Tag Archives: Federal Trade Commission

Ignorance Is No Excuse

I don’t think any of us like being deceived unless we’re watching a magic show. It’s especially angering when you find out that what you believed to be a trusted source has told you something based on someone paying them to do so. You might be aware that several years ago the Federal Trade Commission (FTC) issued rules about the need to clearly label paid social media posts as ads so that consumers aren’t deceived by ads masquerading as content.

English: Fined Stamp text

(Photo credit: Wikipedia)

Several companies have been fined as a result of failing to follow the rules. Lord & Tayor, for example, was fined because they paid 50 online fashion “influencers” to post Instagram pictures of themselves wearing the same paisley dress but failed to disclose they had given each influencer the dress, as well as thousands of dollars, in exchange for their endorsement. The folks at Warner Brothers were fined for failing to adequately disclose that it paid online influencers thousands of dollars to post positive gameplay videos on YouTube and social media. Over the course of the campaign, the sponsored videos were viewed more than 5.5 million times.

I bring this up because I saw a piece this morning headlined

Marketers ‘Unaware’ of FTC Social Media Guidelines Regulating Influencers

Only one in 10 know sponsored posts should be tagged as ads, study finds.

Seriously? These rules have been in place since 2009 and were updated in 2013. 60% of influencers – the people who are paid to put this stuff out there with their endorsement – are fully aware of the rules and do a good job of following them. The people paying them? Not so much.

But wait! There’s more! I found this especially perturbing:

A significant minority of influencers said it’s not uncommon for brands to ask them to hide the fact that their post is sponsored.

I’m not sure which is worse – ignorance of the rules or the willful violation of them. Either way, it’s really a problem. Ignorance of the rules is certainly no excuse. One could argue that consumers are sophisticated enough to understand that even traditional product reviews often came based on the product being made available to the reviewer for free. I think most folks assume that unless we’re into the realm of reviews posted by normal people on Amazon or Yelp or Trip Advisor, most “influencer” reviews or posts involve money changing hands. All celebrity endorsements do and seeing an athlete or actor endorsing a product, one can safely assume it’s an ad.

Maybe these marketers can shrug their shoulders and think of the fines as a cost of doing business. That’s short-sighted since the hit to their reputations is larger than the fine, whatever that fine may be. All of us need to know and follow the rules that are in place when it comes to paying people to promote our products. If we don’t the choice is to be labeled ignorant or sleazy, and neither is a great option. You agree?

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I Want To Watch

Yet another brouhaha over privacy has reared its ugly head and the group which represents marketers – the Association Of National Advertisers (ANA) – has weighed in on the topic. In a blog post entitled “Don’t Bother Us With The Facts“, the ANA talks about a new set of privacy rules contemplated by the FCC. Their quarrels have to do with the complexity of the rules and the timeframe given for analysis and comment before the new rules go into effect. That, however, isn’t our topic today.

Logo of the United States Federal Communicatio...

(Photo credit: Wikipedia)

The thing I’d like to discuss is a quote at the end of the post. The new rules are going to be imposed on broadband providers – generally, your cable company or telephone provider. It says:

Most importantly, ANA will remind the FCC that “there’s no free lunch,” and that consumers receive information today at little or no cost in return for companies’ ability to reach them via directed advertising that surveys show are acceptable to consumers. This approach has fostered a healthy, vibrant, and economically valuable Internet and mobile media ecosystem that must not be allowed to be severely undermined.

I have an issue with that since the topic isn’t monetization of websites and content but the ability of ISP’s to make extra money capturing and selling information about their customers. These customers (that’s us, folks) pay handsomely for our broadband service, a service which is generally inferior to that found in other countries with respect to speed and bandwidth caps (we rank somewhere in the low teens in terms of countries ranked by average speed). Is it too much to ask that we give permission to yet another entity monitoring and monetizing our behavior?

Another lobbyist stated that requiring consumers’ opt-in consent to behavioral targeting, would prevent broadband providers “from efficiently monetizing online data in the same way that Google and Facebook have long done, with astounding consumer benefits.” Sorry, my friend. Google and Facebook provide a free service. Anyone you know receiving free broadband access in return for being tracked?

Unless and until everyone involved in marketing recognizes that consumers should control what data they give to which entities in return for what benefit, problems such as ad blocking aren’t going to go away. The customer is in control now, and tracking them just because you want to watch what they’re up to can undermine even the best marketing.  Do you agree?

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Gagging Your Customers

I love the Streisand Effect.  You know – some person or company takes umbrage at what someone else has written somewhere and decides to “fix” things.  Usually, that fix creates even more awareness of the original negative  item and so the attempt to hide it has just the opposite effect.  Some genius at a Florida company that sells weight loss products decided to solve the negative item problem in a different way.  It allegedly made false claims for their products, and then threatened to enforce “gag clause” provisions against consumers to stop them from posting negative reviews and testimonials online.  How great an idea was this?

Seal of the United States Federal Trade Commis...

(Photo credit: Wikipedia)

In a complaint filed in federal court, the FTC alleges that Roca Labs, Inc.; Roca Labs Nutraceutical USA, Inc.; and their principals have sued and threatened to sue consumers who shared their negative experiences online or complained to the Better Business Bureau, stating that the consumers violated the non-disparagement provisions of the “Terms and Conditions” they supposedly agreed to when they bought the products. The FTC alleges that these gag clause provisions, and the defendants’ related warnings, threats, and lawsuits, harm consumers by unfairly barring purchasers from sharing truthful, negative comments about the defendants and their products.

