Site   Web

January 26, 2010

The FTC Needs to Shut Up!

business

The Federal Trade Commission (FTC) is one of the most unique parts of our government. It has a wide range of powers given by law, which encompass among other things the ability to pass rules and regulations against unfair and deceptive acts or practices. The FTC often issues “guidelines which are no more than notices that they will push for prosecution or civil action against individuals in violation their guidelines. Although these guidelines are often up for public debate, they are not passed by any governing body such as Congress, yet affect us often more than any newly passed law would. While many people see that the FTC is a consumer rights entity within the government, a growing number of people see that the FTC is a part of a growing, overreaching government that is interfering with the ability of businesses and often individuals to conduct business in this market economy.

I’m not claiming that the FTC should NOT prosecute obvious fraud, where consumers are clearly being scammed – such as not delivering a product as promised or the mass distribution of unsafe toys. That being said, the FTC’s guidelines and civil actions are quickly crossing the border of infringing not only on our ability to do business, but our First Amendment Rights to Free Speech. The Right to express one’s self and opinions, whether it is political or business related is an inherent part of our society and the foundations of our business community. The courts have ruled that advertising is a form of free speech, which cannot be infringed upon anymore than any other opinion, written or spoken.

Recently the FTC issued guidelines (http://www.ftc.gov/opa/2009/ 10/endortest.shtm) (which means, as said, we plan to bring action against someone) that regulate bloggers. Bloggers are a unique part of our economy, a throwback to the creation of this Country when people would often hand out pamphlets to express their opinion, in order to get attention to their cause. Bloggers are often people, like myself, who have taken the initiative to put their feelings down and write, taking the power away from larger media organizations, and putting it into the hands of the individual. As one knows, blogs often express anything from political opinion to diet tips. They are sometimes political, commercial, religious, or just something someone did in order to express their frustration at their parents. Whatever the reason is, they are a wonderful expression of our First Amendment Rights.

Yet the FTC believes that bloggers are so unique, that they need to be regulated in a way that has never been proposed to mainstream media. The FTC recently issued regulations in which they clearly state how bloggers who engage in commercial activity, should clearly state how they are related to the product, and make it obvious they are engaging in business, or have been paid to endorse the product. This uniquely affects the interactive advertising community, because it could easily be interpreted that any link, any mention of a product that would in turn create a sale (such as an affiliate link) would have to be clearly mentioned as an advertisement or state the nature of the relationship.

Additionally, more and more the FTC is engaged in the business of deciding what is considered an “authentic or substantiated” claim by an endorser or a product. While they have for the last decade or so, been more involved in cases in which they believe unsubstantiated product claims have been made, they are specifically targeting bloggers – and their opinions. This growing trend is more and more disturbing, as it gives the government the right to make assumptions on the quality and accuracy of claims of businesses – and then in theory, the accuracy of claims of individuals. It asks businesses and bloggers to basically “prove” what they are saying is correct, even if it is an opinion. They must substantiate according to the FTC, all their claims.

This is unique in nature, because it places an undue hardship often on small businesses and bloggers, who cannot afford to hire research teams or a huge law firm to assist them in the creation of their materials. A sole-proprietor who discovers that perhaps his home-made fig bars have lead to increased weight loss and energy, in theory, will have to prove and substantiate his claims before he could buy advertising on Google that states that these bars can help in weight loss. It could prevent a small business owner from selling knitted goods on Ebay, because the claim that they have kept her warmer than any other coat she owned, might be subject to scrutiny. They have to worry that the government, the FTC might intervene at some point and bring action against them based on perception and supposition. It gives bureaucrats, non-elected officials an extreme amount of power over small businesses in this Country.

The right of Free Speech in this Country is quite interesting, because it allows people to express their opinion, even if they are wrong. It assumes that no opinion is inherently wrong and opens up the possibility of debate. It also assumes that most adults are intelligent enough to make their own decisions regarding their dislikes, their opinions and the products they want to buy. The government, acting as “Big Mommy” is more and more interfering and saying that they want to regulate what we see and hear – that despite a huge Internet with tons of information, we can’t do our own research and decide if a product is what we want. We are giving the government more power than has ever existed before: the ability to sanitize what we hear and see before it’s released to the public.

