Thou Shalt Disclose Endorsement

FTC has set a few new rules. Finally, after around three decades of un-amended rules, regulations and policies, the FTC (for those who don't know, FTC stands for Federal Trade Commission) has now introduced a new rule. This rules simply stands on the principle of transparency. It states that all bloggers who endorse a product or organization in anyway through their blogs, and accept payment in cash or kind for the same, need to disclose the transaction.

This rule was brought about to ensure transparency of incomes and expenditure or the bloggers and the organizations respectively. Richard Cleland, assistant director for the division of advertising practices at the FTC said, "Given that social media has become such a significant player in the advertising area, we thought it was necessary to address social media as well". Consumer Interest groups like Consumer Union have, since a long time now, complained of the lack of disclosure regarding bloggers' ties with individual organizations that they choose to endorse. In light of this fact, Consumer Union made an attempt, via WebWatch.com, to monitor bloggers and their ties. However, due to an acute lack of funding, the site had to shut down. In response to this FTC said, "Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service."

Nonetheless, the impact of this new rule cannot be ascertained as the sheer magnitude and number of bloggers is too much to monitor with accuracy. More so, many bloggers will not mind receiving free products in return of their endorsements. The new guidelines also cater to organizations that use market research done by institutions that they fund. The FTC's new guidelines will expect these organizations to disclose their ties with such organizations as well.

In spite of the difficulty of the matter, many observers would respond positively. As the FTC is not forbidding these ties, but merely asking the parties to maintain transparency and disclosure. Failure to do so will result in a monitory penalty upto $11,000. The complete effect of these new rules will be seen in days to come. This is where I sign off! More on the impact of the new rules, soon!