Business Law

Truth in Blogging New FTC Blog Disclosure Rules

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Could you spot a fake review posted to an online travel or consumer forum? Students at Cornell University say they've developed software that can spot fake reviews 90 percent of the time. This should interest the hospitality industry and the consuming public.

Fake reviews include sponsored blogs, which are unlawful if not disclosed under FTC rules. They also include spam and "deliberate review fraud." This fraud could be fake positive reviews or fake negative reviews.

Fake negative reviews could qualify as trade disparagement. This may be a specific illegal act or be covered under unfair competition laws. So businesses should take care to avoid this sort of dirty politics. For consumers, despite regulation and even software to combat this, it remains buyer beware when reading anonymous customer reviews.

The Federal Trade Commission recently settled charges against a company accused of using misleading online reviews. The FTC claimed Legacy Learning Systems advertised a guitar learning program with endorsements and reviews. These supposedly came from ordinary consumers or reviewers. The company failed to disclose these endorsements and reviews were provided by the company's paid marketing affiliates.

Such an arrangement violates the Federal Trade Commission Act. It's a deceptive and misleading practice. The company has agreed to pay $250,000 and maintain a system to review and monitor its affiliate marketers’ representations and disclosures.


Fake online reviewers beware! The Federal Trade Commission (FTC) revised its truth-in-advertising guides in October 2009 to target online endorsements. The FTC rules require bloggers who get freebies or payments to write online product reviews to disclose the kickbacks to readers.

  • Reverb Communications posted fake customer reviews of video games at the Apple iTunes store, and was charged with deceptive advertising.
  • Reverb settled without paying a fine, but had to remove the fake reviews and promise not to make future endorsements without proper disclosures.
  • The FTC isn't monitoring bloggers, but will investigate complaints and possible legal violations as they arise. Their FTC’s focus is on advertisers, not endorsers.
  • Avoid possible FTC Act violations by telling readers about any perks you get to plug a product or any inside connections you have to a product or a business you review. Your disclosure can be as simple as saying “Company X gave me a free product to try.”

Original Article

Bloggers are spilling over with enthusiasm about their latest find: a trendy restaurant, a chic gift shop, the latest product, service or fad. Nothing could be better, they claim, you really must try it, buy it.

Would you be skeptical of those rave reviews if you knew that the blogger was being paid for their words of wonder? New FTC regulations, effective in December 1, 2009, require bloggers to disclose money or perks - or even free products.

Requiring Disclosure Trend

Blog disclosure regulations are part of a trend for open disclosure of conflicts of interest. "Sarbanes-Oxley" had a major impact on the way companies keep financial records, and signaled a major shift in public wish for open disclosure. Even not-for-profit organizations are now pro-active disclosing conflicts among officers and board members.

The Federal Trade Commission (FTC) blog disclosure regulations require those who write articles or reviews of products or services on the internet to disclose, in a "clear and conspicuous" manner, any free products or payments they receive for these reviews.

The regulations go beyond current requirements that advertising testimonials must disclose that consumers should not expect these results to occur. Now, companies proclaiming "atypical" results must identify what consumers can expect, in other words, what "typical" results are.

Anything But Objective

The coming blog disclosure regulations result from consumer complaints about the perceived unfairness and potential for deception by bloggers touting products without revealing financial bias toward the product.

The FTC web site will likely contain more information about the regulations. How blog policing and enforcement will happen remains to be seen. The shield of the computer screen allows people to avoid being "discovered", many bloggers could be difficult to identify and locate.

Reporting Violations

It's impossible to predict how effective the new blog disclosure regulations will be. If your business, product or service has come under harsh criticism in a blog, and you suspect that it may have actually been the work of your competitors, consult an attorney.

The attorney will help you understand the likelihood of winning a suit to recover damages for the harm. The attorney may also help you determine if a complaint to the FTC is warranted. If the FTC receives multiple complaints about a particular blogger, it may take steps to prosecute.

Avoid the temptation to "return the favor in kind" by writing a scathing response or criticism of your competitor or the blogger. You may risk a suit for libel or defamation.

The resulting fallout may cause more harm to your business or reputation than if you simply let time pass or had devised a marketing strategy to respond in a positive, appropriate way. Have an attorney review your plan if you are uncertain of the legal implications.

Questions for Your Attorney

  • I have a blog site, and I do review products and services; can you review the general disclosures I have on my site to see if I'm in compliance with blog disclosure rules?
  • I have several small business activities on various web sites, including a blog, in which I will review products, and sell advertising space. I also sell products on a peer-to-peer auction site. Do I have to disclose how all my activities are related?
  • I posted a negative review of a product on my blog; there was no connection to any one product maker. Now I've received a letter from the product owner, advising me that it's considering a lawsuit due to the negative review. Can't I state my opinion on a product and report my experience with it to my readers?
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