“Government big enough to supply everything you need is big enough to take everything you have. The course of history shows us that as a government grows, liberty decreases.” – Thomas Jefferson


In perhaps the fastest growing industry ever, one person has made a name for himself as a leader and innovator. Pace Lattin, the publisher of the top newsletters in new media and online advertising, is one of the inventors of many of the technologies and methods that have become standards in the industry. He has been called many things, including a rabble-rouser, a guru, an innovator and a watchdog — but one thing stays the same: he is one of the most interesting leaders and commentators in the online advertising industry. Marketing Sherpa, a leading marketing research publication called him the most influential journalist in online media for a reason. Check out Pace’s Blog at: IndustryPace.com

29 Responses to “The FTC Needs to Shut Up!

    avatar JadeDragon says:

    I think Pace is right on with his assessment. The FCC has forgotten all about free speech with these new rules. Why target bloggers? What about product placements in TV shows and movies? Should there be a bubble pop up on screen saying “we got paid by Coke to include this can in the the movie”?

    I want to know how they intend to enforce the new FCC rules in a flat world where I might be sitting on a beach in Mexico, posting to a UK website host, blogging to an American reader base, working under my Malaysian company recommending a Canadian business selling a product made in China.

    The response I’m seeing so far from a few bloggers (including myself) is to post up wide reaching statements like “Assume everything I talk about and link too could make me money somehow. I might have gotten free products or services for blogging about something.” I even saw one guy post that he “might get laid” for recommending products and services on his blog. Hey, full (if wishful) disclosure right?

    At any rate, how is the FCC going to prove anyone got hurt because they followed a link to someone’s favorite eBook.

    Discloser: I did not get paid, nor have I received any promotional consideration for mentioning any country, government agency or soft drink in this post.

    avatar Entrepreneur says:

    Great article & well stated – it’s all well & good to have laws to prevent anarchy in business but business laws like this can only serve to stifle small business growth which is what most countries are trying to stimulate.

    avatar Anxiety Relief says:

    When all the noise started about the FTC changes, I became really worried that I didn’t have all the legal ‘stuff’ necessary to carry on with my blogging. Compared to many I am only a small voice on the web.

    Now, I am not so worried as there are certainly bigger operations that do not totally comply with all the laws.

    avatar Ballybeg says:

    How worrying that laws against small business bloggers in the USA are being enacted at the same time the Supreme Court is giving corporations and unions unlimited spending powers on political messaging.

    avatar David says:

    Great article…sadly, this is being done because of all the scams out there! However, they are taking it to far…The decent, hard working people in this so called great country always have to pay for the ones who screw it up!!

    avatar anthony says:

    OK, Im no expert on this topic – in fact im not even American, but perhaps that gives me a clearer perspective.
    Despite the apparent inconvenience to small business, theres actually something more important than profit, and that is a persons welfare.
    It is a sad truth that the (psychological) knowledge base that is used by advertisers (in order to persuade their prospects) is only ever increasing – advertisers have access to ever more powerful means of persuasion.

    It has been my view for some time that this cannot go unregulated in an ethical society. I dont know the answers, just the problem – which is that certain vulnerable sectors of our populations will need to be protected – or else they will becomes slaves to corporations, if not already.
    It is a uniquely American perspective to put profit before welfare.

    Very good article. It’s about time someone said what everyone else is thinking. Big brother is alive and well.

    avatar Adrian says:

    While I fully agree that freedom of speech and the ability to express ones opinion is a right which needs to be protected there is, I feel, a difference between someone doing this because it is their belief and someone doing it to sell a product or service. In the first case the intention is merely to share information, advice or an opinion for no financial gain whereas an endorsement, being made for the purposes of making a sale for financial reward, is a different matter all together. I think a reader does have a right to be aware if a “blog” or “article” is an honest, open and unbiased opinion or a sales pitch.

    avatar Jim says:

    I think that his points are not too valid. Our country decided long ago that “the buyer beware” is not in the best interest of anyone. We have had laws for many years to combat “Con Men” and the idea that somehow some part of our commercial industry should be exempt from scrutiny is just silly.

