their competitor’s activities.
    I would like to see the FTC get it right with the print media nad television before they embark on such an ambitious pursuit as policing every blog and tweet.
    We should remain mindful that theses laws are as a result of lobbying – by whom?
    I am all for full disclosure and honesty – yet I see so many companies engaging in patently false advertising – particularly in the field of identity theft and online security. Where is the FTC on this?

  3. Glenn Fleishman says:

    I just read the long document you link to, and as a long-time blogger and even longer-time journalist, I don’t have any problem with this.
    The rules balance a bunch of factors, including whether a reviewer is receiving something of material value (such as, in the example in the document, a gaming system as opposed to a game for review) which a reader of a review would otherwise be unaware.
    In your test case, you’re being specious.
    First, Google apparently loaned, and did not give you Android phones. These would not constitute in-kind payment.
    Secondly, this is for research, not commercial review or endorsement.
    Third, it sounds as if you routinely and openly disclose that you have received equipment under loan.
    Now I do agree that if a) Google gave you a phone and you kept it, and you b) posted a Tweet that read, in its entirety, “This Android phone is the best mobile phone I’ve used. I recommend it highly,” then you might need an item “Disclosures: is.gd/2dkfkj” to avoid running afoul of this rule.
    That part might stifle some forms of commercial speech.
    “And what about the extremely common practices of traditional media? Every news organization covering technology gets freebies by the container-load. Book reviewers’ offices overflow with volumes sent by publishers. Subsidized or even complimentary travel, food and other things of this sort are common but too-rarely disclosed.”
    Who gets freebies? Loans, software, etc., maybe, but freebies? Is there a seamy underbelly of mainstream journalism in which reporters get to keep piles of hardware that I don’t know about? I return everything I get, or donate it if the company doesn’t want or won’t take it back. I don’t keep hardware products of material value, nor accept services of material value beyond the period of need for a review of the service.
    Also, these guidelines affect anything that’s blog like, including the New York Times blogs, and thus hit big and small alike.
    That’s my first take.

  4. “The Internet is a many-to-many system. …”
    But blogging is a top-down, BROADCAST, system where a tiny, tiny, number of BigHeads directs a huge amount of attention (I know, I’ve made that point before). Denying it  – and all the hucksters who want to use net-evangelism to destroy what minor restraints there are on untrammeled marketing – is just wrong.
    Oh, why bother :-(
     

  5. I scanned through the 81-page document of guidelines (I say scanned because I got bored reading the all the laborious examples).
    You make a good point about the Twitter limitation of 140 characters (no room to disclose and rave about xyz product/service) but I don’t see a problem with the guidelines when it comes to longer publications (whether a blog post, a magazine article or a newspaper article (on or offline).
    People should disclose a “material connection.” Isn’t it sad that people don’t do the right thing to begin?

  6. anigalla.net says:

    Generally all the Government Orders or documents make us bored, this is not an exceptional document either. But do you feel that this document is prepared by someone who is avert to the bloggers and social media? I do..

  7. zato says:

    These laws and guidelines have the same major weakness the legal system does. The jails are filled with the naive and foolish, while master crooks steal billions. What about the major corporations who secretly own or control the websites and even newspapers, television and conferences that review and report on their industry. This kind of very large scale corporate propaganda is one of the biggest industries in America.
     

  8. Bill Free says:

    I have to agree with Glenn. Most “commenters” I follow, whether in new or traditional media, value highly their reputation for objectivity and are extremely sensitive to actions that might compromise it. In my mind, this is an attempt to codify standards of practice that most already recognize. I understand concern over inevitable misapplication by an overzealous regulator or cheap shots by greedy consumers, but I don’t think this should or will change behavior in the social media space.

  9. boomhauer says:

    yet again, freedoms lost via unenforceable regulations that will only be pulled out and used against you when the gov wants to shut you up.  If everyone is guilty, the powers can target anyone they decide to.

  10. Shocked_n_Awed says:

    “The Internet is a many-to-many system. …”
    Well, perhaps – but that’s akin to saying television, in general, is a many-to-many system. Any one single blog or website is certainly a one-to-many broadcast.
    And I’m not sure that has any baring on the point.
    Any professional journalist not disclosing the reciept of a product or service either before or after writing anything relating to the manufacturer or producer of said product or service is biased, and will have a very hard time getting past that bias.
    I haven’t seen anyone disagree with the premise behind these new rules – I guess, like most other laws, it will have to be hoped enforcement will be fair and balanced.

