Making good on its suggestion that advertisers who have blogger policies might fare better than those who don't, the FTC yesterday announced the closing of an investigation into Ann Taylor Stores Corp.'s advertising practice whereby its LOFT division would send free goods to bloggers to preview. The FTC decided to close the case because (1) the previewing event was a one-time isolated incident; (2) only a few bloggers posted reviews; and (3) LOFT had a written policy (adopted after the launch of the event) stating that LOFT will not issue any gift to any blogger without first telling the blogger that the blogger must disclose the gift on his or her blog. The Commission, in letting Ann Taylor Stores off the hook, left the advertiser with a parting warning: "The FTC staff expect that LOFT will both honor that written policy and take reasonable steps to monitor bloggers' compliance with the obligation to disclose gifts they receive from LOFT."
What This Means
The fact that the FTC even initiated an investigation is troublesome and should not be lost in the salve of the closing letter. The "previewing event" that the advertiser engaged in was not an online event. It was a physical event that people (identified by the FTC staff as "bloggers") attended in order to view a preview of LOFT's Summer 2010 collection. A sign at the preview told bloggers that they should disclose the gifts if they posted comments about the preview. The FTC alleged that LOFT had an expectation that the people attending the previewing event would blog about the collection. One might question how much knowledge Ann Taylor actually had about who the people at the preview were. Were they all very well known fashion critics who just happened to use social media to publish their reviews? What if there was a fashion show to which members of the world press were invited? It's not beyond the realm of imagination to presume that everyone who attended would get some token from one or more designers in a gift bag, etc. Obviously, the designer wants the reviewer to write something positive about the products. Is this an example of how the FTC will look at bloggers differently from "traditional media"? And, what does this mean for other industries where gifts at trade shows are commonplace? Will a sign at the booth be necessary or even sufficient? Is swag at a trade show now subject to the testimonial guides? The answer should be no, but, the fact that this investigation was even pursued suggests that just letting people come to a site to look at or sample products, with some knowledge that the people might be likely to write a review about the products, creates a situation in which any gift to the attendee could taint the resulting review, turning it into "sponsored" speech and subjecting it to FTC scrutiny under section 5 for failure to disclose a material connection. Maybe more analysis was undertaken by the FTC staff to determine whether there was any sponsored speech. Or, maybe some of the blogger paranoia that has accompanied the revised Testimonial and Endorsement Guides was justified after all.