Why the FTC's Guidelines Are a Case of Government Gone Wild

They're Vague, Set a Double Standard and Violate Free Speech

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Dan Gillmor
Dan Gillmor
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.

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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?

First, the new system is unworkable in practice, which is bad enough. Worse, the rules are worryingly vague and wide-ranging. Worse yet, they appear to give traditional print and broadcast journalists a pass while applying harsh regulations to bloggers (and others using conversational media of various kinds). Worst and most important, they are, in the end, an attack on markets and free speech, based on a 20th Century notion of media and advertising that simply doesn't map to the new era.

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The advertising of the past was a one-to-many system. Call it broadcasting. The internet is a many-to-many system. Call that conversation. They are not the same.

The FTC would deal with this essentially by throwing sand into the gears of online conversations. The rules are explained through examples -- which means that almost no one can be sure that what he or she is doing, at least at the margins, is allowed or forbidden.

Consider the basic un-workability when it comes to one of the newest forms of social media: micro-blogging. Does the FTC genuinely expect people to create disclosures in messages that, at most, contain 140 characters? What's left for the actual message?

How, moreover, does the commission plan to deal with search engine optimization (SEO) and search advertising? Will it be a violation to allow an ad that might end up rewarding the blogger even if the blogger didn't select the ad? Who knows?

And what about the extremely common practices of traditional media? Every news organization covering technology gets freebies by the container-load. Book reviewers' offices overflow with volumes sent by publishers. Subsidized or even complimentary travel, food and other things of this sort are common but too-rarely disclosed.

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Meanwhile, the FTC has ignored the gross conflicts of interest in other ways, namely the use of so-called expert sources, especially by cable TV news programs, which are in the pay of the people whose interests they're directly or indirectly touting.

Yes, the answer is transparency. But do I want the feds enforcing it, especially when their rules can be interpreted narrowly or widely, depending on the circumstance?

Again, let's be clear that the motives behind the FTC's rules seem to be well-intentioned. I also loathe the odious practice of using bloggers and other online conversationalists as commercial sock puppets in a sleazy online word-of-mouth operation. Let's also agree that disclosures are always better than hiding one's affiliation with a company.

We already have laws against fraud. Let's enforce those -- first against the serious fraudsters, who keep getting away with it -- before we even consider harsh regulations on speech.

We also have an obligation as consumers of information to be highly skeptical. Just as I assume that a well-known product shot in a movie is an advertisement, I assume the same by bloggers I don't know and trust when they mention products, unless they tell me otherwise.

One outcome of this FTC action is predictable: a slew of court cases. This is a full employment act for First Amendment lawyers, who have better things to do.

Dan Gillmor is director of the Knight Center for Digital Media Entrepreneurship at Arizona State University's Walter Cronkite School of Journalism and Mass Communication. He is also involved in several outside projects; on several media-related boards and advisory boards; and has a number of media investments.
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