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UPDATE: Interview With FTC Director of Division of Advertising Practices Yields More Vague Answers About Blog vs. Print Disclosure

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On Wednesday, we posted about our exchange with a Federal Trade Commission (FTC) attorney wherein we asked why bloggers are required by the FTC to disclose freebies and samples while print editors don't. We cited recent examples of print editors receiving iPad lookbooks, $3,000 Chanel handbags at the holidays, and $1,000 gift certificates to Jimmy Choo at a mascara launch.

The FTC contacted us. We've included the full text of our email exchange (with phone numbers and contact details redacted) after the jump, for your perusal and entertainment.

Because we felt we weren't getting clear and satisfactory answers from the FTC social media specialist, we put in a request to speak with Mary Engle, the Director of the Federal Trade Commission's Division of Advertising Practices, who was part of the committee that drafted the government agency's endorsement guidelines. There were several things we wanted to ask her about—why bloggers are required to disclose freebies when print publications aren't, why bloggers need to disclose that a company advertises on their blog when writing about said company's product when print publications don't, and whether the FTC has, in its history, ever looked at the women's magazine industry in terms of illegal or unfair practices—at least in the same way the FTC seems to have scrutinized bloggers and new media in recent years.

The answers will (or will not, depending on how cynical you are) surprise you.

Here's how our conversation went:

Racked: Just to clarify, we're not arguing against disclosure. Obviously, disclosure and transparency are important to us as a fashion and retail blog. But what we'd like to get more clarification on is why the FTC singles out bloggers—for example, in your YouTube video, in point seven of the FTC endorsement guidelines FAQs, and example five in section 255.1 General Conditions of the FTC's
Guides Concerning the Use of Endorsements and Testimonials in Advertising
.

Mary Engle: You will see most of our cases have involved endorsements that have traditionally involved product manufacturers and product sellers making claims about what their products can do—weight loss pills, cure diseases—and how, in these contexts, endorsements can be deceptive. Our focus is on the claims of efficacy of these products.

It's always a question whether a reader or the audience understands the relationship between the advertiser and the reviewer—if they understand that the person got the product for free or not. It's very fact-specific. For example, if it's a product review site, we've said they don't need to disclose because it's obvious they're getting sent products for the purposes of review. If the reader thinks that whomever is reviewing is also buying the products and paying for them, the blog doesn't need to disclose.

Racked: What about gifting products that are unrelated to the review item? For example, in recent months, companies have gifted print editors iPads loaded with a seasonal lookbook. The editors don't have to return the iPad; should they disclose this? What about a company that hosts a mascara launch and hands each editor a $1,000 gift certificate to Jimmy Choo?

Engle: It's very hard for me to say. Generally, you know, when we investigate a practice, we conduct a thorough investigation. We can't really make a snap decision. We can try to speak more generally—what's being said to the consumer, what is the marketing that's going on, is it clear to consumers, is there a deceptive practice going on.

I encourage you and anybody to complain to the FTC because that's how we find out about practices. It's compliance. [Sometimes we learn about things by] reading the trade press. If you think there are deceptive practices going on, bring them to our attention. The more facts you can provide, the better.

Racked: How did the FTC focus on bloggers come about?

Engle: We were planning on updating the endorsement guidelines anyway, and, actually, it was more because it had been a number of years. The main issue driving it was the whole "Results Not Typical" thing we were seeing with weight loss ads. We wanted to address that. But at the same time, social media and marketing was really developing. In fact, we got a complaint from Commercial Alert about word-of-mouth marketing and behind-the-scenes people being paid to promote products. It was very timely and we were updating the guides anyway.

We do have a regulatory review schedule of about every ten years, depending on what's going on.

Racked: What about the connection between advertisers and editorial. In one of the examples [no. 5 in section 255.1] in the FTC guidelines, it says that a blogger must disclose that they are receiving money from an advertiser when the blogger reviews or writes about said advertiser's product. It's common knowledge—and we've seen internal magazine documents explicitly correlating this—that the number of ad dollars spent by an advertiser directly influences number of editorial credits in issues of print magazines. Should print magazines be disclosing this?

Engle: No, I'm not aware of that. And I can't say it would definitely be an illegal practice.

Racked: To your knowledge, has there ever been an investigation of a women's magazine by the FTC? Certainly, it's significant because women are responsible for spending 85% of this country's disposable income.

