Blogging, Bucks & Bias – The Case for Disclosure

Previous college paper of mine that commented on new FTC disclosure requirements.

Should there be laws regulating bloggers to disclose any payments or benefits they receive for endorsing a certain product in the blogosphere?

As blogs become more popular, many people are turning to them for advice or suggestions on which products and services to buy. This gives the bloggers great influence over people’s commercial actions, attracting the interest of marketers. Often, successful bloggers are offered payments or gifts in exchange for writing positive reviews. Even smaller blogs can get involved by suggesting products with “affiliate links”, where the blogger gets paid a commission for sales generated from his link. These widespread practices[1] benefit both the marketer, who can reach new audiences, and the blogger, who can generate additional income from his blog. The side that may lose is the reader of the blog, who may not be aware of the deal, and not know that the reviews’ impartiality may have been compromised. Recently, the FTC implemented new guidelines[2] that require bloggers to disclose any payments of gifts received for their reviews. Some have praised this measure for protecting the consumer, while others have criticized it for interfering unjustly in the blogosphere. Are the new guidelines justified?

The Arguments Against

Opponents of the new laws give various reasons to support their argument. Some claim that there is nothing unethical about failing to disclose payments received for endorsements. They claim they will only endorse products they like, and turn down other endorsement offers[3]. Some admit it may be recommended for bloggers to disclose any payments, but argue that the law should not get involved in every ethical matter.  Others add that the law is misguided because the FTC cannot possibly enforce the law on the millions of blogs on the internet. A fourth argument is concerned with the scope of the law, and whether the FTC’s rules apply to too many cases. This essay will primarily focus on a more specific case: bloggers who receives direct payments or gifts for their endorsements.  I think the guidelines are justified in such a case because the importance of protecting the consumer and preventing dishonest advertising outweigh the fears some bloggers have of being over-regulated.

Is it Ethical?

Obviously, a blogger who recommends a product solely because he was paid to do so should disclose this fact. Failure to do so is total dishonesty. The reader thinks he is getting an honest opinion when he is in fact getting an advertisement. The ethical question arises when the blogger claims he can remain impartial despite any payments received. There are many difficulties with such a claim. Often they are only reviewing the product because of the offer, and not because they selected it objectively from all the products. So even if they claim to review it without bias, the very selection of it was influenced by money. There claimed objectivity is also highly questionable. Imagine if a judge takes money from one side to review his arguments. He may claim that he will remain impartial, but it is clearly bribery. People are biased in favor of the person or institution providing them money, often without realizing it. Studies have shown that this bias applies in many areas, from professionals giving evaluations[4] to scientists doing research[5]. Surely bloggers are no different!

Even if the bloggers think they are impartial, they should still disclose payments received. The reader is the one who may follow such recommendations, so he has a right to evaluate their credibility. Some bloggers[6] say they will remain unbiased because they do not want to lose their credibility. But if they never disclose the payments they receive, the readers will not know when to look out for possible bias. Only proper disclosure will create incentives for the bloggers to remain objective.

Should it be Regulated?

The main purpose of the FTC is to defend the interests of the general consumer. Originally, it fought monopolies, but later its role was extended to “administer a wide variety of other consumer protection laws[7]”. As new developments arise, the FTC’s job is to make sure the consumer is protected. The blogger’s endorsement of a product influences the reader’s commercial actions, so it falls in the realm of the FTC to monitor. Consumers can be financially harmed by biased recommendations that they thought were credible, so the FTC is justified in creating guidelines which require disclosure. The consumers’ rights should be protected in various areas, including new developments like the blogosphere.

Enforceability

The FTC admits it will not be able to enforce the law for every one of the millions of blogs on the internet.[8] There are still good reasons for creating such guidelines. First, the very fact that it is a law will encourage a large number of bloggers to comply with it. Many people were willing to tread in ethical grey zones, but do not want to break the law.  If something is illegal, it becomes more clearly unethical for many, and the slight chance of being penalized also encourages compliance.

The second reason for the new guidelines is that the FTC will be able to enforce the rules when necessary. The FTC plans on enforcing the guidelines only for very large sites that break the rules in a serious manner. For example, if a large blog recommends a health product without any disclosure that they were paid by the manufacturer to recommend it. This can cause health issues, and the FTC may get involved. The FTC also plans on encouraging the advertisers to inform the bloggers of the new rules, which will help generate the voluntary compliance mentioned above.

The Broad Scope

So far, the essay focused on a blogger that endorses a product and receives financial payments for it. Yet the new guidelines have a much broader scope. They appear to cover any endorsement, in any form, on any medium. If someone suggests to a friend to sign up for something on Facebook, he officially has to disclose the small reward the company is offering him for each new sign-up. Maybe sometimes this is the ethical thing to do, but often it may be overkill, as the disclosure might be longer than the message. Although the justification for the guidelines in these areas may be questionable, it is important to realize that the FTC will not actually enforce them in such cases, so people do not need to fear getting fined. The overall laws are a good thing, even if their scope could be considered too broad.

Implications

The internet has revolutionized many areas, and people can now access information and buy products in ways not possible before. Yet, as with any new technology, it has also been used in many unethical ways. In the commercial realm, many websites and bloggers have encouraged people to buy products without disclosing the financial incentives behind their suggestions. These practices have made it harder to find reliable recommendations on the internet. When one searches for certain product reviews, such as web-hosts or online colleges, the results are filled with websites who get paid based on the visitors’ actions through their site. Instead of giving the user the information he needs, the sites often just try to get him to click on a link, register for more information, or complete a purchase. These websites rarely disclose their financial incentives, and the reader may not realize the suggestions may be biased. As the internet becomes the primary source for product reviews and suggestions, this problem can become more acute. It is important to implement measures now to help improve integrity on the internet. The FTC’s new guidelines are an important step to help protect the consumer and prevent dishonest advertising. These principles should always be protected, even as the medium for communication changes.

 


[1] Affiliate marketing is widespread, as a Google search will demonstrate. Direct payments to bloggers is growing, but is mostly among large blogs.

[2] The full guidelines can be viewed at the FTC website at: http://ftc.gov/os/2009/10/091005endorsementguidesfnnotice.pdf. The shorter press release is available here: http://www.ftc.gov/opa/2009/10/endortest.shtm.

[3] See, for example, the end of this New York Times article: http://www.nytimes.com/2009/07/13/technology/internet/13blog.html?_r=2

[4] See “Conflict of interest and the intrusion of bias”, available at: http://journal.sjdm.org/10/91104/jdm91104.pdf

[5] See, for example: The price of truth: how money affects the norms of science, by David B. Resnik. Available on Google Books at: http://books.google.com/books?id=6MZ7KoVdhiAC&dq=”D+Resnik”The+Price+of+Truth:+How+Money+Affects+the+Norms+of+Science”&lr=&source=gbs_navlinks_s

[6] New York Times ibid.

[7] http://www.ftc.gov/ftc/about.shtm

[8] See the end of this article: http://www.fastcompany.com/blog/jennifer-vilaga/slipstream/ftc-bloggers-its-not-medium-its-message-0