You may have read the buzz earlier about how the Federal Trade Commission will be requiring disclosure from those who use social media (including blogging) for 
reviews or endorsements. As I’ve written elsewhere, I think these rules are bad for more than just bloggers who get free iPhones or baby toys, since liability for failure to disclose a sponsorship relationship can rest on any consumer who meets the subjective criteria of “endorsement,” as well as on the business that “sponsored” the consumer’s good words.
Since then, I’ve had my scaredy-pants attitude tempered by posts like this one. However, this scintillating 81-page document (the new guidelines pdf) got my law-school-trained-always-looking-for-the-hypo brain thinking about a relationship I’ve witnessed on Twitter between a locally-based restaurant chain and local consumers, who may very well be the FTC’s new “endorsers.”
What follows is excerpts of an email exchange I had with the social media face and voice of @pancheros (a national chain of burrito-based fast food), Reid.
Me: Basically the FTC is looking to define the scope of how it can enforce rules about advertising so consumers are better informed of any “material sponsorship” (money or free stuff) received by someone who makes statements about a given product. The idea being that those who get money or free stuff are more likely to say good things, and that sometimes those good things are exaggerated or even wholly untrue.
So, this recent notice (the doc linked above) addresses (among other things) how these newer interpretations of advertising rules will apply to “new media” like social media and blogging.
Below are two of the provisions that jumped out at me and got me thinking about how I’ve seen Panchero’s interact with “endorsers” on Twitter (your customers), who may have received free burritos or won the trivia prize (page #s refer to the PDF linked above).
First, there’s the issue of these consumers needing to disclose their relationship with you and the fact that they may have obtained a free product — the following makes it look like every time @swirlee says “Mouth confirms it: @pancheros’ new barbacoa burrito is delicious!” (http://twitter.com/pancheros/status/4502469312), he’s acting as an endorser that would be regulated under the new rule. The guidelines call for a very subjective, case-by-case determination of the threshold for endorsement, but your relationship with @swirlee (which, though not limited to trying to sell Panchero’s products, is certainly premised on advertising for Panchero’s) would likely weigh in the favor of him falling under the regulation (here presuming that your Twitter use qualifies as a “word of mouth marketing program”):
“consumers who join word of mouth marketing programs that periodically provide them products to review publicly (as opposed to simply giving feedback to the advertiser) will also likely be viewed as giving sponsored
messages” (p. 10)This is relevant not just for @swirlee, who may face personal liability for failure to disclose his relationship or any “material sponsorship,” but for Panchero’s, who may be liable if @swirlee overstates a claim, has a “non-typical consumer experience” (his burrito was better than others could expect theirs to be), or lies.
“[I]f the advertiser initiated the process that led to these endorsements being made – e.g., by providing products to well-known bloggers or to endorsers enrolled in word of mouth marketing programs – it potentially is liable for misleading statements made by those consumers.” (p. 15)
My feeling, and what I’m writing about, is that a situation like this illustrates well the potential problems with these guidelines. Application to social media of “endorsement” rules that were intended to address celebrity infomercials creates an awkward regulatory regime for what is, at it’s core, two nice guys in Iowa being nice to each other.
After that epic introduction, two questions:
1. Do you think Panchero’s will do anything different in your social media marketing once the FTC says you “should establish procedures to advise endorsers that they should make the necessary disclosures and to monitor the conduct of those
endorsers.” (p. 39)?
Reid @pancheros: No, we will not do anything differently until something officially goes into effect. Everything we do in our social media campaign is natural and honest, not manipulative. This platform gives consumers the freedom to praise us as well as state what they don’t like about the brand.Me:
2. Do you think these guidelines will inhibit how you interact with your friends and followers online? If so, do you think that’s good or bad for the consumer who might otherwise be “duped” by positive Panchero’s talk (as the requirement for disclosure suggests)?
Reid @pancheros: Yes, it will inhibit communication because any time restrictions are placed on any sort of communication people are inhibited and they lose their spontaneity. What’s so great about social media is it is meant to be as though you are sitting in a room with these people having a discussion. Once you have to start checking on “the rules and guidelines” this just becomes another stilted and orchestrated form of speaking.Me: And my disclosure, just for fun: I’ve been following @Pancheros on Twitter for a while, even though I don’t eat there (I have maybe three times ever in the past and was pleased with the food). You certainly didn’t give me anything in exchange for calling you a “nice guy” or for what might be construed as a positive review of how you run your social media campaign. And while your online marketing efforts haven’t made me buy your products, there is probably a reason that you popped into my head as someone who has ongoing customer relations via social media.
I should add that since Reid answered my emails, my family did receive, and subsequently use, a kinda crappy Panchero’s fribee-esque plastic disc. But it was randomly handed out at a parade, which probably wouldn’t rise to the level of “sponsorship.”
In any case, even if most social media marketers and bloggers and consumer-review-generating users don’t change their behavior and don’t suffer at the hands of the FTC, the First Amendment implications of such speech entering the realm of “commercial” abound.
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