    Do you really believe that any pill is going to help you lose weight? Yet how many billions of dollars does that industry make? Of course people are smart enough to figure things out, eventualy. But people can be desperate too. Take the Nutraceutical industry where many have been caught telling their “affiliates” their product has been shown to cure cancer and they are just waiting on FDA aproval. So here are 10’s of thousands of “smart people” out there espousing this new wonder drug!

    So, my question is this, if blogers in business should have free speach why can’t other businesses start blogs like Dell, Johnson & Johnson and not have any issues with free speach. I mean, what’s fair is everyone including CEOs, CFOs and the like should be able to make any claim they want by virture of their blog, right?

    avatar Mike Peacock says:

    It has come to a point where I as a marketer and web designer, have to question why I have to point out that I may make money from a link posted on any of my sites. What happened to the good old American free enterprise system? I think that all adults should be responsible for what they buy and not try to push blame on everybody else if they make a poor decision. The FTC now has way too much power over advertising and now we all are scared to take a step without fear of being punished for promoting a product or service that we did not create.

    avatar Larry Jensen says:

    I am on the other side, for the consumer as I am also one of. When I am online searching for an item, I like to know who I am buying from. With the huge link network of affilates, you never know if they are actually selling something or an affilate untill you actually buy it. To have to say that the links that wou have are going to some other company’s store , not your own is a good thing.

    Mores the pity this is aimed at the dishonest people who make things very difficult for individuals as well as small business. If only we could get rid of those people us honest people would have more of a chance. Great article thanks

    avatar John Hayes says:

    People expect that if they are on a commercial site whatever truth portrayed may need to be taken with a grain of salt.

    I may be naive but if enforcement is limited to disclosure of financial interest in blog reporting why not?

    That would let consumers know that the blogger for that post is functioning as a paid extension of a business.

    Advertising may properly be protected as free speech but I don’t jump to the conclusion that hidden advertising disguised as a blogger’s opinion is the same thing.

    Advertising is free speech but subject to truth in advertising laws. It wouldn’t seem fair to escape the truth in advertising laws because a business subcontracts out their advertising to bloggers whose paid for opinions are somehow exempt from Truth in advertising laws.

    If I blogger wants to say Aunt Millie’s cookies are the best in the world let him. If he is being paid by Aunt Millie and living in her house maybe it is fair to say so.

    Good law is hard to write because of unintended consequences.

    avatar Gail says:

    In response to 1 comment here, what do you care if you are using an affiliate link to purchase something or not? As long as you are taken to the product you want to purchase, does it really matter?

    Regarding the FTC, people need to take responsibility for their actions and not expect the government to get involved to solve every tiny issue that comes into their lives. Small business is being crushed while big business is allowed to run amok…then they get bailed out of the problems they caused.

    If people weren’t so greedy, they wouldn’t have to go whining to the government. Yes there are scams everywhere, but just like paid advertisements in magazines, newspapers and infomercials on TV, you need to stop looking for “something too good to be true” and instead base your actions on reality. Has everyone forgotten that what seems too good to be true usually is?

    I like a lot of people are tired of the online scams, but these new FTC regulations can’t just be applied to the Internet. Personally, I don’t think they are needed at all, but as long as people rely on the government they will continue to be regulated “for their own good.”

    avatar John says:

    What about bloggers from outside the country outside FTC reach. How is it that the law only applies to the U.S. citizens and not someone else. Sounds like the FTC is taking a page from the chinese government and like google if a website similiar to blogger.com is available in another country and people use that then what. The only thing I have to say to the FTC and any other Gov’t agency trying to regulate the internet, “GIVE ME A BREAK”. If you CAN’T enforce to everyone around the world then DON’T force it on us. How is it that an agency can institute technically a “Law” without it going through a vote. I CONSIDER THAT RULING ILLEGAL AND WILL NOT ABIDE BY IT.

    avatar millca says:

    Perhaps the FTC should start holding politicians to the same scrutiny as bloggers. How many blatant promises and claims have been completely undelivered and never followed through on by politicians! I think Big Brother needs to start watching Big Brother and leave the small fish who are merely trying to eek out a living alone!

    I agree with Pace — to a point. The FTC has overstepped their bounds regarding freedom of speech — but bloggers and businesses brought it on themselves.