  11. BMoreKarl says:

    Thank you Dan Gillmor,
    You can’t have the government deciding who is and who isn’t covered by the first amendment freedom of the press.
    My crotchety old editor used to point out that that freedom applied to anybody who owned a press.  But today, the Web is my press.  The Internet is my sandbox and my audience and I’ll be damned if I’m going to comply with this regulation because the FTC said so.
    Let the blogger beware – you’re credibility is your own to spend or squander as you please.
    Let the reader beware – don’t buy a product based on some random Web page you ran across.
    In the long run, the 24/7 crush of information about everything but everything will sort out the wheat from the chaff.
     

  12. SpaceyG says:

    I once, a few months ago, suggested a political blogger with a specialty in SC politics for a CNN show.  CNN put the blogger on-air during the height of the Mark Sanford Appalachian Trail To Argentina, er, episode.
    The SC blogger was great on-camera, as many political bloggers often are as they’re so devoted to whatever their particular political beat is that it is perfectly natural for them to converse knowledgeably on-air about it their topics as they write and talk constantly about their beat. Great fit, right?
    CNN liked the blogger as an on-air guest. Wanted him back for more he was so good at the SC political conversation.  This particular SC blogger was an expert in the wickedly squirmy underbelly of SC politics, and a good TV talker. What’s not to like there?!
    Unbeknown to me, or to CNN at the time he went on-air though, was that this particular  SC politics blogger was on the payroll for a previous political opponent of Gov. Mark Sanford, an opponent from the SC gubernatorial campaign that Sanford won.
    The SC blogger chose not to disclose this to me (I was acting in the role of booker; not for pay though) or to CNN. Whoever the blogger  was getting a check from was NOT on his website (Palmetto Scoop) at the time either.  (And I don’t know what’s on the blog now in terms of disclosure.)
    Anyway… getting to the point here, and I do have one… why would CNN choose to NOT invite back this particular blogger over non-disclosure issues when they have a parade, and a Rolodex FULL,  of people on-air every day who are on far larger payrolls?
    Last I checked, CNN doesn’t disclose any paying affiliations of every guest they put on-air as “experts.”  Such as those now infamous  “experts” in warfare who are also on the payroll for defense contractors as consultants.
    Yep, that SC politics blogger got a raw deal. Maybe even one that would now be considered prosecutable, the non-disclosed blogging part at least. Who’s to say what the broadcast ramifications would be? (I, thankfully, am not a lawyer. But I’m starting to feel that as a blogger I may need to be.)
    And we, as an audience, lost out on hearing more from a very entertaining and engaging on-air political personality in the making.
    FULL DISCLOSURE:  my personal political tendencies couldn’t have been farther from that particular SC blogger’s political bent. I just knew he ran a darn good SC politics blog which was engaging and entertaining and well-written. And I happened to know CNN was sniffing around for a SC politics expert… something I likely found out about on Twitter. Where else?!

  13. Roo says:

    among the dozen questions this raises for me…

    do these “guidelines” apply only to endorsement? Am i then free to take money (or a computer) from Apple to bash Windows 7 in my blog (or some equvialent scenerio) without fearing the fcc?

    My television is now so intertwined with my home network and the internet as to be virtually one “media outlet”. how do we distinguish “traditional media” when any ten minute viewing of CNN includes their twitters, facebooks, and blogs on whatever topic is being discussed?  will CNN now need to check on who posted each “opinion” they show and add a disclaimer between every comment? or are traditional media now only those on paper?

    what is the rational for exempting traditional media (whatever the definition) in the face of the clear abuses of “independent editorial oversight”? (The tea parties being the most glareing example, though the least agregious as it was so transparent)

  14. Netvalar says:

    I am all for the reason and purpose of these guidelines. Especially as the primary focus is on advertisers not bloggers. However how many complaints does it take to start an investigation? How much of your time as a blogger will be wasted by this investigation? Oh and lets not forget this is the internet so how many enemies does it take to make hundreds of complaints? I will answer that last very easily it only takes pissing off 1 person.

    This is the age of word of mouth. How many music fans are part of a street team? How often do they receive free swag? And now you tell me that all street team members have to disclose this in their limited character tweets?

    But hey I have the answer. Everyone who receives free swag once they no longer need it for reviews or whatever. Then they need to send it to the FTC via COD. If the govt. says we can’t keep it well then instead of me paying to send it back let them.

  15.  
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