More Problems With The FTC's New Disclosure Rules: Free Speech And Liability Problems

from the disclose-everything dept

I've already noted my general problems the FTC's new disclosure rules, but as others look into the details, the worse they seem and the more you realize the unintended consequences may be pretty bad. Jeff Jarvis makes some key points concerning how this could be seen as a restriction on free speech. And that's because the FTC seems to be viewing blog posts as if they are media, rather than straightforward communication. As we've pointed out in the past, for many, blogging is often no different than a conversation. It's not journalism. It's not reporting. It's having a discussion with people:
Second, the FTC assumes -- as media people do -- that the internet is a medium. It's not. It's a place where people talk. Most people who blog, as Pew found in a survey a few years ago, don't think they are doing anything remotely connected to journalism. I imagine that virtually no one on Facebook thinks they're making media. They're connecting. They're talking. So for the FTC to go after bloggers and social media -- as they explicitly do -- is the same as sending a government goon into Denny's to listen to the conversations in the corner booth and demand that you disclose that your Uncle Vinnie owns the pizzeria whose product you just endorsed.
As such, you could make a case that the new rules are an unconstitutional law hindering First Amendment guarantees on freedom of speech. As I noted originally, it seems like these things get sorted out in the marketplace of ideas -- whereby those who do something so stupid as to sell their "views" on things face the potential of a substantial loss in credibility. But suddenly demanding people reveal the sourcing of some product they mention in blogs leads to all sorts of silly results, amusingly mocked by Mark Cuban in a blog post, where he wonders what sorts of disclosures he'll have to make if he mentions a breakfast at IHOP where the managers comps the breakfast. And while he's mocking the overall situation, it's not so silly. You shouldn't have to confer with your lawyers to figure out how you mention any particular product, just because you got a freebie or a sample somewhere.

And, what's really scary? It appears that even the FTC isn't sure what the policy actually means, and hasn't thought through any of the unintended consequences or fuzzy borders.

Separately, Eric Goldman highlights another massive problem with the new guidelines that no one else seems to have picked up on yet: that in some cases it's the company providing the product that will be liable -- ridiculously blaming the company if a blogger makes claims about its products that are not true. As Goldman points out, there's no way the FTC would be successful in going after companies for that, as Section 230 clearly would protect the advertiser from bogus statements by someone else. But, even assuming that the FTC never considered the Section 230 issues, why would the FTC ever think it's reasonable to fine an advertiser for statements made by someone else?

Despite tons of feedback and discussion when the FTC first proposed these new rules a few months ago, it really feels like no one at the FTC put much time into actually thinking through what these sorts of rules would actually mean in the real world.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Anonymous Coward, Oct 8th, 2009 @ 5:09am

    "is the same as sending a government goon into Denny's to listen to the conversations in the corner booth and demand that you disclose that your Uncle Vinnie owns the pizzeria whose product you just endorsed."

    You would think that after all this discussion, you could get the policy right. It's like a government goon saying you have to disclose that your Uncle Vinnie *paid you to endorse* his pizzeria. Or at least had provided you with some form of compensation in the hopes that you would endorse it.

     

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    •  
      identicon
      Anonymous Coward, Oct 8th, 2009 @ 5:37am

      Re:

      My uncle Vinnie givin' me a free slice ain't the same as you gettin' a fifty ta say it's the boss, ya goomba.

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      YouAreWrong, Oct 8th, 2009 @ 6:58am

      Re:

      Mike gets a lot wrong in this article. He probably gets some sort of remuneration for some of these posts, so that's why he's saying this is so confusing.

      If you talk about someone's product or service and that person/company gave YOU something or did something for YOU, then you as a blogger have to disclose it. It's simple. It's no different than it is on any other medium/platform or whatever word you want to call it. There are paid posts, product placement, and even reviews written by the manufacturer being posted under blogger's names without disclosure -- this is all advertisement. Congress has said repeatedly [and requires in the Communications Act] that every person has a right to know when they're being advertised to. Television currently has to disclose at the end of every episode anyone who gave them anything of legal value for a product or service to be displayed or discussed during the actual programming. Magazines which have a page that looks like a story about a product usually say ADVERTISEMENT at the bottom. It's because you have a right to know when someone is being paid to say something.

