Why Social Media Needs the FTC

While some people might think that Ashton and Oprah on Twitter is the only news, the real social media story happening at the minute involves the FTC (the Federal Trade Commission).

Their announcement that they want to regulate social media advertising has been met pretty negatively by many in the social media field, particularly bloggers and advertisers. The feeling is bloggers will refuse to publish content that could see them being sued for false advertising, meaning a reduced social media-led advertising spend.

Now, call me naive, but personally I don’t see the FTC’s announcement being a problem. If you’re honest.

The Good, The Bad and the Sponsored

Friendly Donkey!!Think about the current discussions taking place about sponsored posts and the ethics behind them. The main argument against sponsored blog posts is that the blogger immediately loses credibility, since you can’t possibly be unbiased if you’re being paid for something.

While there’s some merit to this, I actually do believe you can remain both ethical and unbiased. Of course, it all boils down to the individual, but it can be done.

However, introduce the FTC into the equation, and it immediately lends authority and credence to both the blogger and the advertiser using them to promote their products. Immediate benefits include:

  1. Blogger and advertiser has to adhere to FTC standards
  2. Blog readers can read a product review and know it’s honest
  3. Builds trust between blogger and reader

On a long-term basis, the professional blogging industry gains more respect, advertisers see that social media is a field to take seriously, and consumers get the best of both worlds.

Yet still there are the complaints that it’s a bad move for social media.

Against the FTC

One critic is Richard O’Brien, vice-president of the American Association of Advertising Agencies (4A’s). He claims, “Bloggers and other viral marketers will be discouraged from publishing content for fear of being held liable for any potentially misleading claim.”

Meanwhile, Nathania Johnson of SearchEngineWatch.com states, “The FTC should go back to elementary school. That’s when kids learn that opinions are not true or false – only facts are. They even have homework assignments about it.”

eyes openLet’s take both arguments at face value.

With regards Richard’s claim, surely the only people that will be discouraged by the new regulations will be the ones that were skirting around false advertising anyway?

Wouldn’t a claim only be misleading if any of the facts are distorted? Which would be the fault of both the blogger and the company using them.

Looking at Nathania’s position, it’s not opinion that’s being questioned – it’s false advertising. They’re two completely different things. Nathania herself points this out further in her piece (and, in a way, contradicts her opposition) when she asks, “When you see a celebrity endorse a consumer brand in traditional advertising, does anyone really believe that celebrity uses the brand?”

No. Most people don’t believe that the celebrity uses that product.

Because it is quite clearly a paid advertisement.

The difference with sponsored or paid blog posts is that it’s not always apparent that this is the case. While the blogger should disclose, not every one does. And this is where the false advertising argument comes into play.

Food for Thought

If I read someone and they say I should eat at Joe Average Burger Joint rather than Wendy’s or McDonald’s because they use healthier ingredients, and I then find out it’s not the case, I’m going to be angry. I’ve been lied to.

If I then find out that the blogger who reviewed and recommended Joe Average Burger Joint has never been there in their life, but instead was paid to write a positive review on their food blog because that’s Joe Average’s core audience… This is no longer opinion – this is paid advertising, and false advertising at that.

If anything, if social media is seen as being regulated properly it may actually encourage more businesses to become involved, knowing that the competition is fair.

The very fact that the FTC wants to step in and stop this kind of unethical and questionable consumer manipulation can only be a good thing. At least for the majority of those affected.

Otherwise, doesn’t it just raise the question of what are you hiding?

Creative Commons License photo credit: tricky ™
Creative Commons License photo credit: Yersinia

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  1. says

    Hey Danny –

    my principal concern here revolves around the possibiluty of the FTC attempting to regulate or limit speech-

    this would allow them to potentially craft law or rider legislation to control tue flow of information as well as it’s content.
    I like the concept of standards as guidelines – much akin to an evolving set of best practices –

    we’re all adults here – the responsibility both falls on the purchaser in their decision making process- and a reasonable expectation the seller or figure of brand /market authority speaks truths. social media imho is pretty aware and self monitoring, + responsive,

    perhaps the creature – given the flexibility to evolve naturally, unexposed to the potential discordancies imposed by a set of definitive guidelines of law – will be enough.

