Bloggers, particularly moms, are an audience of such growing importance to General Mills that the consumer-goods company has built a formal network to feed them free products and enable them to run giveaways for their audiences.
After being accused of making it difficult, or nearly impossible, to cancel its service, Vonage reached a settlement with 32 states yesterday. Under the terms of the agreement, Vonage must pay $3 million, as well as change the language it uses in its marketing. The crux of the complaint (read here), was the lack of clarity surrounding the free services, trial periods and money-back guarantees Vonage offered. “Companies like Vonage have deliberately turned the whole notion of ‘customer service’ on its ear, so that consumers are even more frustrated and confused after they call the company than before,” said Montana Attorney General Steve Bullock in a statement. “That’s not good enough, and this settlement will hold Vonage to a higher standard—a standard of genuine customer satisfaction it should have been striving to meet without our intervention.”
The Federal Trade Commission noticed a while back that marketers of brands, products and ideas have used new media in some incredibly dishonest ways. These include paying people or giving them freebies in return for positive mentions and not requiring (or even encouraging) them to disclose that they're being compensated. So with laudable goals, the commission -- an institution that plays a vital role in helping us have a free and honorable marketplace -- issued a document aimed at better disclosure, with penalties of up to $11,000 in fines for violations. Basically, the FTC is saying that if you have a "material connection" to a product or service you're praising, you are an endorser who must disclose that connection. Sounds good, doesn't it. But when you read the FTC's ruling, published this week, you get the sense of a government-gone-wild travesty. Why?
Ok, so I just said something nice about Best Buy and something critical about its competitor. Look on my disclosures page and you’ll see that I had a business relationship with Best Buy. A few weeks ago, because of my book, they paid for me to come speak to various groups over two days (which I quite enjoyed and which taught me a lot about retail, which I’ve been contemplating and want to write about). So is what I just said about Best Buy an ad? An endorsement? A testimonial? Or just a story and my opinion?
The Federal Trade Commission just released rules to regulate product endorsements not just in advertisements but also on blogs. (PDF here; the regs don’t start until page 55.) It is a monument to unintended consequence, hidden dangers, and dangerous assumptions. Mind you, I hate one of its apparent targets: Pay Per Post and its ilk, which attempt to co-opt the voice of bloggers. But I hate government regulation of speech more. And mind you, I am all in favor of transparency; I disclose to a comic fault here. I think that openness is the best fix for questions of trust and advise companies and politicians and certainly governments to become transparent by default as enlightened self-interest. But mandating this for anyone who dares speak online? Foolish.
In light of the FTC’s recent scrutiny of Social Media practices and the activity that connects brands to influencers and ultimately consumers, we will soon see guidelines and corresponding penalties to serve as governance for future engagement.