      Mike, when you say "Section 230 clearly would protect the advertiser from bogus statements by someone else," you clearly have no idea what 230 means. 230(a) does not actually create any immunity for anyone -- it just means the forum/service is not responsible for what unaffiliated users say. Let's take your blog for instance. You are a blogger here. Let's say someone pays you to talk about them in one of your posts (that's exactly what the FTC is regulating). You're the speaker. You're the one who has to disclose. You're an employee of TD, and TD is still vicariously liable for your actions. The FTC regulation is saying that whoever you're advertising for can also be liable. All 230 does is make it so if you get one of those techcrunch comments where the guy is plugging some product/service, techcrunch is not liable.

      The only problem with advertiser liability is when some random guy posts his opinion as a relatively anonymous comment in a manner that looks like product placement. The FTC would have no way of policing that because the company would just "we didn't pay this guy, and because we don't know who he is, there's no evidence we can give you which proves we don't know anything about this." But with respect to blog posts, the authors are never under the radar. If companies are paying you to talk about their products in a post, usually you've broken through the blogosphere's glass ceiling, and you're disclosing on your tax forms that you're blogging.

      Oh, yeah, and umm... this comment paid for by Bullshit Off, a subsidiary of No Bull Industries.

       

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      •  
        identicon
        Anonymous Coward, Oct 8th, 2009 @ 8:01am

        Re: Re:

        You are right, YouAreWrong. Plenty of bloggers like Mike are going to have to take stock and figure out how they are going to break the news to us all that they have been accepting gifts, getting paid by, or receiving support from the very groups they discuss and promote.

        More over, it's funny as heck to read all this. Mike has plenty of posts here about the need to transparancy in companies, accounting, whatever. Yet when the light even suggests to shine his way, he is fast to pull down the blinds and tell us all we have no right to peep inside.

        It isn't just directly being paid to post, you know the "here is $1000, write good stuff about us in 3 posts this week", but rather the broader implications. If Mike gets paid to speak to group, then everything he posts about that group in future needs to mention that payment. Payment can be anything from a free dinner to free airfare to actually paying an appearance or speaking fee.

        For someone like Mike, this could entirely undermine his credibility, if in fact certain groups are paying for his time.

        The implications all over the net are huge. My personal favorite for this is going to be the celeb bloggers, like Perez Hilton. Rumors have swirled for years that certain c-listers have paid to get posts made about them, shows like the "reality" show The Hills have been featured prominently on his blog, but barely registered on the American population in general. How much is he getting paid to make the posts, if he is? The answers will be interesting.

        45 days to figure it out, get to work Mike!

         

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        •  
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          Dark Helmet (profile), Oct 8th, 2009 @ 8:10am

          Re: Re: Re:

          ....do I still get to keep my helmet?

           

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        •  
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          Ryan, Oct 8th, 2009 @ 8:47am

          Re: Re: Re:

          And how is your comment here any different? Seems to me that you should disclose who you are, whom you are employed by, your education level, and from where you are accessing the internet so that we can all make a more informed judgment regarding your intelligence, biases, and intentions. Otherwise we might actually be swayed into believing what you have to say...

           

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        Mike Masnick (profile), Oct 8th, 2009 @ 11:17am

        Re: Re:

        Mike gets a lot wrong in this article. He probably gets some sort of remuneration for some of these posts, so that's why he's saying this is so confusing.

        YouAreWrong is wrong. We do not get paid or any kind of remuneration for any blog post on Techdirt. We do get paid for Insight Community cases, but that's quite clearly disclosed.

        Not sure why YouAreWrong would say this, other than, when, he's living up to his own name.

        If you talk about someone's product or service and that person/company gave YOU something or did something for YOU, then you as a blogger have to disclose it. It's simple.

        Again, it's not that simple. Try reading this link for example:

        http://www.edrants.com/interview-with-the-ftcs-richard-cleland/

        Even the FTC doesn't know what counts and what doesn't. Adding an Amazon link to a book review suddenly requires excess disclosure? That seems arbitrary.

