What You Need to Know About the FTC Disclosure Act

A couple of years back, the Federal Trade Commission or FTC implemented the FTC Act. This set of guidelines was meant to address the problem of endorsements, advertisements, or testimonials of bloggers and website owners. The federal government wanted full disclosure – meaning the blogger or author should specify if he or she received payment for the post. The FTC Disclosure act also holds the blog post or article authors accountable for gifts received before or after the article was published. This means that gift cheques, souvenir items, and even free tickets received to see a movie and then write a review about it, must all be listed down on the blog or website.

What’s The Point of the FTC Disclosure Act?

Given the influence and very wide reach of the internet, the FTC wanted to make sure that consumers were not being tricked into buying a certain product or brand. It is a fact that websites and blogposts publish thousands of reviews about different consumer products every day. Some reviews are factual and technical and are done by qualified reviewers. The more influential ones however, are the testimonials or personal stories written by blog or website authors.  The personal approach of the story and the human face behind the advertisement or testimonial makes it more credible and believable. This translates to hundreds of thousands of dollars in sales and profits.

Question is, was the author paid to write the review or post? Did he receive gifts before or after the article the published? If so, this might have had a bearing on the article’s slant.  The FTC is also concerned that blogs and websites are being used as unfair competition grounds. For example, a blogger could have been “hired” by a certain company to write a negative review about a close competitor. As we all know, negative publicity spreads like wildfire over the internet. In a few hours, one negative review could already bring about damage that would take months to undo.

The FTC Disclosure act attempts to level the playing field by holding netizens accountable for what they post. But more than just asking websites owners and bloggers to be transparent about their dealings, the FTC Disclosure act also aims to keep advertisers and business owners in check. The guidelines have recently been expanded to include endorsements and testimonials. It also covers a wider spectrum –  consumers, experts, organizations, and celebrities. And later, it could possibly cover different aspects of social media  such as twitter, facebook, tumblr, Pinterest and Flickr.

Word of Mouth Marketing

Bloggers and social media marketers are called  “word-of-mouth” marketers. It is considered as a very personal and direct way of promoting a product, brand or service. The author uses his or her personal experience – whether real or fabricated – to create a story and seamlessly weave in a promotion or endorsement. According to the FTC, any blogger who receives gifts, whether cash or in kind, to review a certain product and write a favorable article about it will be classified as an endorsement. And, based on the rules of the FTC disclosure act, the author must clearly state this “material connection” with the seller or the product in the said blog post.

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