Sunday, October 18, 2009

FTC Rules, Regs and Guides from Kidlitcon 09

What better way to start my posts from Kidlitcon 09 than with a report on the FTC?

Mary Engle, Associate Director for Advertising Practices, from the Federal Trade Commission spoke at the Kidlitcon on Saturday.

Engle began with a brief explanation of the FTC and the difference between rules, regulations, and guides. What is currently being discussed among the blogosphere are the guidelines, not rules or regulations.

The FTC's concern is about endorsements that are really an advertising message; so when there is an advertiser and endorser, there is a need to disclose. Engle's specific examples were about pills (i.e., "this pill cures cancer!" or your doctor prescribing a medication and not disclosing he/she is receiving money from the drug company) and pay-for-post or pay-for-tweet situations. It's not so much that these things cannot be said -- as when they are, the relationship with the marketer must be disclosed.

Engle then specifically said there is a difference between a product review place and a place that is part of a marketing review program. So reviews are not endorsements as the FTC sees it. (Also? the way the FTC uses the word "compensation" is not the way the IRS uses it. Sadly, or happily, I totally understand that, being the former lawyer. It's not just words that matter; it's how we use them and what our definitions are.)

Again -- the types of reviews here are not endorsements so under the FTC guide no disclosure is needed. (On a personal note, I will continue to say where I got the book I review for the same reasons I always have -- transparency and readers who are unaware that publishers provide such copies). It was specifically asked if receiving review copies had to be disclosed. The answer? No, not if you're an independent reviewer.

Now, as for Amazon Affiliates....

Before I get to that, Engle noted she is not giving legal advice but explaining things. She noted that the book blogs were part of an "unintentional sweep," almost; and that FAQs are coming. They don't want to be patrolling the blogosphere; and should something arise, the FTC's concern is with the ADVERTISER. NOT the blogger.

Engle further noted that the FTC looks at an industry, industry practice, what consumers think and believe, etc., in making its determinations about advertiser, endorser, and necessary disclosures. Such things are dependent on the industry; and also on the facts.

Back to Amazon Affiliates and other instances where a blog gets money if a book is purchased through the site. While the FTC would need to examine the industry, Engle said she believed that, if the consumer didn't know the blogger was making money off the sale, this type of thing WOULD have to be disclosed to the consumer. Later, when I spoke with her a bit more about this, she noted that the FTC does not just look at the majority of consumers but also considers a significant minority of consumers. It is NOT "buyer beware." She was very open and clear about this -- so, if 24 of 100 consumers would read your blog, not know that link to Amazon/other bookseller meant you received money, and thought that was material? Then yes, you would need to disclose and do so prominently. So the fact that a blogger is making money via book sales, even if it is a small amount, should be disclosed to the consumer; and such disclosure should by per post. Information in a sidebar or "about" section would not be enough. (Paragraph edited because I don't think I was clear enough. Significant additions are in italics.)

While I'll do my best to answer any questions, Engle only spoke for a half hour. Also, she made clear that the FTC would examine industries, understand how that industry works, and things would be fact and industry specific. So, in other words, it's going to be really hard to respond to "what if ... unique fact unique fact unique fact".

In a nutshell:

Independent reviewer? No requirement to disclose.

Part of a marketing program? Need to disclose.

Part of a book sales program? Disclose in posts.

Please note that this is my report to the best of my recollection. Nothing in this post is intended to be legal advice.


For some reason, I have trouble with my browser scrolling down the FTC homepage. Here is the information at its website About the Endorsement Guides.

GalleySmith's post about the FTC guides and the Kidlitcon session.

Charlotte's Library post. And WriterJenn.

Adding Colleen/ Chasing Ray's post asking, "but how do we know who to listen to."

Amazon Affiliate. If you click from here to Amazon and buy something, I receive a percentage of the purchase price.

© Elizabeth Burns of A Chair, A Fireplace & A Tea Cozy


Unknown said...

