New Online Disclosure Rules Reach the U.K.

New Online Disclosure Rules Reach the U.K.

A little over a year ago, the Federal Trade Commission set specific disclosure obligations for the sponsored online media promotion of products and services. Because the rules potentially imposed disclosure obligations on a broad range of companies, individuals and bloggers engaged in online reviews and word-of-mouth advertising, publishers were advised to familiarize themselves with the FTC guidance.

Wrote Chad Bowman, attorney for Levine Sullivan Koch & Schulz, L.L.P., SIPA’s legal counsel: “The safest practice for a blogger or online publisher is, when writing about a commercial product or service, to disclose any compensation.”

Fast forward to last month and shift overseas to the United Kingdom where similar rules have now been enacted. Wall Street Journal’s Paul Sonne writes on the blog “Digits” that “the U.K. has chimed in to clarify its rules regarding product endorsement on blogs and Twitter feeds.” The clarification comes from the Office of Fair Trading, the UK’s FTC equivalent.

“[O]nline advertising and marketing practices that do not disclose they include paid-for promotions are deceptive under fair trading laws,” the OFT wrote. “This includes comments about services and products on website blogs and microblogs such as Twitter…Online promotional activity, just like any promotional activity, must clearly identify when promotions and editorial comment have been paid for, so consumers are not misled.”

The actions by the OFT stem from the consumer protection laws laid down in the Consumer Protection from Unfair Trading Regulations 2008. As you might guess, British newspapers like the Daily Mail—which featured this headline: ”Stop Tweeting – or we will take you to court! Watchdog’s crackdown on celebrities who plug products on Twitter”—and the Guardian—which includes a big photo of Snoop Dogg in its article—are highlighting the celebrity angle.

But just as importantly, there does seem to be an “everyperson” component to this as well. According to the Guardian, the OFT “brought a case against a PR firm that was discovered to be paying bloggers to write effusively about its clients. The watchdog has launched an investigation into Handpicked Media, which operates a commercial blogging network—insisting that it must clearly state when promotional comments have been paid for.”

The OFT has the authority to seek a court order that could lead to a criminal prosecution and fines. Said OFT Senior Director Heather Clayton: ‘The integrity of information published online is crucial so that people can make informed decisions on how to spend their money.’

Media commentator Mark Borkowski said in the Guardian: “If people are open and there is a conversation about it, then fine. The problems come when people endorse covertly, that puts the whole thing into jeopardy.”

That seems to be how U.S. bloggers have looked at the FTC guidelines. But because of space limitations, tweeters may need to handle this differently. In his WSJ blog article, Sonne reports that “some Twitter users started to include the hash tag #spon for sponsored Tweets; others use the hash tags #paid and #samp when they receive a payment or a sample product in exchange for a Tweet.”

This is also a good time for a reminder for those in the U.S. Attorney Bowman had this advisory at the time the FTC rules were issued: “One other headline of the new regulations for SIPA members is that the FTC has done away with a ‘safe harbor’ for testimonials, where atypical results could be promoted so long as the advertiser included a disclaimer to the effect of ‘results not typical.’ The FTC has announced that it will now look at testimonials as a whole, to determine whether they are deceptive and can be proven, or ‘substantiated.’ This may be an important change for financial publishers or others who use testimonials in their promotional materials.”

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