The FTC needs to shut up!
The Federal Trade Commission (FTC) is one of the most unique parts of our government. It has a wide range of powers given by law, which encompass among other things the ability to pass rules and regulations against “unfair and deceptive acts or practices.” The FTC often issues “guidelines” which are no more than notices that they will push for prosecution or civil action against individuals in violation their guidelines. Although these guidelines are often up for public debate, they are not passed by any governing body such as Congress, yet affect us often more than any newly passed law would. While many people see that the FTC is a consumer rights entity within the government, a growing amount of people sees that the FTC is a part of a growing, overreaching government that is interfering with the ability of businesses and often individuals to conduct business in this market economy.
I’m not claiming that the FTC should NOT prosecute obvious fraud, where consumers are clearly being scammed – such as not delivering a product as promised or the mass distribution of unsafe toys. That being said, the FTC’s guidelines and civil actions are quickly crossing the border of infringing not only on our ability to do business, but our First Amendment Rights to Free Speech. The Right to express one’s self and opinions, whether it is political or business related is an inherent part of our society and the foundations of our business community. The courts have ruled that advertising is a form of free speech, which cannot be infringed upon anymore than any other opinion, written or spoken.
Recently the FTC issued guidelines (which means, as said, we plan to bring action against someone) that regulate bloggers. Bloggers are a unique part of our economy, a throwback to the creation of this Country when people would often hand out pamphlets to express their opinion, in order to get attention to their cause. Bloggers are often people, like myself, who have taken the initiative to put their feelings down and write, taking the power away from larger media organization, and putting it into the hands of the individual. As one knows, blogs often express anything from political opinion to diet tips. They are sometimes political, commercial, religious, or just something someone did in order to express their frustration at their parents. Whatever the reason is, they are a wonderful expression of our First Amendment Rights.
Yet the FTC believes that bloggers are so unique, that they need to be regulated in a way that has never been proposed to mainstream media. The FTC recently issued regulations in which they clearly state how bloggers who engage in commercial activity, should clearly state how they are related to the product, and make it obvious they are engaging in business, or have been paid to endorse the product. This uniquely affects the interactive advertising community, because it could easily be interpreted that any link, any mention of a product that would in turn create a sale (such as an affiliate link) would have to be clearly mentioned as an advertisement or state the nature of the relationship.
Additionally, more and more the FTC is engaged in the business of deciding what is considered an “authentic or substantiated” claim by an endorser or a product. While they have for the last decade or so, been more involved in cases in which they believe unsubstantiated product claims have been made, they are specifically targeting out bloggers – and their opinions. This growing trend is more and more disturbing, as it gives the government the right to make assumptions of the quality and accuracy of claims of businesses – and then in theory, the accuracy of claims of individuals. It asks businesses and bloggers to basically “prove” what they are saying is correct, even if it is an opinion. They must substantiate according to the FTC, all their claims.
This is unique in nature, because it places an undue hardship often on small businesses and bloggers, who cannot afford to hire research teams or a huge law firm to assist them in the creation of their materials. A sole-proprietor who discovers that perhaps his home-made fig bars have lead to increased weight loss and energy, in theory, will have to prove and substantiate his claims before he could buy advertising on Google that states that these bars can help in weight loss. It could prevent a small business owner from selling knitted goods on Ebay, because the claim that they have kept her warmer than any other coat she owned, might be subject to scrutiny. They have to worry that the government, the FTC might intervene at some point and bring action against them based on perception and supposition. It gives bureaucrats, non-elected officials an extreme amount of power over small businesses in this Country.
The right of Free Speech in this Country is quite interesting, because it allows people to express their opinion, even if they are wrong. It assumes that no opinion is inherently wrong and opens up the possibility of debate. It also assumes that most adults are intelligent enough to make their own decisions regarding their dislikes, their opinions and the products they want to buy. The government, acting as “Big Mommy” is more and more interfering and saying that they want to regulate what we see and hear – that despite a huge Internet with tons of information, we can’t do our own research and decide if a product is what we want. We are giving the government more power than has ever existed before: the ability to sanitize what we hear and see before it’s released to the public.
“Government big enough to supply everything you need is big enough to take everything you have. The course of history shows us that as a government grows, liberty decreases.” – Thomas Jefferson
10 Responses to “The FTC needs to shut up!”
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(C) 2010 Pace Lattin. It is the policy of this blogger to not edit or remove any content and comments, unless it is specifically attacking a protected group or irrelevant to the conversation, such as a spam. These are the OPINIONS of the respective writers, posters, commentators. All DCMA Notices shoudl be sent to pace@pacelattin.com
Right on, Pace! Your points regarding the FTC’s narrow minded stance on bloggers is what all of us with marketing backgrounds feel.
There are more nanny-state FTC actions under way now, than in the 20 years I have been in the direct marketing industry. This is further complicated by the fact that when the FTC comes knocking, they don’t fight fair.
