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Bloggers Need to Beware of Violating FTC Deceptive Practice Standards When Making Endorsements

Aug 18, 2007
The Federal Trade Commission ("the Commission or FTC") has handed down an advisory opinion that may have dire consequences for companies that employ individuals who are involved in blogging and promote those companies products or services while blogging. According to the Commission, this may hold true even if these employees are undertaking this blogging on their personal time and even if the company management has no idea of what may be going on. The Commission advises that such a blogger must make readers aware of his or her connection with the company whose products or services he or she is endorsing.

The FTC has concluded in this advisory opinion that these specific actions may constitute deceptive business practices in violation of the Federal Trade Commission Act. The Federal Trade Commission Act defines a deceptive business practice as sets forth below:

1. a practice that represents or omits material information that likely would mislead reasonable consumers under the circumstances; and,

2. a practice that involves a representation or omission that is of material importance to consumers

The Commission continually and regularly has found that a seller's failure to disclose a relationship that would materially effect a consumer's opinion is deceptive.

In the case of the advisory opinion, the specific concern was the weight that a consumer will naturally give to a sponsored endorser. The Federal Trade Commission Endorsement Guides set forth:

"(W)hen there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement . . . such connection must be fully disclosed."

A connection is deemed to exist in most instances when the endorser (here, a blogger) is paid by the company responsible for providing the product or service or when an endorser has a close business association (or has a relative with such an association) with such a company. Without a doubt, according to the Commission, employees of a business have such a close business association and their connection must be made public when they make any endorsement.

The bottom line is that it appears that companies and businesses have a duty to pro-actively monitor their employees blogging habits and warn them about the perils of making endorsements through blogging when their connection to that business enterprise is not made public. In a similar vein, if the employee is making negative statements about a competitor, his or her association with his or her employer must be made public to avoid violating FTC regulations.
About the Author
Robert Masud, Esq. is the principal of Masud & Company LLC, a law firm for the world of business, finance and the internet. Find out how our lawyers can help you or assist your business at http://www.masudco.com.
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