Engle: Nothing comes to mind in terms of investigations of publishers. Our investigations have more to do with the weight loss pill type of thing, where they had some sort of interest in the product they were promoting. I haven't been here forever, but off the top of my head, nothing is jumping out. I know we investigated Readers' Digest, but I think that had to do with subscriptions.

Racked: So, why the interest in blogs? Was it just because of one complaint by Commercial Alert?

Engle: It was clearly what we were seeing, around 2005, with Facebook and MySpace, that social media was coming to the fore—blogs, obviously developments in the world of marketing, were things we needed to take account of. The Commercial Alert complaint was more about interpersonal word of mouth marketing rather than blogs—how, as an average consumer, you wouldn't know that someone was doing advocacy work for a marketer.

Racked: We think there's a general sense of dissatisfaction with the FTC from within the blogging community because of what's perceived to be a double standard between online media and print media.

Engle; I mean, definitely we're not targeting bloggers. You can see, even in our main goal here, with the revision of the endorsement guidelines, we've done a lot of outreach to educate marketers who are using bloggers. So that's been our goal—it's not law enforcement. And I think that cases we've brought up have been really clear cut because there's so much out there that we have to concentrate our resources on clear-cut cases.

I think we're really looking on both ends in our investigations. We look at good faith—even though, technically, that's not a legal defense. But if we see a company is really trying... In the case of Ann Taylor, we closed it, it was small, and it ended up not being what it appeared to be at first. We can't really have two different invitations—one for bloggers and one for print journalists. They weren't even aware of the guidelines. We haven't sued a blogger. There's a lot of misinformation out there.

The burden is on the marketer, and so we want them to be aboveboard with consumers—and that means when they have a marketing campaign or are using word of mouth to promote their products, when it's someone else who's doing the speaking.

Racked: You talked about how disclosure depends on how much the public understands about what happens behind the scenes. How does the FTC gauge what the public knows?

FTC: Typically we're looking at an advertisement—if it's clear from the face of an ad. A claim can be made expressly or implied. If it's not clear, we'll do a copy test, a consumer survey, and see what claims consumers take away.

So here's our takeaway from this conversation: the FTC issued its revised endorsement guidelines in 2009 because the last draft had been published in 1980 and they needed to update it to keep up with new media; the FTC received a complaint about social media and new media endorsements of a product whose efficacy was questionable; the FTC has no idea what goes on behind the scenes in the women's print media and publishing industry and the FTC's advertising division has never monitored the relationship between the editorial and advertising sides of women's publications; and, while technically (secretly, we'd call it) print publications ought to disclose the free stuff they get when it's not obvious (we especially like The Cut's example of how a print disclosure could read: "Miu Miu shoes, $985; borrowed, not returned, now worn by new editorial assistant Lisa when she's not wearing her Givenchy ankle booties, $1,295 (opposite page)"), they haven't yet been made an example of, like bloggers have.

What do you think of all this?

On a side note:

Here's our email correspondence with the FTC's Social Media Specialist Cheryl Hackley (earliest correspondence appears first). After our original post ran on Racked, we received this email. Emphasis is ours.

On Thu, May 12, 2011 at 12:15 PM, Hackley, Cheryl wrote:

Hi Danica,

I work in the press office at the FTC and just read your post in Racked about the FTC’s disclosures. First, my apologies that Tracey wasn’t able to answer your questions about our Endorsement Guides. If you have additional questions, I’d be happy to put you in touch with one of our attorney’s that helped write the revised Endorsement Guides. And in the future, please direct any questions about our agency to the press office.

Second, I noticed you shared with your readers a link to our Frequently Asked Questions, which is great. However, you may have missed that the answer to your question was actually right there:

Do the Guides hold online reviewers to a higher standard than reviewers for paper-and-ink publications?

No. The Guides apply across the board. The issue is—and always has been—whether the audience understands the reviewer’s relationship to the company whose products are being reviewed. If the audience gets the relationship, a disclosure isn’t needed. For a review in a newspaper, on TV, or on a website with similar content, it’s usually clear to the audience that the reviewer didn’t buy the product being reviewed. It’s the reviewer’s job to write his or her opinion and no one thinks they bought the product—for example, a book or movie ticket—themselves. But on a personal blog, a social networking page, or in similar media, the reader may not expect the reviewer to have a relationship with the company whose products are mentioned. Disclosure of that relationship helps readers decide how much weight to give the review.