        And the problem is there are all sorts of gray areas about talking about someone's project and a company "doing something for YOU." For example, I talk about Google all the time. Entirely separate from that, we use Google for a tiny fraction of our ads. So... do I need to disclose that every time I write about Google? Or, Google once accidentally deleted my account, and I called a friend there who looked into it and got my account turned back on. Do I need to disclose that every time I talk about Google. After all, they "did something for me."

        It's not simple at all.

        Congress has said repeatedly [and requires in the Communications Act] that every person has a right to know when they're being advertised to.

        Indeed. And if it's an advertisement we agree. The problem here is that the FTC is redefining all sorts of things that are not ads into ads. And not being clear about it.

        Television currently has to disclose at the end of every episode anyone who gave them anything of legal value for a product or service to be displayed or discussed during the actual programming. Magazines which have a page that looks like a story about a product usually say ADVERTISEMENT at the bottom. It's because you have a right to know when someone is being paid to say something.

        Again, you pretend like this is cut and dry simple, and that people talking to each other online is the same thing as magazines or TVs selling ad space.

        In the meantime, will you disclose who pays your salary?

        Mike, when you say "Section 230 clearly would protect the advertiser from bogus statements by someone else," you clearly have no idea what 230 means.

        Are you honestly suggesting that Eric Goldman, who's recognized as an expert on Section 230 doesn't know what 230 means? Really? You want to go there?

        And then the rest of your explanation is just wrong. The key point is "The FTC regulation is saying that whoever you're advertising for can also be liable" but that's exactly what 230 says is not acceptible. You can't blame a 3rd party for the comments made by someone else. If you think I explained it wrong, at least read Eric's explanation -- but again, it seems pretty clear to me that you're the one wrong here.

        If companies are paying you to talk about their products in a post, usually you've broken through the blogosphere's glass ceiling, and you're disclosing on your tax forms that you're blogging.

        If companies are paying you to talk about their products, and you've broken through the blogosphere's glass ceiling, you're an idiot. You are destroying your credibility.

        Besides, once again, YouAreWrong is.... oh look!... wrong. Most of the cases of bloggers being paid to talk about products is NOT for bloggers who are big. It's using systems like PayPerPost which are GOOGLE SPAM. They find no name bloggers, but because bloggers have good Google juice, it pumps up those reviews in Google.

        It's an SEO tactic. It's not about finding big name bloggers. Most of those people know better than to put their credibility on the line.

        It's only no names... like you... who post wrong things like this who would appear to be open to such stupidity.

         

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    •  
      icon
      johnney (profile), Oct 8th, 2009 @ 5:43pm

      Re: To WHO?

      All laws the govt. 'creates' exist solely to restrict our rights; the same laws which they will be exempt from.
      The govt does not and NEVER has made laws. Only the people of this country have that power. FTC go GFY's!

       

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  •  
    identicon
    ..., Oct 8th, 2009 @ 5:11am

    If it is journalism

    If it is journalism, then where are the rights provided to journalists?

     

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  •  
    identicon
    Joe, Oct 8th, 2009 @ 5:38am

    So what is it now?

    Ok you are saying "More Problems With The FTC's New Disclosure Rules: Free Speech And Liability Problems" and

    Businessweek is writing about "FTC: Actually, We Don't Really Mean That Stuff About $11,000 Non-Disclosure Fines"

    WTH?

    http://www.businessinsider.com/ftc-no-bloggers-were-not-going-to-fine-you-11000-20 09-10

     

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  •  
    identicon
    Michial Thompson, Oct 8th, 2009 @ 6:09am

    Can't have your cake and eat it too mikee

    Either Bloggers are journalists and legally responsible to the levels of a journalist or they are just citizens communicating with the world. Take your pick, but you can't have both...

    Your entries continually contradict each other, you want bloggers to be treated as journalist when it comes to access to events and such, but then want them protected as citizens when the government tries to regulate them under the same laws as journalists...