Great summary & analysis, Liz! I was going to write my own post about it, but I think I'll just link to yours. It was great to see you again at Kidlitcon this weekend.

Michelle said...

Thanks for the great recap Liz. I tried to take away as much from the session as I could be think I likely missed a bit while I was writing notes. :) Like you, regardless of the need I'll continue to disclose where I got a book from.

It was a pleasure to meet you this weekend.

Melissa said...

Very informative post - thank you for summarizing all this for us!

Lisa said...

Wow! Thank you for this valuable report, especially for those of us who couldn't make it to the con!

Michelle (Red Headed Book Child) said...

THanks for the info. That answers a lot of questions.

Colleen said...

This is excellent - thank you. One concern though - she is not giving "legal advice" but an explanation. That means this is her interpretation of the guidelines. I very much look forward to the clarification in writing that she says should be appearing because honestly, she told everyone what makes sense and they wanted to hear, but as you recall Richard Cleland's interpretation was very different.

Can you see where I'm going with this?

If there is no clarification then it will come down to who you deal with at the FTC and not what the rules are. And yes, you might win in the end but while you are stuck in a confrontation with them it won't be any fun.

I have dealt with federal regulations for 20 years (my first class in regs was even earlier than that - when I was 18) and the only consistent thing I have learned is that unless the reg is black and white (ex: a pilot may fly so many commercial hours in a 24 hour period) then it is up to interpretation. And that means the only opinion that matters is the one of the federal employee investigating you at that moment.

I hope that I would get an Engle as opposed to a Cleland, but it really wouldn't be up to me, would it?

Anonymous said...

A very helpful update - much appreciated!

Alison (Alison's Book Marks) said...

Thanks for posting, Liz!

Good point, Colleen.

From my lawyer's interpretation of the FTC guidelines, we need to disclose two things -
1. Where we received our review books and
2. If we are an Amazon affiliate we receive compensation from readers linking to Amazon from our site.

AND do not link to a specific book via Amazon within the body of our review post.

As long as we follow these guidelines, it shouldn't matter whether we get an Engle or a Cleland (as Colleen puts it) our A$$ is covered.

Liz, did Engle give you any reason to think that we need to do more than the above?

Liz B said...

Sheila, I like reading people's posts on this to make sure I didn't miss/misunderstand something so please share your pov.

Michelle, it was so much fun to meet you! & great post on the FTC.

Melissa, Lisa, Michelle, 100scopenotes: thank you; but motherreader is the person who deserves the real praise, for getting an FTC rep to the conference.

Colleen, no attorney is going to say anything they generally say or write is legal advice. It's too huge a risk and exposure. Given all Engle said & didn't say, I'm pretty confident that we can rely on the takeaways I mention in the posts: the acknowledgement that review places are different from marketing programs & that the FTC understands the need to look at individual industries (do readers understand what amazon links are?) Engle, for example, reiterated that these are NOT rules or regs (they remain unchanged) but Guides to interpret those rules; that, as always, their issue is advertisers and she specifically said reviews are not advertisements/ endorsements even if a book is given for review; and they are concerned with the advertiser.

Allison, Engle, as an FTC official, said unless you are part of a marketing program you do not have to disclose it's a review copy. (I do disclose, but not because of FTC). She specifically said independent review blogs are NOT endorsers -- basically, agreeing with what many book bloggers have been saying for the past two weeks. Per a link to a bookseller (ie Amazon affiliate) -- if you link to a bookseller AND recieve compensation for someone buying a book via that link, you have to disclose "prominently" that relationship. (This is where Engle said "not giving legal advice" and "we'd need to look into it to see what the consumer thinks/knows"). So YES you can link in your post as long as you disclose in your post that you've done so and will get a percentage/money. And, basically, yes -- all they want is disclosure. So per posts "where I got the book/ I linke to amazon/indiepublisher" is enough protection. BUT (and I know there are those out there who feel "if NYT doesn't have to disclose its source of a book, I shouldn't) you don't have to disclose the review copy. So, not only do you not have to do more than the disclaimers in posts; you can do LESS (ie not disclose source of book).

