Freaking out about the new FTC rules


The Twitters were twitting fervently Monday in response to the Federal Trade Commission’s new guidelines requiring online writers to disclose when they have received freebies in exchange for reviewing a product. But much of the uproar and indignation expressed by bloggers was unfounded, demonstrating a misunderstanding not just of the FTC’s new guidelines but of the underlying ethical principles, too.

Here is the relevant portion of the FTC’s press release on these new guidelines, which take effect Dec. 1:

The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers — connections that consumers would not expect — must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.

That’s from the press release about the guidelines. You can read the actual guidelines in PDF format here. On page 75, at section 255.5, “Disclosure of material connections,” is this:

When 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 (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.

This does not mean, as many tweets seemed to think, that a movie critic must now mention in his review that he saw the film by attending a press screening. Being admitted to a press screening is not a “material connection” (i.e., it’s not worth anything) — and, more to the point, people reading the review would expect that this was the case. It’s commonly understood that movie critics see movies at special screenings in order to write their reviews. Knowing that a critic saw the movie that way would not affect the reader’s view of the critic’s credibility.

Even if the studio sends the critic a DVD screener of the film to watch at home, that need not be disclosed. These screeners usually must be returned to the studio, and even if the reviewer gets to keep it, it has no monetary value. (The studio usually puts a watermark on the film, too, making it of little value even to movie pirates.) Moreover, the DVD is merely substituting for the press screening and would thus not be unexpected by a typical reader. There is no “material connection” here.

Where there IS a material connection is when, for example, a critic is flown to a press junket and put up in a hotel in order to watch a movie and then review it. Consumers would not expect that my review of “Saw VII: Still Sawin'” was preceded by an all-expenses-paid trip to L.A., a night in a swanky hotel, and a per diem. Furthermore, knowing that I had received those perks might affect the reader’s assessment of my credibility. The reader might wonder whether my review of the film (especially if it’s positive) had been influenced by the things the studio had given me. Such material connections — “in-kind payment,” in the words of the press release — would need to be disclosed in my review of the film.

Please note that none of this means that a critic who goes on studio-sponsored junket is, in fact, being bought in exchange for providing a good review. No doubt many such writers do a fine job of keeping their feelings about the movies separate from the perks they receive from the studios. The problem is that consumers might THINK that they’ve been bought. There is the APPEARANCE of graft. And it’s the consumers that the FTC is concerned about. Consumers need to have the facts available to them so that they can decide for themselves whether they take the reviewer seriously. Reliable reviewers will have built up audiences who trust them to speak honestly, so the disclosure won’t be a problem.

And if you don’t want to disclose it … well, why not? People who truly believe what they are doing is ethical should have no problem telling people what they are doing.

All of this seems perfectly sensible to old school types who have worked in print journalism. The basic rule of thumb in the newspaper business is that if the freebie you’re receiving is necessary for you to do your job, then it’s not a “material connection” and is OK. To review a play, you obviously must SEE the play, so the theater providing a free ticket is perfectly acceptable. It’s not a “perk” that a photographer gets to stand on the sidelines of the football game — even though the average ticket-buyer can’t do that — because it’s where he needs to be in order to take his photos. Now, if the theater also gives the critic a free night in a nearby hotel when he reviews the play, or if the football team flies the photographer out to cover an away game, then it’s unethical.

Newspapers and newsmagazines have strict rules about this sort of thing. The details might vary from one outlet to another, but the general ideas are the same. A paper won’t let its critic go on a press junket on the studio’s dime. The paper (or the writer himself, I suppose) must pick up the tab. Additional gifts, even if offered innocently and without an undertone of bribery, are refused or given to charity. All of this is done to avoid even the appearance of impropriety. (Not that newspaper employees always abide by these rules, of course — but the rules are there, and people generally get in trouble when they violate them.)

Some twitterers were offended that bloggers and online movie critics are seemingly being asked to follow rules that critics at newspapers and magazines are not required to follow. People at newspapers don’t have to disclose that they went on press junkets! No fair! The FTC addresses this in its guidelines, on page 47:

The Commission acknowledges that bloggers may be subject to different disclosure requirements than reviewers in traditional media. In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e., where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages. Accordingly, such reviews are not “endorsements” within the meaning of the Guides. Under these circumstances, the Commission believes, knowing whether the media entity that published the review paid for the item in question would not affect the weight consumers give to the reviewer’s statements….

In contrast, if a blogger’s statement on his personal blog or elsewhere (e.g., the site of an online retailer of electronic products) qualifies as an “endorsement” — i.e., as a sponsored message — due to the blogger’s relationship with the advertiser or the value of the merchandise he has received and has been asked to review by that advertiser, knowing these facts might affect the weight consumers give to his review.

The reason the FTC doesn’t bother with “traditional media” is that news outlets already have their own codes of conduct in place. They are largely self-policing — and consumers know that. Newspapers have thick ranks of editors and other gatekeepers, and consumers know that newspapers take their credibility very seriously. The Internet, however, has no such rules, and certainly not ones that are generally agreed upon by all outlets, as is the case in the world of print journalism. Newspaper critics don’t have to disclose that they went on a press junket because 1) they probably didn’t, and 2) if they did, it was paid for by the paper, not the studio.

On page 79 of the FTC guide is this relevant example:

A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.

It’s also important to remember that, let’s be honest here, the FTC isn’t going to be enforcing these guidelines very often. There’s no need to get worried about the government breathing down our sweaty blogger necks.

There is also some murkiness regarding what constitutes a “blogger.” I thought at first that the FTC was defining the word “blogger” the way all old people define it: “anyone who writes on the Internet.” But the examples they give, including the one just quoted, suggest a more limited definition: someone who maintains his own blog, as opposed to a website that employs multiple writers and has editors and advertisers. It may well be that people who visit a site like that have different expectations from people who visit the blog of a guy who writes about video games from his dorm room. A reader at one of the “professional” sites would probably expect that a DVD review means the studio provided a copy of the DVD that the writer gets to keep; a reader at a blog might not expect that the reviewer has those kinds of professional connections. But where’s the line between the two? The FTC might have to clarify whom all of this applies to.

Either way, the basic principles here are laudable and practical. Why NOT tell your readers in your review of a film that the studio flew you out to visit the set several months earlier? The mere fact that you have disclosed it will usually allay any concerns the reader would have had. (“If it was shady, he wouldn’t have told us about it.”) It’s not disclosing it, and letting the readers find out on their own, that makes it look like you were hiding something.

No one behaves 100 percent ethically 100 percent of the time. Sometimes it doesn’t even occur to us until after the fact that we’ve done something dodgy. The fact that nobody’s perfect means we shouldn’t waste a lot of time on finger-pointing and accusations. But it doesn’t mean we shouldn’t all try, on our own, to be above reproach.