    Care to explain how you can have it both ways???? Of course your the Great Mikee Mesnick and your opinions is the way the world should work, but then my kids when they were 13 and 14 felt the same way too...

     

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    •  
      identicon
      ..., Oct 8th, 2009 @ 6:18am

      Re: Can't have your cake and eat it too mikee

      Your professionalism and high class have shone through again.
      Bravo.

      btw, you forgot about protections provided to journalists.

       

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    •  
      icon
      Dark Helmet (profile), Oct 8th, 2009 @ 6:51am

      Re: Can't have your cake and eat it too mikee

      I'm constantly amazed at your ability to be super incredibly ultratastically splendiforously mega-wrong on these things. Today you've one-upped yourself: you're actually DOUBLE wrong. Allow me to explain:

      "Either Bloggers are journalists and legally responsible to the levels of a journalist or they are just citizens communicating with the world"

      Uh....not at all? That's like saying that if you write something down on paper you're either a journalist or your just a citizen communicating. You have newspapers, news magazines, consumer magazines, novels, textbooks, non-fiction works, instruction manuals, etc. etc. etc. Pigeon-holing (sp?) blogs and social media into an either/or makes absolutely no sense. There are news blogs (journalists), commentating blogs, instruction blogs, etc. etc. etc.

      "you want bloggers to be treated as journalist when it comes to access to events and such, but then want them protected as citizens when the government tries to regulate them under the same laws as journalists"

      It seems to me that what's being called for is a standard of treatment, but more on that in a second. Instead, I'd appreciate you explaining to me exactly what requirements are placed on traditional media journalists to reveal affiliations. I read newspapers on occasion...and I've never seen them. You certainly don't see book/movie/music reviewers disclosing what they've received free of charge. I don't know Skip Bayless' affiliations, or who he owns stock in. I don't have Tom Brokaw's tax returns to see what he's claiming as gifts in what amount from whom. Perhaps you're aware of something I'm not, but thus far I have no idea what you're talking about...

      "Care to explain how you can have it both ways????"

      ....well, I don't want bloggers to have it BOTH ways, but I would like them to have it ONE of the ways. This is an attack on new media. Currently they aren't recognized as journalists in terms of their rights but the government (backed by mass media lobyists) DO want them to be REGULATED as journalists? And MIKE is the one that wants things both ways?

      The ultimate point is that legislating as if we lived in a black and white world (bloggers are either journalists or not) is idiotic, inflexible, and will ultimately lead to stupid court cases applying rigid law where it doesn't belong.

       

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    •  
      identicon
      Just Saying, Oct 8th, 2009 @ 6:51am

      Re: Can't have your cake and eat it too mikee

      "Of course your the Great Mikee Mesnick"

      I think you intended to use "you're" rather than your.
      - Michial Thompson keeping it classy

       

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    •  
      identicon
      Anonymous Coward, Oct 8th, 2009 @ 7:22am

      Re: Can't have your cake and eat it too mikee

      Either golfers are professional athletes or just a bunch of oddly dressed hipsters knocking a ball about.

      You usually don't have it both ways there, but you're talking about the difference between amateur and pro.

      Journalism is a bit different than a simple pro vs amateur demarcation. A professional or commercial journalist may have stringent requirements on disclosure of conflict of interest, but ALL U.S. citizens should be able to investigate and report regardless of their employment status without a whistleblower's fear of prosecution. ALL citizens should be able to have a one to many conversation without fear of undue commercial regulation.

      You naturally accredit doctors and charge those amateurs practising without a license with a crime. Do you suggest the same for journalists?

       

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    •  
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      tracker1 (profile), Oct 8th, 2009 @ 8:00am

      Re: Can't have your cake and eat it too mikee

      If I kept a diary, and showed it to you, would that be journalism? If it's online it still isn't... If I publish a newsletter is that? If it's online it still is. a "Blog" is a platform, like "Paper" ... A diary isn't journalism, and a newsletter isn't necessarily *not* journalism.

       

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    •  
      identicon
      Anonymous Coward, Oct 8th, 2009 @ 9:46am

      Re: Can't have your cake and eat it too mikee

      That is like saying that anyone who writes in a piece of paper is either a journalist or some guy writing something down, but that you can't have both.

