FTC completes first “blog-ola” investigation

Last December 1, blogs were explicitly brought within the scope of updated Federal Trade Commission guidelines on rules governing the use of endorsements and testimonials in advertising. The FTC last month quietly posted on its web site the “closing letter” of its first investigation involving blogs under the rules.

The FTC investigated whether the Ann Taylor Stores Corp. violated the law in connection with providing gifts to bloggers who the company expected would post about the company’s LOFT division. In its April 20 closing letter, the FTC staff said it had decided “not to recommend enforcement action at this time.”

The investigation stemmed from LOFT providing gifts to bloggers who attended a January 26 “Exclusive Blogger Preview!” of LOFT’s Summer 2010 collection. The invitation said bloggers attending would receive a special gift and be entered in a “mystery gift card drawing.” In smaller print, the invitation said any blog coverage had to appear within 24 hours and links had to be sent to LOFT to be eligible for gift cards ranging from $10 to $500. The FTC guidelines require bloggers who receive a free or discounted product or service in exchange for writing a review to disclose that fact.

According to reports, 31 bloggers attended the event and all received gift cards. According to the FTC, only a very small number of bloggers posted anything about the preview, and several of them disclosed that LOFT had provided them gifts. Also working in LOFT’s favor was that it adopted a written policy after the event that it will not issue gifts to any blogger without first telling the blogger they must disclose the gift on his or her blog. “The FTC staff expects that LOFT will both honor that written policy and take reasonable steps to monitor bloggers’ compliance with the obligation to disclose gifts they receive from LOFT,” the closing letter said.

In typical government fashion, the letter noted that the decision not to take further steps “is not to be construed as a determination that a violation may not have occurred, just as the pendency of an investigation should not be construed as a determination that a violation has occurred.” In other words, we’re not saying you did or didn’t violate the law but we’re watching you.

This is the first public disclosure of an investigation involving bloggers under the updated guidelines. Undoubtedly, it stemmed in part from mainstream and fashion press coverage before and after the event. Some of the coverage directly asked whether this violated the new regulations, almost inviting the FTC to investigate. Yet the letter also appears to support the FTC’s statement before the updated guidelines were adopted that it would pursue the advertisers, not individual bloggers.

Frankly, then, the closing letter shouldn’t prompt a new round of uproar in the blogging community. Still, the fact there was an investigation and a public letter on it indicates that blogs are on the FTC’s radar and that bloggers need to be cognizant of that fact. Moreover, corporations who see social media as a vehicle for advertising and endorsements better be putting policies in place and making sure they are following the regulations.

One size does not fit all in any regulation.

Bruce Aust, Inc. magazine, (September 2005)

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