Feb 26, 2011

Textbook Site Needs a Lesson

The college used textbook sale and rental site Swellhead may need to go back to school, after it announced (via an e-mail to college journalists and on its website) a contest in which the writer of "most shared" article about the company will win a new iPad. To be eligible, articles must be at least 200 words, "must appear in a prominent space on your newspaper," must link back to the Swellhead site, and must be posted on the wall of Swellhead's Facebook page.

The problem is that unless the articles specifically mention that the writers are vying for a prize, they would violate the Federal Trade Commission's "Guides Concerning the Use of Endorsements and Testimonials in Advertising," which require disclosure of incentives for bloggers to mention commercial products or services.

Last year, the FTC took no action against Ann Taylor's Loft division over a similar contest, after the clothing retailer committed to not offering any incentives to bloggers for coverage in the future without informing the bloggers of their obligation under the FTC guides to disclose the arrangement.  The commission's investigation of Loft was consistent with its assurances after adopting the guides that it would target advertisers that offer freebies or discounts without informing bloggers and social media contributors of the disclosure requirement, rather than targeting the writers of the posts.

Swellhead makes no mention of the disclosure requirement in the contest information on the company's website, although the "Fine Print" includes a standard disclaimer that entrants "hold harmless Swellhead from and against any claim or cause of action arising out of participation in the Giveaway or receipt or use of any prize."

It's also worth nothing that while the FTC guides specifically apply only to bloggers and other social media -- based on the dubious conclusion that traditional media have "independent editorial responsibility" in writing about products, and that readers "reasonably expect[]" that traditional media journalists receive free or discounted products and services -- they would apply here even though Swellhead's contest targets journalists at traditional student newspapers, since the contest requires that the articles be posted online. This also points out another absurdity in the FTC applying different rules to online and offline media.

But Swellhead's contest -- which has received some ridicule -- still should raise red flags; under the FTC guides, it's anything but swell.


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