Again, please let me know if there’s anything else I can assist you with.

Thank you,

Cheryl

Cheryl M. Hackley
Social Media Specialist
Office of Public Affairs
Federal Trade Commission

We read this email, felt that it didn't really address any of the points we'd brought up, since it still singles out bloggers over print, and replied with this:
From: Danica Lo
Sent: Thursday, May 12, 2011 3:13 PM
To: Hackley, Cheryl
Subject: Re: Hello from the Federal Trade Commission's Office of Public Affairs!

Thanks for getting in touch, Cheryl.

So, basically the answer to this FAQ is completely in line with what we've been reiterating all along—that bloggers are required to disclose their relationship with the company, but print publications are not. Right?

See: "But on a personal blog, a social networking page, or in similar media, the reader may not expect the reviewer to have a relationship with the company whose products are mentioned. Disclosure of that relationship helps readers decide how much weight to give the review."

Nowhere in this FAQ does it state that print publications are required to disclose.

Just wanted to clarify that our points are the same.

Danica

Danica Lo
Editor, Racked.com

To which Cheryl responded:
On Thu, May 12, 2011 at 3:54 PM, Hackley, Cheryl wrote:

Hi again,

We’re saying that the medium doesn’t matter; the Endorsement Guides apply across the board.

What we look for and often ask is: “Does the audience understand the relationship between the company and the writer?” If there’s a blogger out there who gets freebies all the time and the readers know that, then they wouldn’t necessarily have to disclose. If there’s a print writer out there where the relationship isn’t obvious and people don’t know the writer is being compensated in some way, then they would need to disclose.

Does that make sense?

Cheryl

Cheryl M. Hackley
Social Media Specialist
Office of Public Affairs
Federal Trade Commission

To which we responded:
From: Danica Lo
Sent: Thursday, May 12, 2011 4:24 PM

To: Hackley, Cheryl
Subject: Re: Hello from the Federal Trade Commission's Office of Public Affairs!

Yes. However, the point of our post is that it's obviously unclear to readers (the public) how much money—in the form of luxury goods, gift cards, free trips, gifts, and other compensation are exchanged behind the scenes with print editors. Yet the FTC has only made disclosure an issue with bloggers, not print writers, in recent years.

Danica

Danica Lo
Editor, Racked.com

To which she responded, denying that the FTC was targeting bloggers, and in spite of the fact that the revised guidelines for endorsement specifically cites blogger issues:
On Thu, May 12, 2011 at 4:49 PM, Hackley, Cheryl wrote:

Danica,

We’re not targeting bloggers—we simply updated our Guides to reflect the current times. Are you familiar with our most recent Endorsement cases? I know you mentioned we looked at Ann Taylor, but we have had two cases since, the first involved a PR firm where the employees wrote misleading game review apps and didn’t disclose their relationship with the company. The other with a company that sold guitar lesson DVDs but had affiliate marketers writing, blogging and endorsing the products online without disclosing they were being paid for their reviews. Again, regardless of the means, endorsers must disclose their relationship with advertisers if it’s not obvious.

Cheryl

Cheryl M. Hackley
Social Media Specialist
Office of Public Affairs
Federal Trade Commission

At which point we got frustrated and decided to request a phoner with a lawyer who drafted the 2009 guidelines.
From: Danica Lo
Sent: Thursday, May 12, 2011 4:59 PM
- Show quoted text -
- Hide quoted text -

Cheryl,

I am familiar with these cases. Our point is that the relationship between print editors/writers and the companies they endorse in the pages of their magazines is not obvious.

I would like to speak with an attorney who helped write the revised Endorsement Guides.

Please let me know when we can schedule a call. I am available tomorrow between 11 a.m. and 4 p.m. and Monday and Tuesday anytime between 11 a.m. and 4 p.m.

Thanks,

Danica

Danica Lo
Editor, Racked.com

How's that for disclosure?
· Guides Concerning the Use of Endorsements and Testimonials in Advertising [FTC]
· Why does the FTC mandate that bloggers disclose freebies when print writers don't [Racked]
· EXCLUSIVE: Top Fashion Magazine's label list in priority order [Racked]