    • says

      As Rachel mentions below, Omar, I don't think it's free speech that the FTC is going after.

      As rightly mentioned by detractors of the plan, opinion (and the right to have that opinion) shouldn't be silenced. What does need regulating is the false marketing and sales pitches being happily given by people and companies because there is no regulation.

      While the social media space can be quick to warn off bad news, this might not necessarily reach the amount of people that a warning or censure from the FTC would.

      I think that's why the move should be welcomed.

  2. says

    Danny – Thanks for giving some perspective on both sides. While I’ll need to see specifics before making a judgment call – my instincts agree with you. Blogs and Web vehicles are an evolution in PR, marketing and advertising, but the outcome is the same -to drive sales, traffic, etc… I’m not really sure why anyone would think that it is ok to regulate paid advertising if it resides on television but not if it relies on the Web. Advertising is regulated to ensure that consumers are not deceived – not to limit free speech. If done right, this should be a relief to marketers and consumers alike.

  3. says

    Danny — you are absolutely right in your argument. At the very least, you will see the relationship between bloggers and corporations become more transparent. The only way the government will be able to enforce this is if they can prove that a blogger is receiving money from a corporation and not revealing that information before endorsing a product.

    I think this actually legitimizes social media. It demonstrates that a growing number of people are influenced by bloggers.

  4. says

    Danny, when this many nations of unguided people get together under such a big tent, a lack of regulations can only be the death of consumer safety and concern.

    I hate to say it, but with the prevalence of criminality in the world, the net needs law just as offline terrain needs it. I’m all for it.

  5. says


    I wonder what difference the FTC will have because most purchase decisions (IMHO) are executed for emotional reasons and then justified by reason. Consumer behavior is very much this way (B2B is slightly less this way).

    For example, If I start watching an infomercial about steak knives, I might say, “Why would anyone buy these things?” But after 30-minutes of testimonials and demonstrations, I might be picking up the phone to order a set. My justification would be that my current knife set is old and needs replacing (which might be true).

    The same is true with social media (We’ve all seen those huge landing pages on “How I Made $114,987 In One Day!” And who couldn’t use more money?


    • says

      Hi John,

      I agree that most purchases are emotional – however, the 30 minutes or so presentation is still being regulated (I’m assuming you’re on about the TV infomercials?). They have to pass guidelines and remain factual, especially when “compared to the leading brand”.

      I think (and hope) what the FTC involvement would be is to ensure that these landing pages have facts to back up the claims, otherwise they won’t get web real estate.

      And that’s got to be a good thing for the people they’re targeting.

      • says

        Agreed. But even if the FTC makes a “get rich overnight on the internet” product state: “The results may vary – please be very cautious when buying any get rich quick scheme”, dirty online marketers will find a work around. It may hurt them, but not much.

  6. says

    Bravo Danny. Great display of the argument. While I don’t think I have enough information to fully understand which way is the best for everyone involved, my gut tells me regulation of some sort is the right way to go.

    Isn’t transparency one of the main points and benefits of SM? Lately I’ve witnessed more dishonest approaches and practices than I’d like to see continue.

    • says

      I agree, Jen – it does seem that for such a transparent medium, sometimes it seems like it’s anything but. Perhaps the FTC can have a say in cleaning that up.

  7. JuneM says

    I agree with transparency and disclosure. When it comes to regulation laws I would like to see the text of those laws first before forming a opinion.

    While tv ads, etc. are regulated as evidenced in pharm. disclosures and small text, the online marketing world is different in its publicity methods.
    Not only paid reviews, blog sponsorship but also affiliate programs that people write about promo or ppc products/services, link builders, tweeters. Add in the marketing service providers, pr agencies etc. If language of regulations are not crafted correctly it could possibly open a can of lawsuit & liability worms if regulation language is not clear & not ambiguous.