Hmm.  Maybe not such a good idea after all, huh?  Telling consumers that they would be subject to $100,000 in damages for posting reviews isn’t exactly embracing the customer.  In fact, I can’t really imagine a circumstance where preemptively threatening to sue a customer for anything short of non-payment makes any sense.  In this case, not only has the Streisand Effect kicked in but so too has a stream of legal fees and, potentially, fines and damages.  As it turns out, the FTC alleges that the product’s weight-loss claims are false or unsubstantiated – you know, the stuff they’re selling just doesn’t work. That will move a lot of product, right? Just to kick them a little while they’re down, the FTC also charges that the defendants failed to disclose that they compensated users who posted positive reviews.

The takeaways (none of which are news to anyone who has read this screed before): don’t threaten your customers, don’t lie about your products, don’t pay for fake reviews and don’t actually follow through and sue them when someone posts a negative comment (these guys did file a number of suits).  Sure, if someone is spreading out-and-out lies, you need to respond but hopefully not in court.  If what they are saying contains a fair amount of truth, however, the fault isn’t the customer’s.  Agreed?

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Turf Burns

I read an article about a fine imposed by the FTC on an ad agency. Apparently what the agency did was to ask employees to promote Sony‘s PlayStation Vita on Twitter as if they were “regular” consumers. Agency employees then used their personal Twitter accounts to make positive posts about the gaming device. Obviously there was no disclaimer in each tweet that the person posting was an agency employee or had a financial relationship with the product.

Seal of the United States Federal Trade Commis...

 (Photo credit: Wikipedia)

This sort of thing is known as “astroturfing.”  It goes on in politics all the time and is “the practice of masking the sponsors of a message or organization (e.g. political, advertising, religious or public relations) to make it appear as though it originates from and is supported by grassroots participant(s).”  Fake reviews are a form of this when they’re written by marketing or PR people on behalf of a company.

I’m not sure what genius thought that this could in any way be considered smart marketing but it’s an expensive lesson.  Especially when you put it in this context:

Almost 8 in 10 American adults read online consumer reviews for product and services before making a purchase, with this figure relatively constant across generations, according to a survey from YouGov. The study analyzes the use of online reviews from a variety of angles, finding that a bare majority (51%) of those who read consumer reviews generally read at least 4 before feeling that they have enough information to purchase a product or service…the YouGov survey also finds that among the 44% who post online reviews themselves, 49% (including 58% of 18-34-year-olds) admit to having at some point written reviews for products and services they haven’t actually purchased or tried.

So reviews are important to consumers yet consumers themselves sabotage the reviews’ value.  Add that to the astroturfing that goes on and you might say “oh, everyone does it.”  As the expression goes, it’s all fun and games until someone loses an eye.  Get caught, as happened in this case, and you pay financially (the cost to defend a complaint even if there isn’t a fine) and with your reputation (it doesn’t matter if “everyone” does it – you got caught).

There is very little upside to posting fake reviews and a lot of downside.  That spells bad idea in my book.  Yours?

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A Peek Over The Native Horizon

Sometimes you can get a glimpse of what’s coming over the horizon and I think I got one of those this morning.  I was catching up on some reading and came across a letter that the FTC sent out.  It was directed to search engines but I think it’s a harbinger of things to come as the digital ad business gets more deeply into content marketing and so-called “native” advertising.  You can read the letter here but in summary it says that ads in search results must be clearly identified as such:


Advertising (Photo credit: Wrote)

Search engines provide invaluable benefits to consumers. By using search engines, consumers can find relevant and useful information, typically at no charge. At the same time, consumers should be able to easily distinguish natural search results from advertising that search engines deliver. Accordingly, we encourage you to review your websites or other methods of displaying search results, including your use of specialized search, and make any necessary adjustments to ensure you clearly and prominently disclose any advertising. In addition, as your business may change in response to consumers’ search demands, the disclosure techniques you use for advertising should keep pace with innovations in how and where you deliver information to consumers.

That’s why you see the yellow background, for example, on Google search results along with it saying “ads related to (whatever the search term is)”.  The point is for consumers to be able to distinguish results that someone paid to make prominent vs those that would otherwise rise to the top.  Makes sense.  The tail end of the letter begins to talk about this same principle as it manifests itself in social and mobile (and voice search as well!).   Which got me thinking.

Content marketing done well is a beautiful thing.  Hopefully you all consider this blog a good example of someone putting our content that’s informative and engaging.  My hope is that this will lead you to email or call me about working with you, so I think in part that makes this an ad.  If I ever write anything that I’m paid to put in here, I’ll disclose it (although I probably won’t do that in the first place).  That’s content marketing – using content to sell.

Native ads are a bit more insidious.  It’s about the creation of content that’s supposed to be useful and interactive like content marketing.  Someone defined it as any type of advertising where the placement appeared to be appropriate except it’s much harder to identify as an ad.  When an article is about cats and is really an ad for a retailer, that’s a problem.

I think it won’t be long before rules are put in place to crack down on this.  How will the FTC stop fake reviews, articles such as the one above, and other forms that don’t disclose they’re really ads (which might call into question the validity of what’s in the article)?  I’m not sure but I know it won’t be as thoughtful as if marketers figure it out for themselves.

What do you think?

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Full Disclosure

Seal of the United States Federal Trade Commis...

I’m not sure if this goes into the “well DUH” file or if it’s actually a good reminder. You’ll have to tell me. I’m talking about the FTC‘s publication of some new guides for bloggers with respect to disclosing relationships they may have with those companies or products they review. In a nutshell, bloggers are advised (they’re not actually rules or pay a fine) to say if they’re being given free product or paid somehow for their review by the reviewed entity. Those same standards don’t apply to “traditional” media such as newspapers. There is a good explanation of the arguments here and of course the blogosphere is buzzing but to me it’s a whole lot of “so what.” Continue reading

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