Athletes Can Start Endorsing A Brand In Hours... But A Blogger Does It And It's A Federal Issue?

from the hmmm... dept

As the FTC still wants to stick by its questionable guidelines concerning bloggers "endorsing" products, I found it interesting that the NY Times was profiling a new online service that more easily allows brands to sign endorsement deals with star athletes. Basically, they just need to fill out a few forms, and within hours, that athlete may be the face of the local car dealership. Now, I don't see anything wrong with this, but I'm curious as to why this is somehow okay, but when a blogger fails to mention that he or she got a book for free, the FTC will consider fining them? Does anyone actually believe that the star football player shops at the local Ford dealer?

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IAB Takes On FTC Over Silly Blogger Disclosure Rules

from the good-for-them dept

While more disclosure is generally a good thing, the FTC's new guidelines for blogging disclosure have some pretty massive problems, and probably aren't legal. As more and more people are recognizing this -- and interviews with the FTC folks in charge of this suggest they either haven't put very much thought into this issue or they don't quite know how the world works outside of their government cocoon -- the backlash is growing. Now, the Internet Advertising Bureau (IAB) has stepped in with quite the open letter to the FTC, asking them to scrap the rules, while noting (snarkily) how impossible they are to follow, in practice:

So there I was last Saturday, about to send out on my Twitter feed -- which automatically updates my Facebook page and links to my personal blog -- a photograph of this wonderful baked halibut dish I'd just made as a surprise for my wife. I was in the middle of typing a rave review of the recipe, which I'd pulled from my favorite cookbook, Delicioso! The Regional Cooking of Spain by Penelope Casas. But before I could press the "post" button, I stopped and canceled the whole thing.

I remembered that the book was a freebie, sent to me by an editor at the Alfred A. Knopf publishing house 13 years ago. And I didn't want you guys to haul me into court and fine me for violating the rules you've just promulgated to muzzle social media.

While this may seem silly, it really does highlight the problems with the FTC's rules. They're totally unclear and absolutely could concern things like this. Getting a free book here or there happens all the time -- and the FTC actually claimed that if people don't return them, then they may face sanctions. That's ridiculous. Last month, we ran a fun contest for people to win free copies of a Kevin Smith book. If the winners from our comments mention that book anywhere online, do they need to mention they got the book for free? If they mention it to a friend, do they need to do the same thing? Because most of the time when posting stuff online, people really are just talking to their friends.

Again, it's not clear why people can't just sort this out themselves. People who post bogus reviews of things because someone pays them to, or because of something "free," are going to get called out on it eventually and lose their credibility. When people talk amongst friends, they don't reveal where they got the products they talk about, or if they happened to get a promotional sample -- and that's fine. While you can understand where the FTC is coming from, it really has gone overboard with these rules.

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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.

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Did The FTC's New 'Blogger' Guidelines Just Change The Way All Book/Music Reviews Must Be Conducted?

from the just-wondering dept

A bunch of folks have been sending in the fact that the FTC has (as was widely expected) approved new rules on "endorsements" or "testimonials," including a section on bloggers or "word-of-mouth marketers." The end goal here is definitely admirable, but I question whether or not this ruling really makes sense:

The revised Guides also add new examples to illustrate the long standing principle that "material connections" (sometimes payments or free products) between advertisers and endorsers -- connections that consumers would not expect -- must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other "word-of-mouth" marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.

Again, the concept is definitely admirable. There's long been a fear that companies are effectively bribing people with free stuff in order to get good reviews, and the FTC wants people to reveal that info. But... does that really make sense? It seems to me like this could just create a totally unnecessary minefield for anyone who blogs. And why is this focused on bloggers and word-of-mouth marketers? Almost all book and music reviews in the mainstream press involve the books and music being sent for free - and there's never been any question of impartiality of most of those reviews -- but why are they now left out of these rules? Is every blogger who reviews a book going to have to disclose where they got it? What about music? Many music bloggers are sent mp3s by the record labels. Do they need to reveal who sent them stuff? Does that really matter?