    Also the other consideration is universal adoption of these regulations meaning online marketing, advertising etc. Its a world wide venue seamless to viewer as to where blog etc. is hosted or coming from so truth in advertising could be regulated within US produced/hosted venues and transparency gained but how to regulate sources from outside the US?

    • says

      These are some very valid points you raise, June, and I agree that the policy/regulation needs to be carefully put together to ensure it’s as clear as possible to follow and enforce.

      Where I (personally) feel it would come into most benefit is keeping companies in line, which will then filter down to the relevant arms of that company (internally and outsourced).

      If a paid review is found to be false, you can “punish” the blogger and company that sponsored it (if they’re guilty of requesting a positive review through enhanced payment).

      Go for the source as opposed to the bottom end messengers and it would have a domino effect.

      With regards international enforcement, perhaps it’s time we have a universal body to deal with this? After all, nothing is truly international anymore online – it’s the largest local community around.

      Thanks for some interesting thoughts.

  8. says

    Fact is that politicians in Washington are so far behind in techno issues that to think they can tackle blogging issues is naive at best. Many top heads at the FTC and other agencies still don’t use computers much. Get real.

    • says

      As your business is in arbitration, I’m sure you can agree why regulation is needed – legal clauses are hard to argue against in a dispute.

      There’s also the possibility that the FTC will bring on a board of social media or online marketing and advertising “experts” as advisors, which will lend the whole approach validation.

      • says

        Very true Danny. However, NeutralSystems.com was created to help relieve the litigatory burdens on the American court system. I’m afraid what you propose would increase that burden exponentially.

        • says

          I see where you’re coming from and I agree that the burden is a huge problem for the US courts.

          But, say the proposal was a success and it took a “heavy hit” on the system initially, but in the long run greatly reduced the burden, wouldn’t this be worth the initial pain?

          Sometimes we need to take the extra work to make it easier. If it could be done without too much burden – both physically and financially – on the current system, my instinct is to say it would be worth it.

          Course, I’ve been wrong plenty times before… 😉

  9. says

    It really is all about the language. False advertising is false advertising, whether it’s on a blog or a television spot. But personal opinions certainly shouldn’t be regulated by the FTC – and I don’t think that’s really the point of the upcoming regulation.

    If a blogger has actually tried a product and gives an honest opinion, that’s one thing, but when companies send them products on ‘indefinite loan’ *expecting* a good review, the line gets a bit blurry for bloggers. Gosh, how can a blogger show their appreciation for a possibly expensive gadget or product beyond giving a positive review? How many bloggers who receive an expensive product for review will feel compelled to give a neutral or even bad review if they didn’t like the product? Of course, they’re going to want to continue receiving products to review, and giving good reviews is one of the quickest paths to getting even more products to review. The ethics of this gets pretty sticky, so I’m all for reasonable FTC regulation. My hope is that it doesn’t silence honest reviews since consumers have come to rely on peer reviews and credible opinions as our main research before purchasing a product.

    PR Firms need to be diligent to monitor their client’s WOM campaigns with perhaps an Ethics Guide that makes it clear to bloggers that they wont necessarily be de-listed as reviewers if they give an honest opinion that happens to be negative.

    Great post.

    • says

      This is one of the areas that seems to be raising the biggest questions, Ghennipher.

      I was speaking with a blogger last night on Twitter about this topic, and his view was that it was up to him if he discloses, not the FTC.

      While technically he’s correct, I just thought the viewpoint was why we need some form of regulation.

      An opinion is one thing, but when it’s paid for that needs to be made clear. The argument that “my regular readers know my voice” may be true, but what about the people that stumble across your site or blog and take review at face value?

      It’s a difficult one to work out all the nuances, but whatever it takes has got to be better than having nothing at all.