    I am surprised that a newsletter publisher who is supposedly a “journalist” doesn’t appear to understand the simple journalistic principle that protects reporters and news publishers…something most bloggers do NOT understand because most have never studied journalism…if you write something as a fact it MUST be provable or you can be sued for what you write. Period.

    If you wish to write your OPINION, you do so under a banner that makes it clear this is an OPINION PIECE…or you write, “In my opinion,” or “as I see it,” or “my own feelings about this are…” then write whatever you feel.

    You will be protected by the First Amendment when you do. On a blog. In a newspaper, On your website or on a napkin.

    What I’ve seen lately is an explosion of blogs written by amateurs who fail to understand journalistic law, writing their opinions but stating them as fact.

    This often results in defamation of character, outright libel and can cause harm to the individuals being written about.

    For example — MOST people are considered private citizens are are, thus, considered to be somewhat protected from the kinds of attacks we see in Enquirer or other rags…which go after public figures and have whatever fun they want. Why? Because public figures assume the role of a person OUTSIDE of normal citizen status to a certain degree as it’s their position to be in the public. They don’t get the same protections from libel and slander that normal citizens do.

    Do average bloggers know this? No! Should they? Absolutely!

    And — recently we’ve seen blogs where people can write GOOD things about products in return for pay.

    Huh? This isn’t opinion. It’s ADVERTISING. Yet it parades on blogs as an individual’s opinion.

    Do you REALLY want this to continue so no one five years from now believes a word published ANYWHERE?

    I didn’t think so.

    So — like all government actions, the FTC went overboard. But they were reacting to REAL problems hurting REAL people.

    You as a publisher should be able to see this and, because you didn’t appear to in this article, I feel it’s more than a little misleading.

    As I see it, the FTC is just saying that bloggers must adhere, finally, to the SAME rules print publications and writers have had to follow for more than a century.

    avatar John says:

    Pace – get a grip. Overreaction for sure. What is wrong with expecting openness, honesty and decency from bloggers -especially if they have financial interests at stake in whatever they are blogging about. If bloggers want to be respected then perhaps adhering to some minimum standards of accountability is not a bad thing for everyone involved. Making false or misleading claims about a product,or extolling the virtues of a product for financial gain without disclosure is shady and distasteful at best and fraudulent at worst. As to all this possibly hindering small businesses – now rrrreally! Perhaps the only businesses that would have a crimp put in their style by all this disclosure and false claims stuff would be the low hanging fruit of the huckster world who usually like to take the money and run anyway (you know – the snake oil types). Anyone in business for the legitimate long term usually finds that type of behavior non-conducive to business anyway. So who would I expect to scream hardest and loudest about all this FTC stuff? The very people who need to clean up their act anyway.

    avatar Cindy says:

    I disagree with you Pace. I think it is about time someone reined in all the outlandish, unethical practices going on in internet marketing. I think the one thing that many are not seeing is that transparency is being called for not only on the internet but for brick-and-mortar businesses as well. These laws have always been on the books so I don’t understand why so many marketers are acting so surprised. It only affects those that behave badly and totally run rough-shod over their customers. Those that think they can cross the line of ethical business are the ones that are screaming the loudest.

    To those that are acting this way I can guarantee that if yours was a ‘brick-and-motar’ business you would not last very long in the business world.

    I think John in the post above stated it very eloquently and precisely. I concur!!

    It is amazing to observe how bold various government agencies become with a President and congress both inclined towards an activist agenda. However, although supposed to be for the common good, their actions are largely aimed at justifying larger agency budgets. Because success in government agencies and departments is usually measured in the increases in budgets that they can justify. And the administration and congress condone this because it contributes to bigger government.

    The bottom line is that government is out of control. Look at the extremes already in place with uncontrolled spending, government intrusion into businesses and free enterprise.

    Giving up our freedoms to be managed by government is to have no more individual freedom.

    Well done Pace!