The real question, from my standpoint, is whether or not the FTC is really needed here. If someone is constantly blogging positively about stuff they get for free, they put their own credibility at risk, as people realize that the products aren't actually very good. It seems like the type of situation that sorts itself out. Those who are constantly pushing products for questionable reasons hurt themselves and soon no one trusts them. Does the FTC really need to be involved in that process? In the meantime, I'm suddenly glad that we don't do reviews on this site for the most part. I do occasionally mention or review books, but I guess I'll have to mention when I buy those books vs. when I'm sent them for free (it's about 50/50), which seems pretty pointless.

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Apparently Google's Lawyers Were Prepped For Google/Apple Antitrust Inquiry

from the just-look-at-our-website dept

With the (not particularly surprising) news coming out that the FTC was looking at the relationship between Apple and Google (specifically the ties between the Board of Directors of both companies), John Paczkowski noticed that Google's outside law firm (full disclosure: it's our outside law firm as well, though it's a big, big law firm), Wilson Sonsini Goodrich and Rosati had not only already prepared a presentation on the issue but had posted it to its website. Soon after noticing it, WSGR pulled down the presentation. So Paczkowski pointed to the Google cache of it... only to see that disappear quickly as well. Amusingly, Danny Sullivan noted that it's still available in Microsoft's cache. Either way, it seems like Google should be quite prepared for the issue, though Eric Schmidt's initial responses to questions about it don't seem very reassuring. You would think that he would have thought through a slightly more nuanced answer than saying that he hadn't even considered leaving Apple's board. Either way, it seems pretty clear that Google is going to spend an awful lot of time in the antitrust spotlight -- justified or not -- over the next few years, and the company better get used to it.

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Sleight Of Hand: If We Don't Call It DRM, We Can Pretend That DRM Is Gone

from the poof dept

I was upset that I had to miss the FTC's workshop on DRM earlier this week. I had been invited to speak at the event, but had already committed to speaking at the Leadership Music Digital Summit in Nashville, so had to decline. But, from the writeups about the event, it's quite clear that many in the content industry still believe DRM is a good idea (or, rather a "necessary" idea), despite the fact that it doesn't work. DRM, despite what they might say, does not "enable new business models" at all. It simply gives the content holders the illusion that they can somehow control the content. But, it never stops any copying at all. So, it actually tends to just annoy those who are trying to legitimately purchase and/or access the content. Because those who are going to access it in an unauthorized manner will do so separately.

That said, a bunch of folks have sent in a series of stories this week that are somewhat amusing. Basically, it seems that video game companies have decided to stop calling DRM "DRM." This follows a series of horrific PR nightmares, where firms made use of DRM in ways that significantly limited the value of certain games, and players (or potential customers) of those games struck back in trashing those gaming companies for treating them as criminals. So, now, we have stories about Valve launching a new DRM that "makes DRM obsolete" even though it's still DRM. Then there's EA -- who received the biggest brunt of consumer backlash for its DRM choices. It's releasing the new Sims "without DRM methods that feel overly invasive." But, of course, it will still have DRM.

It's really difficult to understand what these execs think they're doing that benefits them in any way. It's not about enabling new business models. Any business model they're talking about can work just fine without DRM. It's not about "keeping honest people honest," because you don't have to keep honest people honest -- that's why they're honest. It's not about stopping unauthorized file sharing or "piracy," because no DRM has yet been shown to do that at all. It's not about "slowing down" unauthorized file sharing, because once an unauthorized copy is out there, it gets pretty quickly copied everywhere. One copy is all it takes and then nothing is "slowed down" at all. The only thing DRM serves to do is get in the way of legitimate customers trying to do what they want with content they thought they had legally purchased. In other words, it destroys value for legitimate customers -- and it's difficult to see any business rationale where that's an intelligent move.

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Details On The FTC's DRM Workshop

from the don't-miss-it dept

At the beginning of January we noted -- with some amount of surprise -- that it appeared that the FTC was preparing a workshop on DRM. When I was in Washington, DC recently, I had the chance to meet some of the folks putting that workshop together, and now they've sent over a more detailed list of topics up for discussion at the session, and it does seem like a pretty good list -- covering pretty much the entire range of questions concerning DRM, specifically from a consumer perspective. It's definitely an encouraging sign that folks at the FTC are recognizing that DRM can be used to do harm, rather than just (as the industry would have you believe) to "open up new business models."

