Hannah is an attorney at Hollingsworth & Zivitz, PC where she focuses her practice on business law and entrepreneurial services. Hannah is one of the few attorneys in Indiana to offer experienced legal guidance on promotional law, including advertising, sweepstakes, contests, consumer privacy, and e-commerce related issues.
Have you ever used your blog to review a product you received for free? Have you ever offered a fellow blogger a deal where you review his product or service if he reviews yours? Did you disclose that deal to your readers? If not, it is time to start.
This week, the FTC announced new rules aimed at increasing transparency used in social media advertising. Starting December 1, 2009, bloggers and other users of social media such as Twitter and Facebook must disclose if they have received any type of payment in exchange for promotion, advertising or endorsement. This seems to include in-kind exchanges, free product or good old fashioned money.
Almost every business has a blog these days. It is a free, easy way to reach existing and potential customers. And there is a lot of trade going on out there in the blogosphere. Bloggers commonly receive gratis products or services in exchange for a positive write up. Companies who send out free stuff have nothing to lose, because if a blogger doesn’t like their product or service, the blog simply doesn’t review or promote it.
In many communities there is a spider web of connections among successful social media sites. But the era of “you scratch my back and I will scratch yours is over.” Bloggers who promote one another for pay, free goods, free services or simply shared promotion now face significant penalties from the Federal Trade Commission, up to $11,000 per violation!
What does this mean for your business? Well some common social media practices that may be affected include anything from writing a positive comment on Facebook in exchange for a free hat to writing a recommendation for a CPA on LinkedIn for a discount on your taxes. You may think that the blogosphere is so vast and there is too many infractions out there for the FTC to catch you, but don’t forget about Naptster. The federal government cracked down on anyone and everyone, including teenagers living in their parent’s homes, simply for downloading a few songs. The FTC is primed to make an example of any business violating these new rules. Don’t subject your business to an $11,000 fine. If you are promoting another company’s product or service on a social media site, and you have ANY kind of relationship with that company, be sure to disclose it.