A client of mine is going through an action in which the FTC offers to settle with him and his company and take all the company’s assets as well as his personal assets (including several million he had before he started the company he only ever took less than a million out of), or fight them and possibly lose in which they will still take everything plus leave him with a judgment for the balance of the $35 million gross proceeds the company did over 3.5 years.
Government allowing prosecutors to use tactics such as this creates a situation where marketers are negotiating with the FTC with a cannon aimed at their head. I think this particular business would have a great chance at winning as they fulfilled every item they promised their customers and only had a few thousand complaints from their several hundred thousand customers.
Unfortunately we will never know, as no one would choose to fight to protect himself and his company under these conditions. I understand a need for plea bargaining to protect the country from having to litigate every case, but plea bargains such as this are not in the interest of justice.
I am glad to see your back to blogging, Pace! It’s been too long since I enjoyed an Adbumb!
I disagree totally! Of course, advertising is free speech and is protected as such, but it is by its nature commercial and readers have a right to know if the opinion is formed from a vested interest. So many "community" organizations are funded by commercial interests and composed of employees. Ironic that you cite the founding of our country and the open forums of our early democracy. True, the internet is taking us back to those days when "cracker barrel" wasn’t just a restaurant chain, and that’s good. But listeners have a right to know when opinions come from the open community and not the board room. And, by the way, your quotation is from Barry Goldwater. Thomas Jefferson may have wider appeal and more credibility, but it’s another example of "not exactly the whole truth", so prevalent in blogs.
I also disagree with Pace. There are massive numbers of highly unethical practices that are the right and responsibility of the FTC to regulate. While we can’t really know how these new guidelines will turn out, it’s an appropriate step.
BTW, these were planned under the Bush administration so they have no connection with the Obama administration except that they continued the process and brought them to fruitiion.
In fact, this is good for advertising’s survival and the law of the common applies here. When companies abuse advertising and communication, it reduces communication effectiveness for all companies. However, the companies with the abusive practices never suffer a comensurate amount for the degree to which they hurt the communication.
So, a small number of bloggers are already sacrificing the credibility of all bloggers by taking payments under the table and issuing false opinions based on that practice. A moderate number of bloggers are hurting credibiliity with less irresponsible practices, but still hurting it. Yet, none of these suffer for their errors and even continue to be paid.
How can our industry accept this as "good"?
I agree with you, Pace, about government agencies totally overstepping the boundaries of free enterprise. I would like to add that the FDA is another government agency that is controlling our choices and limiting our freedoms in the name of protecting us. They even have been known to use gestapo-like techniques against nutrition companies.
Keep writing, make your voice heard.
Pace, as a former FTC advertising attorney who worked at the highest levels of the Commission and who has been counseling and representing direct response marketers in FTC actions for 25 years, I share your concern about overregulation by my former agency. In its vital and wholly legitimate mission to protect consumers against unfair and deceptive practices – a mandate given it by Congress- the FTC has an obligation to exercise its powers responsibly and fairly. Often, even usually, it does, but not always, and I have noticed a disturbing trend in the latter direction in recent times, and particularly in the last year. The agency has become excessively demanding, in my mind even abusive, in monetary settlement negotiations with defendants, especially those who lack the means or stomach to go to trial and defend themselves in court. According to the FTC’s own policy, such negotiations are supposed to be decided by the defendant’s "ability to pay," which, under any common sense definition, should take account of his liabiities and overall net worth as well as his assets. It seems, though, and I’ve observed it firsthand in my own cases, the only part of a defendant’s balance sheet the FTC notices is his cash on hand and any other liquid assets, and they insist on grabbing all or nearly all of that even if he is actually underwater and could be driven into bankruptcy by the settlement. This is an abuse of power and wholly unnecessary to accomplishment of the FTC’s mission to deter misconduct, recover reasonable redress for consumers, and enforce fair marketing standards.
On the blogging question, the FTC has every right to extend and enforce its newly revised Endorsement Guidelines to new media, including bloggers. The First Amendment protects only truthful, nondeceptive advertising, not all commercial speech. Consumer endorsers in conventional media today have to disclose any material financial connection to the sponsoring advertiser. Bloggers are in many ways no different from consumer endorsers appearing in a TV commercial or magazine ad. Thus, if a blogger is being paid by an advertiser to endorse its product, or a celebrity plugging a product on a talk show actually is receiving a fee for it, and ordinary consumers reasonably believe they’re acting on their own, then well-established principles of truth in advertising justify the FTC to require a disclosure of the financial incentive. That said, the FTC has a responsibility to enforce these principles in a practical and balanced way against bloggers and other product promoters operating in new media, whether it be to ensure disclosure of a financial tie, substantiation of a product claim, or something else. It should focus its resources only on the most serious cases and not place unrealistic or unfair demands on targeted bloggers in settlement negotiations. Bloggers and the new media in general are playing a vital and positive new role in our society and economy, and should not suffer from the types of FTC overregulation and abuse I unfortunately am seeing in other areas.