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Companies To Be Held Liable For Selling To Online Criminals

from the seems-a-bit-extreme dept

One of the reasons why various safe harbor rules exist is to protect parties who really have nothing to do with any kind of law breaking from being liable for the activities of others. Thus, we don't blame an ISP for the activities of one of its users, even if that user breaks the law. That's both reasonable and fair. Those who want to blame those providers often do so just because it's easier -- or, more commonly, because they somehow think it's better for that service provider to somehow act in the role of the police to make things easier. Something similar seems to be happening with the FTC placing the onus on small businesses to make sure they don't sell to online criminals. Slashdot points us to the news that, starting November 1st, all companies are supposed to compare customer info with a "red flag" list of online identity fraudsters and money launderers. Firms that fail to check may be liable if they end up doing business with "known" criminals. You can understand the reasoning here. It certainly makes it a lot easier for the FTC to try to crack down on these crimes. But it adds significant expense and liability to small businesses for potential crimes in which they were totally uninvolved.

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Court Overturns FTC Ruling Against Rambus

from the bad-news-all-around dept

We've been covering the story of Rambus' tricks to get itself a patent that covered a standard by sitting in on standards meetings and then modifying its patents to cover the standard. The rulings on the various lawsuits have gone back and forth on this, and while Rambus has had some wins and some losses in court, last year the FTC stepped in and smacked the company down, noting that it had used questionable means to get itself an effective monopoly on the memory market. Unfortunately, that FTC ruling has now been overturned by an appeals court that said the FTC failed to show evidence of a monopoly. This is unfortunate for a variety of reasons. If the FTC's ruling had been allowed to stand, it would have shown how an ill-gotten patent would be the equivalent of an illegal monopoly. That seems like the proper result, as a patent clearly is a government granted monopoly. So, if the patent is gained through questionable means, then that monopoly should be considered an illegal monopoly. Unfortunately the appeals court disagreed, and that will make us all worse off, as it will give the government fewer tools to crack down on abusers of the patent system.

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FTC Notices That Diet Pill Spammer's Diet Pills Don't Work

from the next-thing-you-know,-they'll-be-telling-us-that-the-moon-isn't-made-of-cheese dept

Last week, the FTC announced that a judge had shut down the operation of a diet pill spammer after it turned out (shockingly, we know) that the claims made by the spammers about the pills were either completely false or (at best) unsubstantiated. While the spammers were in violation of the CAN SPAM law, it would seem that they should be in violation of other fraud regulations as well, such as false advertising. Of course, with so much spamming going overseas these days, perhaps what's more amazing is that these guys were in the US and it was possible to find them in order to shut them down. We're sure someone somewhat less easily shut down will quickly fill in the void.

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Cramming Scammers Apparently Spent All Their Money -- Paying Back 5% Of The Money Taken

from the that's-all-they-can-afford dept

We haven't heard much about cramming scams lately, but they still happen all the time. For those who don't know, cramming is when a third party company either illegally gets additional charges on your telephone bill or (more often) tricks you into agreeing to more charges on your phone bill. Four years ago, we wrote about some of the tricks used in cramming call centers, where they pretend they're just "verifying" information -- and then bundle a whole bunch of questions together, tricking people into saying yes to all of the questions, when they really mean to say yes to the last question. The companies later use those recordings (sometimes edited) to prove to people that they "approved" the charges and refuse to cancel the charges or refund the money. Various state governments and the FTC have tried cracking down on these companies for a while, and the FTC went after a bunch last summer -- which has resulted in a settlement. Unfortunately, while the companies took people for $24.7 million, they're only paying back $1.2 million (and not admitting any guilt). Apparently, the firms claim that the $1.2 million is all they can afford. Apparently lesson one if you're going to scam a bunch of people is to spend all that money before the authorities catch up with you.

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