The Federal Trade Commission (FTC) finally dropped their big (but anticipated) bombshell yesterday related to blogger disclosure and paid endorsements. Essentially, bloggers or microbloggers (basically anyone writing anything online) must make a disclosure if they receive any monetary or material payment by a company about whose product they are writing.

Whether you’re familiar with this regulatory change or not, you should learn how it affects you as a brand, a blogger, a marketer or even just some poor schlub with two Twitter followers. In reality, unless you are a blogger getting paid by companies to write product reviews about their products, or a company doling out cash and freebies to bloggers, these regulations will probably not have a big impact on how you do business (see this blog post by Forrester’s Sean Corcoran).

The problem: Some bloggers and microbloggers were being paid by companies (or given free products) in order to write reviews of the products. They didn’t necessarily always disclose this, or return the merchandise after the review was written. The FTC thought these situations crossed the line into paid endorsement territory. Even though the exchange of fees or goods didn’t necessarily always guarantee a positive product review, it just looked bad a lot of the time.

The FTC’s solution: Bloggers who are paid for product reviews or endorsements now must disclose their relationship with the product or service or face a fine of up to $11,000.

Read the FTC announcement here.

The landmark decision reflects the how dramatically social media has changed the rules of the game and how the world is scrambling to keep up. Today, everyone is a product reviewer. Citizen bloggers share the microphone with reviewers at established publications. The FTC is worried that in this online Wild West, consumers won’t know who to trust (assuming we always did in the past) – that we won’t know the difference between an objective product review and one that has been bought and paid for.

Three things you need to do

While we can expect to encounter numerous gray areas as these guidelines are implemented and interpreted (and some push back by those who think the FTC took a heavy handed approach), there are some fundamental things you should do right away:

  1. Be overly transparent. While somewhat obvious, you should embrace transparency, rather than try to figure out ways around it. The rules state that anyone writing a product review must disclose their relationship with the company whose product they are reviewing, if there is such a relationship. Interpret this as broadly as possible. Make a disclosure even if it is your own product. Disclose if you are writing about your company’s product on your personal blog. As redundant as it may seem at times, disclosure is the new black. Wear it with pride. And doesn’t it feel a bit liberating? Disclosing that you received a product sample to review doesn’t make you look bad – most of the time it’s completely understandable.
  2. Encourage transparency. If you as a company are going to provide any sort of incentive (monetary or material – even just a product sample) to someone to facilitate a product review, notify the potential reviewer that you are aware they must disclose this relationship in their review, should they write one. Also be sure to make clear that they need to return the product after reviewing it.* This not only demonstrates that you are a stand-up company; it also protects your reputation if the reviewer does not make this disclosure. (*Note that if your product sample contains partial elements that are not returnable, this requires disclosure)
  3. Do an audit of all marketing programs. The new FTC guidelines are somewhat broad. Beyond online activities, they also cover the whole realm of celebrity endorsements and testimonials. Your organization must consider all areas they might impact. Update your social media policy (you have one, right?) and communicate it to all employees. If you are working with celebrities who plug your products on a blog or Twitter page, make sure they disclose that relationship going forward. You probably don’t need to stop what you’re doing; just be overly transparent about it.

You’re a good kid. Hopefully these tips help keep your nose clean. The new rules raise a lot of questions, and there will be a ton of discussion about them. We’ll keep you posted as things develop.