  10. says

    My last employer was an email, voice and SMS messaging services provider. These marketing services are fully regulated by the FTC (Junk Fax, Telemarketing, and SPAM laws), yet we still caught and had to turn away spammers and junk faxers. They did it anyway. What eased the burden with regulation was that there were less of these offenders. Made it easier for both the company and customers.

    Per Danny’s point, regulation simply reduces or eliminates false advertising and unethical practices. All broadcasting/marketing communications services are regulated; why not social media? Transparency will only get better between companies/customers/bloggers. If advertisers have a huge issue with this, then maybe they need to re-evaluate what they are saying to the public about their products/services.

    I don’t think regulation will impact freedom of speech. If you are ethical you have nothing to worry about. Also, there are always disclaimers for protection.

    It took forever for the FTC to put regulations in place for some of the services above. I’m sure social media will be no different.

    Disclaimer: The above is my opinion alone and not representative of anyone else’s views. HA! 😉

    • says

      Good points Anna! No doubt that many people fell as you do. Consider this: Anyone (those in power) who don’t like your “personal” views can target and prosecute you with “the full force of law” because you made an “inaccurate claim” appearing in a Twitter blog. Sometimes we need to socially catch up to technology organically. The world is not a friendly place for “poor” folk who can’t afford a good attorney. Nuff said.

  11. says

    I oppose the proposed FTC ruling, if for no other reason than this: The Federal Trade Commission regulates activities in the United States; if this law goes forward and both marketers and bloggers are held liable for their actions, what about beyond the U.S. borders?

    The internet is not restrictive to the domain that the FTC controls. Suppose a company is based in Geneva that has two foreign offices: one in Ottawa and the other in New York. A Canadian, you write the Canadian review and I, an American, write the New York bit. Regardless what each of us write, it sounds like the FTC can only regulate me, not you. Correct?

    On the subject of sponsored ads, I’ve flip-flopped on the best solution but I keep going back to what Paul Chaney wrote last month about convening a summit to talk about the issues, not passing a country-specific law to control the issues.

    One other thing: How come the FTC isn’t blogging itself? If you visit ftc.gov and mouseover the navigational bar where it says “news” and then click the sub-bar tab saying “blogs,” you get to this blog index page. Click the only link there, and you’re redirected to ftcblog.gov. The date of the most recent entry: November 29, 2006.

    That’s a telling statistic. The FTC is making rules about blogs but it’s blog is almost three years outdated.

    • says

      I see what you’re saying, Ari, and as I mentioned in my response to JuneM, this is where perhaps an international body is needed? The web has reduced international boundaries anyway (with exception of state-controlled online use in certain countries), so let’s make it easier to manage.

      I’m not saying this would be easy, but I do feel that the teething pains and initial slog would be worth it in the long run.

      With regards your point about the FTC blogging (or not) – I don’t think that’s as big an issue. After all, it’s not the blogs that they would be going after per se – it’s false advertising, and that doesn’t need an updated FTC blog to work.

  12. says

    danny, ari – I think we need to form a group of content experts and form some guidelines “from the inside,” and push/package it towards the relevant legislators & FTC.

    this ongoing dialogue is a great starting point. I’m interested in being involved.



    “be the change you want to see in the world.” – Ghandi

  13. says

    Hi Danny- great post as usual.

    It raises the question to me regarding “who is really qualified to Blog” as anyone can start writing about anything these days. PR pros and journalists are trained to research content and cross check facts (before ading political views 😉 ) whereas the neo-Blogger can blurt, rant or repost anything anywhere.

    In an exponentially growing Blogosphere, I would agree that guidelines, checks and balances would be a much needed platform.


  14. says

    I don’t see a problem with the FTC regulations. These laws already exist, and the new rules make it clear that the existing laws apply to social media.

    It is illegal for a marketer to lie in the United States in order to con someone out of their money. It’s called fraud. (In many states, it’s illegal to lie for any purpose.) Honest individuals and companies have no reason for concern.