    Larry
    http://www.4-the-love-of-jeeps.com

    avatar Pace Lattin says:

    Thank you for all the comments on both sides. Discourse is important in order to work together, and this is a start.
    There should be laws in place for fraud and other crimes. However, we are not talking about obvious fraud, theft or anything dangerous but instead the government regulating advertising based on the content of what they think “accurate.”
    We are not talking about ethics, morality or what is “right” but instead what powers we wish to give the government. I believe personally that Acai diet offers are completely bogus and don’t work and have no problem writing a review to the same and exposing them. However, it is NOT the government to decide those things and be a mommy to the public. The argument that these things are “bad” or “bogus” may very well be true, but these are value judgments that the public at large needs to make not politicians or bureaucrats.
    Everything thinks they are “in the right” or “safe” until someone in the government disagrees with them. However, tomorrow might be the day that some bureaucrat decides that your product, your business is selling something they don’t agree with. Tomorrow it might be Acai, the next day porn distributors but the third day your little business. You may be in the “right” but when your business is shut down after spending hundreds of thousands to defend yourself, what does that matter?

    avatar Mavrick says:

    I disagree with one point. The FTC is not needed in this world or any other. They are an invention that failed. They do more harm than good. You have no idea if you don’t agree with me, because you don’t read and comprehend. They are a tool to cause financial harm and distress which is required of predator countries. Rich countries don’t go to war, they end war, by financially getting along with the planet. Its the poor that are created by the FTC and other universally illegal organization of interferrance with the rights of all life. Does anyone realize that the education system which removed critical thinking caused all con men and fraud to exist? Do yu realize that only dummies can be conned and dummies is what you allow them to make out of your children, dummies that require life time babysitting organization to act as authority. The entire staff of the FTC is not one fraction as smart and the smallest of us main street entrepreneurs. We are the law. We will protect from fraud by education. Not likely but I can dream. No dummies equals no fraud squared.

    avatar Mike says:

    There is nothing wrong with having to declare what perspective or point of view your published comment is based. Whether it be personal experience, an advertisment or a customer testimonial. It will not matter how educated you are because no one can form an educated thought out opinion without all the information. You first need to know the source of information you are reviewing. All that is being asked for is honesty. This is so that whichever person visits your blog or site can evaluate that information knowing that either you gain financially from your statements or you don’t. Because if your honest with yourself you know that dishonest representation to earn a dollar exists and if we were all honest in our business practices and actually new the products we promote then this would not be an issue. People should know if you are gaining financially from what you are writing or promoting in the pursuit of full disclosure. This is an issue for undereducated, older folks and unexperienced users of the on line world. I would think everyone in the business would want clarity honesty rather than the dishonesty that turns so many people away from being cousumers on the internet.

    avatar John says:

    All this talk of freedom and how the big bad government should just stay out of the way of business. Well that has worked out just peachy the last few years, what with this business induced recession we have been living in.

    One thing that freedom advocates seem to forget is that you cannot have freedom without responsibility. Freedom without responsibility is better known as chaos. Freedom and responsibility go hand in hand – they balance each other. And what about the right of people to be free from predation by other people who would take advantage of them? It is remarkable to me how predators freely blame their prey (the marks so to speak) for the predator’s own actions. Talk about not taking responsibility for your own actions – geesh. Freedom does not mean that you can just go around harming or taking advantage of other people. A viable society just cannot allow that to happen. And so, when need be, a good government – one that is doing its job – steps in to set some very needed limits. In this case in regards to bloggers, the restrictions seem neither draconian nor unwarranted. Sometimes those who cry loudest about freedom are those with the least conscience about abbregating the freedom of others.

    avatar anthony says:

    “only dummies can be conned and dummies is what you allow them to make out of your children, dummies that require life time babysitting organization to act as authority.”

    Its not a person’s fault if they are born with low intelligence – it’s tragic. Maybe we should just dispose of them so they dont dirty the gene pool? Or better still, lets sell them off to the Corporations, as you have effectively suggested.

    “it is NOT the government to decide those things and be a mommy to the public”

    If not the government, then who? Private enterprise? LOL. We elect the government – in theory .. well, thats almost true in Australia at least. I understand its a bit different in the USA.

    I think we are seeing a bit of ‘macho posturing’ here, and not much thought to practical & humane policy.

    avatar Nephite says:

    While I agree somewhat with the views of so many of the writers’ responses to this article, I perceive that most are dealing with symptoms of what they perceive to be an issue, but not the root cause of the situation, which boils down to dishonesty and corruption.

