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Jan 7, 2012

FTC Punts Again

Just before the holidays, a post on the Federal Trade Commission's Bureau of Consumer Protection Business blog highlighted a staff letter announcing a decision to not pursue charges against Hyundai Motor America over a campaign in which bloggers were offered gift certificates for linking to the company's videos or commenting on its Superbowl ads, without telling the bloggers that they are required to disclose the incentives under the Commission's "Guides Concerning the Use of Endorsements and Testimonials in Advertising."


The Commission's position is that advertisers which offer such incentives can be held accountable under the Guides for failing to inform bloggers of the disclosure obligation. But its record of enforcing the provisions has been mixed.

In the Hyundai case, the letter announced that the FTC staff "determined not to recommend enforcement action at this time."

As stated in the FTC's own blog  post, "What gives?"

The letter explains that "Hyundai did not know in advance about use of these incentives," and that "the actions with which we are most concerned here were taken not by Hyundai employees, but by an individual who was working for a media firm hired to conduct the blogging campaign," and "upon learning of the misconduct, the media firm promptly took action to address it."

This marks the third publicly announced case in which the FTC has declined to take action against apparent violations of the blogger endorsement rules. Last August, the Commission declined to investigate an online issue of Details magazine, guest edited by actor Ashton Kutcher, which profiled a number of tech companies in which Kutcher has investments. And in April 2010, the FTC decided not to take any action against Ann Taylor, whose Loft division offered gifts to bloggers who attended a January 26 "exclusive blogger preview" of the chain's summer 2010 line.

The Commission has taken action in two cases: it reached a settlement with a public relations firm that allegedly posted positive reviews of client's video games on Apple's iTunes store, and a $250,000 settlement with a company that sells guitar lessons on DVDs.

Yet, as chronicled on this blog, situations that raise the question of whether the blogger endorsement rules apply continue to arise. It's still an open question, however, the extent to which bloggers know the rules exist. (Which is what the FTC says in its post, recommending that the letter "is worth a read if your company has added social media to your marketing arsenal.")


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