5.9 Enforced Online Transparency

The Federal Trade Commission, with laudable goals, issued a document in late 2009 aimed at better disclosure, with penalties of up to $11,000 in fines for violations. Basically, the FTC was 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 you get the sense of a government-gone-wild travesty. The system is unworkable in practice, which is bad enough. Worse, the rules are worryingly vague and wide-ranging. Worse yet, they 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 commission took pains in the uproar that followed the guidelines’ release to insist that no one planned to go after individual bloggers. Rather, the targets would be slippery marketers who were trying to pull wool over the eyes of consumers. This clarification was only modestly reassuring. Plans change, and the rules were written with such deliberate vagueness that I predict it’s only a matter of time before the FTC does begin chasing after individuals it deems problematic.

The FTC’s first enforcement action was heartening, in a way, as it seemed to show a keen sense of how such regulations should be used. The commission settled a case with a California PR firm whose employees had posted glowing reviews of clients’ games in Apple’s online store without disclosing they were being paid for this. The firm, Reverb Communications, agreed to remove what amounted to advertisements and not do it again, though as usual in these cases it didn’t admit (or deny) doing anything wrong.

If these are the kinds of things the FTC will go after, we’ll be okay. I continue to worry, however, that the agency could go further and damage online speech. We should all loathe the odious practice of using bloggers and other online conversationalists as commercial sock puppets in a deceptive online word-of-mouth operation. And we can all 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.

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