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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.

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Has blogging made critics out of us all? Maybe so, but we still have to watch what we say as illustrated in a recent New York case, Cohen v. Google/Blogger.com. Fashion model Liskula Cohen filed suit demanding that Google disclose the name of an anonymous blogger (who we now know was Rosemary Port) who created and operated the blog now infamously known as “Skanks in NYC.” Cohen alleged that Port posted sexually suggestive pictures featuring her, together with derogatory comments about her — labeling her as, among other things, “skank,” “ho” and “whoring.” Google refused to reveal the blogger’s IP address, citing its policies on protecting the privacy of bloggers. 

In New York, the elements for a cause of action for defamation “are a false statement, published without privilege or authorization to a third-party, constituting fault as judged by, at a minimum, a negligence standard, and, it must either cause special harm or constitute defamation per se.”   Cohen petitioned the court that because Port posted, essentially, “per se” defamatory content about her, the blogger’s identity must be disclosed to enable her to pursue her viable claim for defamation. Port filed papers on an anonymous basis in response to the petition, claiming that the statements were “non-actionable opinion and/or hyperbole,” and further argued that even if the words were capable of defamatory meaning, “the context here negates any impression that a verifiable factual assertion was intended” since blogs “have evolved as the modern day soapbox for one’s personal opinions,” by “providing an excessively popular medium not only for conveying ideas, but also for mere venting purposes, affording the less outspoken, a protected forum for voicing gripes, leveling invective, and ranting about anything at all.” While this pleading is certainly an accurate description of how blogs are frequently used by bloggers, the court was not persuaded that Port’s identity should be protected from disclosure because her statements were “reasonably susceptible of a defamatory connotation and are actionable.” The court held that Cohen was entitled to an order directing Google to disclose information as to the identity of the blogger. 

It turns out that Port is an acquaintance of Cohen who frequently attended the same social functions as she did. With Port's identity discovered, it has been reported that Cohen will file a defamation suit against her. In turn, Port has indicated that she will sue Google for $15 million for failure to protect her privacy, claiming that Google “breached its fiduciary duty to protect her expectation of anonymity.” While the merits of Cohen’s claim against Port and Port’s claim against Google are yet to be determined, the lesson for every blogger is that he or she may not hide behind a mask of anonymity with respect to blogs that may cross legal lines and create causes of action, such as defamation. 

Companies also need to be vigilant in connection with the development of policies around blogging by employees or agents. Imagine the scenario where an employee of a consumer products manufacturer posts malicious statements on a consumer opinion blog regarding a competing product. The rival company petitions for the identity of the blogger, and ultimately discovers that the blogger is an employee of a competitor. In this situation, not only the individual, but potentially the company as well, may be subject to a claim by the rival company for unfair competition, or for certain other Lanham Act or Communications Decency Act claims.

Tread carefully with your blogging, or you might get a flogging. (Sorry, we couldn’t resist).

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As we’ve discussed previously on Adlaw by Request, the Federal Trade Commission ("FTC") is in the process of revising its Endorsement and Testimonial Policies and Guidelines – the first set of revisions since 1980. In addition to compelling greater disclosure and substantiation on advertisers that wish to employ endorsements and testimonials in their advertising, the FTC has cast its net to include blogs, message boards and street teams among those parties that would be subject to these new enactments. The purpose of this article is to address the effect such guidelines will have on blogs.

By way of introduction, endorsements refers to any advertising message (including verbal statements, demonstrations or depictions of the name, signature, likeness, or any other identifying personal characteristic of an individual or the name/seal of an organization) that consumers are likely to believe reflects the opinions, findings or experience of an independent party other than the advertiser about a particular product. The FTC has expressed its intention to treat endorsements and testimonials identically in the context of its review and enforcement activities.

Generally speaking, endorsements: (i) must reflect the honest opinions, findings, beliefs or experiences of the endorser, (ii) may not convey an express or implied representation that would be deceptive if made by the actual advertiser, (iii) may not be presented out of context or worded so as to distort in any way the endorser’s opinion or experience with the advertised product, and (iv) may only be communicated by endorsers who are bona fide users of the product at the time of the endorsement, and the endorsement may continue to run so long as the advertiser has good reason to believe that the endorser remains a bona fide user of the product. From a liability perspective, both advertisers and endorsers alike can be held liable on the basis of false or unsubstantiated statements made through endorsements.

Although liability from false endorsements can arise from several different scenarios within the context of blogs, the two most common developments are likely the following: (i) blogger reviews, and (ii) undisclosed payments made by advertisers to bloggers. In the first scenario, bloggers are continually on a mission to find new content about which to write, and advertisers are constantly seeking innovative and organic means by which to disseminate their messages. For a blogger to write a review about a particular product on his/her blog, the blogger will be deemed an "endorser" by the FTC. Therefore, should the blogger fail to verify (or request verification of) an advertiser’s substantiation with respect to any product claims, the advertiser can be subject to liability for false and unsubstantiated statements made through the blogger’s endorsement, and the blogger may also be subject to liability for the same unsubstantiated representations (intentional or unintentional) made in the course of his/her review (aka endorsement).

The second potential pitfall involves a blogger’s failure to clearly and conspicuously disclose any payments (in cash or in goods) that he/she receives from an advertiser. Especially in those situations in which a blogger is neither an expert, nor is known to a significant portion of the viewing public/ readership but receives some form of payment from the advertiser, this fact must be disclosed to the public. The FTC’s reasoning behind this disclosure requirement should be fairly obvious – receipt of consideration by the blogger will likely have a material effect on the credibility that the public ascribes to the endorsement. As mentioned above, the payment/consideration can take the form of cash, free or discounted goods (even for testing purposes), gift certificates, or even advertising revenues on the blog, itself.

So, what is an advertiser to do that wants to enlist the services of bloggers? The answer involves training and monitoring. Advertisers must provide their bloggers with training on the do’s and don’ts of endorsements and claims, making sure that each claim is truthful and substantiated. For those bloggers who regularly receive consideration in some form or another, advertisers must closely monitor their blogs and have clearly defined policies in place that set forth the steps by which deceptive advertising must be halted and immediately taken down, when discovered. Lastly, and particularly for bloggers who are receiving payment in some form or another, advertisers should consider developing a reasonably simple but focused set of terms and conditions and/or an actual agreement/insertion order that lays out the obligations of the blogger, and the risk allocations should a problem arise.

… as for the bloggers, one approach to address the payment disclosure requirement is to bifurcate sections of their blog between a paid advertising area and an editorial (i.e., non-paid advertising) area. So long as a user knows at all times in which of the two "areas" he/she is situated, bloggers (and advertisers, by extension) can get some level of comfort that their disclosure requirements have been satisfied. The objective, simply put, is to convey transparency to the consumer. This point was recently encapsulated by Jory Des Jardins, Co-Founder of BlogHer: "It's time to look at the finer distinctions between compensated programs that have emerged as social media enters awkward adolescence. To us, the question is not whether anyone should ever compensate bloggers, it's under what circumstances should you compensate them? And if you do compensate them, what are your obligations, and theirs?"

While the FTC isn’t expected to roll out its new Endorsement and Testimonial Policies until later this summer, advertisers and bloggers must start to think about these issues and put policies and documents into effect that address them. Consult your local advertising and marketing attorney for further assistance.

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