FTC Requires More Disclosure for Websites

PROVO—Ever vigilant in its mission to “prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them,” the Federal Trade Commission (FTC) on October 5 clarified interpretations of the Federal Trade Commission Act (read the Law) aimed at persuading website owners and advertisers—at the risk of a potential lawsuit—to provide disclosure about material relationships and to clearly identify non-typical advertised results from using products (see FTC Press Release).

For business owners who manage websites and other advertising mediums, the new guidelines serve as a wake-up call to provide legitimate, quality products and services instead of peddling false hope and ill-founded expectations. Otherwise, they may find themselves facing sanctions or lawsuits.

Bloggers Beware
To explain, if a blogger is given cash or free products in return for writing a blog endorsement, the specifics of that relationship now must be disclosed by the website owner and the blogger. Through this clarification of guidelines, consumers are better protected from falling into traps where they might not expect such a relationship to exist, and would otherwise place unwarranted trust on a claim that is insincere. Traditional journalists have long upheld the standard of returning or otherwise refusing gifts, but web writers or bloggers have not lived up to, or been held liable to, the same standard. These new guidelines help level the playing field.

Product Claims
Additionally, with the new guidelines in place, advertisers who play up unusual or atypical results of using a product—when the majority of people using it wouldn't experience the same result—must now clearly identify what the “norm” is. Thus, consumer expectations cannot be as easily manipulated to facilitate or encourage the sale of a product that will eventually disappoint.

Celebrity Endorsements
Finally, both advertisers and celebrities must now disclose material relationships and both may be liable for false or unsubstantiated claims should a lawsuit materialize. Thus, celebrities now have a duty to disclose relationships when they discuss products on talks shows or other publicly viewed mediums like social networking sites or blogs.