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FTC Considers Extending Ad Jurisdiction to Blogs and Bloggers

The FTC has published proposed new rules that would bring commercial endorsements by bloggers under its jurisdiction -- and therefore subject blogs and their authors to potential legal consequences for false or misleading advertising. The new proposed rules were published on the FTC's website Nov. 21, in a Federal Register notice seeking comment on the use of endorsers in advertising.

Ad lobbyists have already expressed fears that the FTC may be entering a more aggressive phase under President Obama. The FTC began its review of endorsements -- usually done by celebrities in ads but often done by "ordinary" consumers in cheaper commercials -- in 2007. The agency is concerned that when, for instance, celebs appear in weight-loss ads claiming they lost 50 pounds, that consumers might believe these results were typical even though on-screen small print displays a disclaimer.

Following that review, the FTC has now invited comment on proposed amendments to the rules governing its own jurisdiction. Among the surprises is a proposed rule covering blogs and bloggers. The Register item discussion asks for debate regarding:

the potential liability of advertisers who use bloggers to promote their products and of the bloggers themselves.
the general principle that material connections between the endorser and the advertiser should be disclosed to several new forms of marketing â€" blogs, discussion boards, and "street teams." The Commission specifically seeks comment on these examples, with particular focus on the expectations held by consumers as to the relationships that exist between advertisers and endorsers in these new marketing contexts.
The FTC uses as an example a blog that contains a discussion of a skin care product, that does not reveal a commercial relationship with the marketer, even if the blog contains no claims.

Such a rule could severely impact Pay Per Post and like services, which offer marketers the opportunity to pay bloggers to mention or review certain products.

Other proposed considerations by the FTC include:

The determination of whether a speaker's statement is an endorsement depends solely on whether consumers believe that it represents the endorser's own view.
-- [whether] advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers.
The FTC also wants to extend its jurisdiction to expressly cover celebrities who appear in ads:
--endorsers may also be subject to liability for their statements.
And the FTC wants advertisers to make it clear to consumers what is real evidence and what is not:
-- consumer endorsements themselves do not constitute competent and reliable scientific evidence; anecdotal evidence about the individual experience of consumers is not sufficient to substantiate claims requiring scientific evidence.
Clearly and conspicuously disclose what the generally expected performance would be in the depicted circumstances, or (2) disclose the limited applicability of the endorser's experience to what consumers may generally expect to achieve, i.e., that the depicted results are not representative. The Commission has long been concerned about potential deception arising from the use of the second category of disclosures, which are often referred to as "disclaimers of typicality."
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