       

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  •  
    identicon
    Angelica, Oct 8th, 2009 @ 6:34am

    Re: Can't have your cake and eat it too mikee

    Honestly, this is the most ridiculous thing I've seen today.
    Who will police this? Who decides what blogs are worth policing? Are you telling me that every Myspace and Facebook page is going to be followed? Or is it just the "popular" blogs? If a journalist writes a blog and accepts a free lunch, does he get fined twice?

     

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  •  
    identicon
    Anonymous Coward, Oct 8th, 2009 @ 7:14am

    Drug companies (legal ones) would like to connect with their customers directly, offer bulletin boards, chat rooms etc. One problem with that is if one consumer is talking about their drug in how it helps them with different problems (off label,) the drug company is responsible for that promotion. That is one reason why drug companies don't offer that type of interaction.

     

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    •  
      identicon
      ..., Oct 8th, 2009 @ 7:04pm

      Re:

      "That is one reason why drug companies don't offer that type of interaction."

      They do have really silly advertisements though. I wonder if those people in the ads actually use the drugs they are promoting. Probably not, given the possible side effects.
      Gotta love those possible side effects.

       

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  •  
    icon
    anymouse (profile), Oct 8th, 2009 @ 8:30am

    Time for a grassroots 'letter of the law' campaign to get this repealed

    Every blogger out there needs to start making outrageous claims about products that they have received to 'review', once the companies start getting hit with the bigger end of this stick (via them getting fined over the bloggers unsubstantiated endorsements), something might get changed....

    I just received a new Palm-Pre (or iTouchMyself, or GoogleDroid, take your pick) to review, and I can't believe how amazing this thing is... It cured my cancer, gave my dog's coat a nice shiny glow, and solved my ED problems once and for all... Everyone should have one of these things...

    /sarcasm off

     

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  •  
    identicon
    Boost, Oct 8th, 2009 @ 9:22am

    If it can possibly be abused...outlaw it...

    So, while we're at it, lets outlaw driving cars, because those can be used to harm people. Lets outlaw concrete, because the mob can poor it around peoples feet and kill them. Let's outlaw everything!!!

    So with this proposal, I'll have to disclose the my local bicycle shop gave me a good deal on a bike when I post a review on roadbikereview.com? And who is going to enforce this? Well we'll need to raise taxes in order to create an new task force to monitor all internet postings of product reviews. All this to protect idiots whom can't tell a product advertisement from an objective review and whom can't be bothered with actually reading more than one product review before they buy a product.

    Yay, go government, come and saves us!

     

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  •  
    identicon
    Jim L, Oct 8th, 2009 @ 9:26am

    My new disclainer

    Does this cover me?

    There may be some people or companies out there crazy enough to pay me money or give me merchandise for my opinion or review of their product and/or service. If they do I’m going to take it.

     

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  •  
    identicon
    Boost, Oct 8th, 2009 @ 9:29am

    And another thing...

    Everyone has biases. Everyone is influenced by someone else. Someone has to pay the bills. Media groups get paid by advertising and doing product reviews (for some) is a way to attract more people and, thus, more advertising.

    People get all up in a tissy about how biased MSNBC and Fox News are in their reporting. My answer...of course they are! All media is biased in some way. People have their own opinions and, at least I think, it's still legal in this country.

    So, guess what, if you read a product review written by someone who likes microsoft products about a microsoft product, you can bet its' going to be biased! Should you completely discredit the review based on that fact? No. Should it be the only review you read before buying that product. No! Do you need the government to protect you? No!

    I agree with Mike...once again.

     

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  •  
    identicon
    iamchmod, Oct 8th, 2009 @ 2:23pm

    FTC Does NOT make laws - they make "Guidelines"

    The FTC does not make “laws” – The FTC makes “guidelines” and then shakes down companies that they feel do not follow the guidelines. The shaking down works well, particularly because its very expensive and time consuming to fight the FTC in court.