Evans said...

This is interesting, surely it's not possible to keep telling your readers that you get a percentage of any purchases made on Amazon if they follow your link.

I think the best way to do this would be to have a 'Privacy/condition' section on one's blog and include it there. If anyone is worried about links and affiliates, that would be the best place to find more information.

Nice write up anyway :)

Liz B said...

Evans, Engle from the FTC was specifically asked, "if Amazon affiliates disclosure is required, is it enough that it is in an about section or otherplace on the blog" and she said "no, it must be clear and prominent to the reader, which means each post." Blogger allows you to set up standard language for each post; I added a copyright link a few months ago, and just added the Amazon info last week. If the FTC defines clear & prominent as per post, I'll go with what they say.

Their concern is the consumer; "would the consumer know to go look at that sidebar? would they look each time?" etc; and not just the majority of consumers, but also looking at whether, if a minority of consumers, is it a significant minority (i.e., 24 people).

So, yes, I'll go with what the FTC sasy on this one!

Melissa said...

Great recap, Liz.

I didn't think of this until yesterday on my way home, but I wonder how blog tours fit in all this. Marketing program? Coordinated individual reviews? (I wish I had thought of this earlier.)

I do think Greg's point about disclosing anyway, no matter what, being the responsible thing to do is a valid (and good) one.

Liz B said...

Melissa, I think that is a great question I'm very interested in how the FTC defines "marketing program." I doubt Engle could have answered it without really looking into what a blog tour is.

My gut reaction is that being part of a marketing plan would have to be knowing on behalf of the blogger; so "guess what Melissa, you've been part of our supersecret marketing program! bwah ha ha" isn't going to work. And it would be up to the advertiser to have fully informed the blogger about them being part of this program. But we'll have to see.

I do think that book blog tours are a bit more fuzzy; the blogger does know they are part of a tour. The tours Colleen organizes has no publisher/publicist involvement, so there is nothing to disclose (tho we all say, its a blog tour organized by chasing ray, so technically i guess we do disclose, lol).

I wonder what those 'professional' (for want of a better term) blog tour organizers are going to want bloggers to disclose. Is that organizer the "advertiser"? Or is it still the publisher or publicist? So what exactly is being disclosed (and what has been disclosed all along?)

I do think that we are asking these questions -- and considering them from the view of the new-to-blogs consumer -- is good, aside from the FTC, but for reasons Greg said -- trust, transparency, reputation. I overheard on Twitter (or is that overread?) some saying "buyer beware." Really? Do I really want to tell my readers, "you snooze you lose, it's your problem if you're too stupid to read my sidebar/about section/blog post from 2007 explaning all this"

Mom101 said...

Great overview, very enlightening, and mostly seems like common sense.

Basic rule of thumb: Don't be deceptive. Anything else after that will fall into place, right?

Alyssa Kirk said...

This is a great post. Thanks for the information. I'm going to link it on our blog.

Melissa said...

I'm SO behind this week with my commenting... (LOL.) Anyway, you're right about the blog blast tours that Colleen puts together being exempt. I was more interested in the "professional" companies, and what the FTC thinks of them. (Though, you're also right that she wouldn't have been able to answer my question about that; she barely managed to flub her way through the Amazon Associates... I almost feel bad about throwing that at her.)

I agree about the buyer beware side of it; it's our blogs, our home, and ultimately, we're culpable for what goes on there. I can't reasonably expect that people will go through and read everything I've got written, especially if it's not obvious. In this case transparency equals trust.

Lori Calabrese said...

This is great information for those of us who were not able to attend Kitlit Con (jealous!).

Again, it just goes to show how giving the kidlitosphere community is to share information with others--it's greatly appreciated!

All the best,

Sheila (bookjourney) said...

Thank you for this post. It really clears things up for me and I feel better about all the FTC buzz.