    It doesn’t matter which “side” we are talking about here. Those who believe there is no corruption in government have their heads where the sun doesn’t shine. Those who believe all people are good and honest, while I admire, and perhaps even envy your innocence and naivety, your perception of the world indicates that your heads are in the same place. Don’t get me wrong, I always try to look for the good in people. Even people doing bad things often believe it to be for the greater good.

    Having said that, the manufacture of a cure to treat a symptom (enacting a law to control what we can/can’t say) is not going to stop the disease. The before-mentioned disease of dishonesty and corruption at all levels of society will continue to thrive despite the law. For example, using an anti-histamine for a runny nose has about as much chance of curing influenza and stopping it from spreading, as enacting a law giving open licence to prosecute based on the opinion of the one initiating prosecution has of curing corruption and dishonesty in peoples’ hearts & minds.

    One of the people above made the comment “How worrying that laws against small business bloggers in the USA are being enacted at the same time the Supreme Court is giving corporations and unions unlimited spending powers on political messaging.”

    Do not think for one minute that is by accident or coincidence? The Golden rule has changed since I was a little boy. It is no longer do unto others… It is “He who owns the most gold sets the rules”.

    If you think for a moment that your rights, freedoms and money are being syphoned off, removed from you, while concurrently, more rights, freedoms and money are entering the hands of those who already have most of the rights, freedoms and money, and it is being given to them by the government, who are paying them with money they took from us, the tax payers, perhaps you should think again.

    Believe it or not, agree with me or not, the whole situation America is in right now is by design. The Gadianton Robbers (look it up on Wikipedia if you don’t know who they were, and still are, just in different bodies & faces today) are thriving in most major governments of the world today, and their financial backers’ institutions. Those who put and keep the government leaders there, hold the chief seats.

    If you are prepared, you shall not fear. Knowledge prepares and empowers you, ignorance ensnares you and keeps you under control, which is where they want us all.

    There is much more to this than most of us realise. I include myself in that statement, because there is just so much I don’t even know. Do your own research, and empower yourself. Your government wants to keep you in ignorance so that they can keep you under control. They do this via the mainstream media, releasing and allowing to be released, only as much information as they want you to have.

    We all need to get our heads out of the sand and take a good, long look what’s going on around us.

    Disclaimer: I am not being paid for my opinion, nor am I making any money if a sale results from you clicking on any links on this page. What I have expressed here is purely my opinion and in no way represents the opinions of, nor is it endorsed by the writers of this column or site-pro owners, officers and/or personnel.

    See how that deflates the impact of a posting. Simply ridiculous!

    avatar Pace Lattin says:

    Thanks again for all the comments.

    There are too many red herrings in the responses. We are not talking about scam artists, people selling fake movies or fake medications. That is covered by the law and criminally prosecuted.

    We are also not talking about right vs wrong. We are asking if the government’s job is to be our Mother and tell us what is good for us, what is not good for us, and then making decisions to “protect us” from ourselves. Basically instead of us making our own decisions, they doing it for us.

    If you’ve never read 1984, please do. If you don’t think that is possible, where all aspects of our lives are controlled, please Google all the local and state proposals to regulate fast food and decide what is good for us.

    Pace

    avatar Laurie says:

    Interesting comments. I can see both sides of the argument.

    I see the benefit of reasonable regulation, but there’s a danger that the FTC, the FDA, Health Canada, and other agencies get so tied up in legalise that they go to extremes. They go overboard with regulations that large companies can comply with because they have the resources to do so, but, that, small companies and individuals are hard pressed to both understand and meet. They just can’t afford the legal resources and expertise.

    In this case, the FTC may have overstepped its bounds, somewhat. I think the danger lies in government arms like the FTC becoming entities unto themselves, without limits and bounds. This is certainly true for the health regulatory bodies, with their bias in favour of pharmaceutical companies. But that’s another story.

Submit a Comment

Your email address will not be published. Required fields are marked *






You may use these HTML tags and attributes: <a href="" title="" rel=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please leave these two fields as-is:

Protected by Invisible Defender. Showed 403 to 4,221,324 bad guys.

css.php