Actually Mia M. is only partially correct. Pace isn’t the first to make the mistake. His source obviously misattributed the quote to Jefferson.
The first part of the quote was actually from a Ford speech, not a Goldwater speech, the second half is Jefferson, just garbled.
Here is what Monticello.org has to say about it:
The following statement, or variations thereof, is often attributed to Thomas Jefferson:
"A government big enough to supply you with everything you need, is a government big enough to take away everything that you have…."
We have never found such a statement in Jefferson’s writings. As far as we know, this statement actually originates with Gerald R. Ford, who said, "A government big enough to give you everything you want is a government big enough to take from you everything you have," in an address to a joint session of Congress on August 12, 1974.[1]
This quotation is sometimes followed by, "The course of history shows that as a government grows, liberty decreases," which is most likely a misquotation of Jefferson’s comment, "The natural progress of things is for liberty to yield, and government to gain ground."
So it seems we should all get the facts straight before we publish something, Mia M. included.
As an advertiser and Business owner for 14 years, I am quite concerned about not only the FTC but the aggressiveness in selective prosecution and the cross of government and big business.
First,
As many of us know we have had a huge blow up in the online space with every network, publisher and employee who worked for one of the above or advertiser, has gone out and screwed the whole industry.
They have lacked the knowledge or being a product company with selling and providing services and just in it for the greed and short, but big money.
In the mean time they have not had good terms, or clear and conspicuous terms and have used Oprah and false endorsements to get conversions higher while offering a bounty that has now made it impossible to do business.
Second, we now have the aftermath, we have AG actions, FTC, Oprah suits, and Now MasterCard/Visa Coming after everyone and anyone even the guys who have been around for years doing it right without having an action or problem against them.
Sure it will clean up some of the space but what NOW?? where do we go? I have heard people talking about selling the craziest things to make free trials work, when we should be balancing out the market, with CPA decrease, regulation on Blogs is ok, and most of All, Networks not running these clowns who have emerged in the last year and a half.
Although now the damage is done and we have quite a mess to clean up. We have a bigger problem to fight and this is our FTC and Visa/MasterCard.
We now have government and a big Unregulated business that handles 50% of all commerce in the US is in control of our Livelihood and possibly the US commerce and economy in there grips.
Here are a few thoughts
Do you realize that with the recent shut down of over 400 merchants that generated over a 300 million in revenue per month and employed 10s of thousands of Americans has just been controlled by a joint effort of the FTC and VISA/MasterCard. Jobs are lost, less taxes are paid, and the economy suffers.
I agree there may be some bad guys out there, but not all of us are bad. In fact why is it that free credit report.com and blockbuster, experian, netflix, and countless other name brand or what they consider house brands, are allowed to continue to offer free plus shipping offers, and in fact some of them are over the 1% but are allowed to continue to process?? Why is this?
Why is it that MasterCard has this power? Was there an under the table deal because they have been scrutinized for Antitrust? was it to Protect there so called Bullshit brand???
While MasterCard and Visa shut off merchants, they use things called fines to justify the theft of tens of millions of dollars in merchants reserves. they call Continuity deceptive, but wait, Taking the tens of millions in reserves that isn’t theft?? they call it protecting there brand, but its the billions made from merchants pockets that allow them to screw us without regulation on how much they charge.
Customers??? Now this is a special. Where the hell is the customers responsibility? Where is the protection for merchants? Why is it that charge-backs are easy as the google offers you see 1. Fast 2. Easy 3. Fun.!!!! Serious you can buy what ever you want now online, and charge it back with no repercussions, and the merchant looses 99% of the time…..
Bottom line is this.
Merchants need to fight back.
Free speech does need to be protected
Right to free trade and commerce needs to be protected (obviously compliantly)
MasterCard and Visa need to be fined and sued by business and government
Affiliates need to come down on the price, or media buys
Bad and non compliant offers not to be run.
accountability for customers is a must
FTC needs to have a final rule, and not be ambiguous
Big brand names need to be treated no differently than small business or non household brands.
Government and Big Business like MasterCard, should not be in business with each other. Especially when this entity has had multiple antitrust questionnaires…
at the end of the day the good guys do prevail, but we have to start fighting back, we have to ask the questions. Send emails to MasterCard, ask them questions, Ask the FTC about the relationship with MasterCard, Ask why is it that big business like Experian, or cable companies or Google, and others have free offers but are allowed??
Rules are ok as long as its fair commerce!
We have to ask and fight back….
Interesting that no one has posted more information or comments. Joe P. You made a comment about mis-quotes, which is like Tyson says ludicrous! Did you vote for Obama?
Wonderful post… Very informational and educational as usual!
Acai Berry Pure
I do not even know how I ended up here, but I thought this post was good. I don’t know who you are but certainly you are going to a famous blogger if you are not already
Cheers!