    Notice this section of their endorsement press release:
    “The Guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.”

    To summarize, they can shake you down and threaten to take you to court and you can settle then or you can fight them in court and get the court to actually interpret the law and thus see if the FTC “guidelines” fall within the law.

    From my research most of the time when the FTC actually goes to an actual court (as opposed to badgering companies to settle), they rarely win. Usually their “guidelines” stand unopposed and they use the might of their bureaucracy to shake money out of companies who don’t have time/resources/energy to fight them.

     

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  •  
    identicon
    Dan, Oct 8th, 2009 @ 3:20pm

    I guess the medium is everywhere, the village hall, park, grocery store, even the street corner and yes FTC meetings also.

     

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  •  
    identicon
    fjpoblam, Oct 8th, 2009 @ 5:38pm

    Full accreditation

    If we're going to give full accreditation of sources, then GOOG must give accreditation for the ordering of search results and the displaying of GOOG-sponsored ads, as paid by AdWords.

    Sample Ad text "Great deal! Herbert's Hotel, Honolulu, Hawaii" Necessary accreditation: "This ad sponsored by "Herbert's Hotel, Honolulu, Hawaii, all rights reserved(c)"

    Or sample search results for "CSS 3-column layout" - first result: "CSS: The Definitive Guide...[description of book, author, publisher]" Necessary accreditation: "This search result sponsored by O'Reilly Publications, Inc. copyright 2009(c)"

    What?

     

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  •  
    identicon
    Jeff Montgomery, Oct 11th, 2009 @ 10:50am

    I agree 100% - the ruling is a terrible idea

    Michael,

    I agree 100%.

    It has come to a point where few people understand the line between freedom and protection, on the one hand, and government overstepping its bounds and violating our rights, on the other. Without this understanding, free speech is doomed and so are the rest of our rights.

    If someone makes a statement in an online review regarding a product and fails to disclose payment from a third party it does not violate my rights, because I am free to make up my mind either way based on the information that *is* provided. Failing to provide information is not a falsehood, nor does it necessarily constitute fraud, which is the only legitimate reason to investigate it. I can simply *not accept it*, if I choose.

    If I want to ask the blogger about their relation to the companies involved I can do that, and they can either tell the truth, not answer, or answer falsely which would be fraud and could be prosecuted.

    It is not a journalist's *duty to provide information* that I need to make a decision simply because they choose to blog on a topic; to impose this sort of positive obligation on media outlets is to make them a veritable slave to others. If the government steps over this line and forces media to provide information, it is government that has committed a transgression, not the blogger. In such a case, government has used force against a citizen who was not violating anyone's rights. That is the definition of the violation of freedom and of individual rights: unprovoked use of force.

    The line in the sand that is becoming obscured is that individuals should be free to say as little or as much as they wish, provide they do not make fraudulent claims. Otherwise, government should have no say and take no action whatsoever. Once this line is crossed, there is literally no significant principle standing in the way of government with regard to written content. Anything the public does not like, and tells government they should have, can be forced out of us.

    What if regulators think that political writers should be forced to disclose their membership to past political organizations, because the public "needs" that information to make an informed decision? What if regulators think scientific publications should be forced to provide alternative theories, because the public "needs" all the facts to make a decision? What if regulators decide that companies need to forced to provide information against the products they are marketing, so that we can make a "balanced" decision. Oh, wait, they already have to do that ;)

    Please, journalists, learn about individual rights, free speech, and fight for it. Free speech in electronic media and more is at stake.

    See:
    Ayn Rand's Capitalism: The Unknown Ideal
    http://www.aynrand.org/site/PageServer?pagename=media_topic_freespeech

    Jeff Montgomery
    http://funwithgravity.blogspot.com/

     

    reply to this | link to this | view in chronology ]

  •  
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    itunes store, Sep 17th, 2010 @ 8:26pm

    Rosetta Stone reviews

    http://www.itunes-gift-cards.net itunes store
    http://www.davesdiscos.net p90x DVD
    http://www.aurautah.com Rosetta Stone English (American)
    http://www.itunes-gift-cards.net itunes gift cards
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