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The Federal Trade Commission today announced the penalty for bloggers, celebrities and lay people who fail to disclose receiving payment for endorsements. Starting December 1, anyone who endorses a product, virtually anywhere, without disclosing brand relationships will receive a fine for $11,000.
This is the first time the FTC has updated its guidelines since 1980. Clearly some updating was neccessary. But enforcement is another story.
$11,000 is a steep price to pay for endorsement violations. And the fees will likely come out of brands' pockets.
In the online battle for privacy rights versus advertising, privacy advocates today drew a line in the sand with requests that Congress draft legislation limiting the practice of behavioral targeting.
A group of 10 consumer privacy groups is urging Congress to draft a new bill for online privacy this fall. And while it is unlikely that all of the group's requests will go into effect, it is yet another sign that the future of behavioral targeting does not look bright.
While it may seem strange for the federal government to start tracking users online as it ramps up its investigation into private companies usage of behavioral targeting, it is important that the two issues be kept separate.
The administration is not asking for special priviledges but simply bringing its websites in line with common online practices. And that is a good thing.
The Federal Trade Commision has been breathing down the neck of online advertisers for months now. But under David C. Vladeck, the new head of the Bureau of Consumer Protection, it looks like the investigation into behavioral targeting tactics online may take a more emotional shift.
Congress has been mulling an opt-in bill that would require all advertisers online to ask consumers every time they try to use their data. But now Vladeck seems to be proposing a new measure for proper advertising online which is something of a dignity index.
Social media can be a great tool but there's an ugly side. Because of the nature of social media, its commercialization has raised a number of issues around subjects like disclosure and integrity.
The reality is that paying to play is an easy and effective way for brands to get into the social media game. The downsides of this were demonstrated quite well at this year's BlogHer conference.
Online advertisers are hoping to head off federal regulation of behavioral targeting with new measures that protect users' privacy and inform them of when and where they are being tracked online.
A new bill being crafted in Congress is rumored to include a regulation that would force advertisers to use opt-in provisions when tracking users online.
But web advertisers are trying to come up with measures that would adequately inform consumers of their tracking policies to avoid a blanket provision that could severely handicap the business of collecting user information and selling it to advertisers.
Journalists have long been held accountable to readers about what companies they receive money from and invest in. But bloggers have had more leeway in exchanging free products and services for coverage. But the Federal Trade Commission would like to change that, with new rules that would require bloggers to disclose any conflicts of interest in their online coverage.
According to the Associated Press:
"New guidelines, expected to be approved late this summer with possible modifications, would clarify that the agency can go after bloggers--as well as the companies that compensate them--for any false claims or failure to disclose conflicts of interest. It would be the first time the FTC tries to patrol systematically what bloggers say and do online. The common practice of posting a graphical ad or a link to an online retailer — and getting commissions for any sales from it — would be enough to trigger oversight."
As blogging becomes more institutionalized, the matter of where money goes online becomes more important. However, with the new guidelines unfinalized, it remains unclear on how effective — or ruthless — they will be.
Tom Cohn is an online advertising legal eagle. During a 17 year stint with the FTC, he was regional director for the Northeast region in the marketing practices division. He's also worked as a legal advisor to the director of the Bureau of Consumer Protection.
Currently, Cohn is with Venable LLP's New York office, where along with legally representing clients, he also advises them on legal and practical aspects of FTC and industry regulatory compliance. His clients include some of the major players in digital advertising as well as industry trade organizations including the IAB, AAAA, AAF, and the DMA.
We caught up with Tom to ask what he sees as the burning legal issues in online advertising today. Number one on his list? The still-in-progress FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising.
Web proxy servers are not new. These servers, which serve as 'middlemen' for accessing the web, are often used by corporations to accelerate web browsing through caching and to filter traffic. They're also used by individuals looking for a bit of anonymity online.
I often use one since I live in a country that is sometimes blocked from using popular services that are based in the US.
It's either one more swipe at the 800-pound gorilla, or it's a serious problem brewing for Google. Today a Washington-based advocacy group filed a complaint asking the FTC to review Google's security standards for its cloud computing services. Among those services: Gmail, Docs, and Picasa.
The source of the complaint, and its target, are definitely serious matters. The Electronic Privacy Information Center (EPIC) wants the trade commission to investigate "the adequacy of the privacy and security safeguards" of Gmail, Calendar, Docs, and Picasa. Earlier this month Google had to report a breach of its Docs application, which is one of the reasons EPIC filed with the FTC, it's petition states. Docs has 4.4 million users; Gmail has 26 million.
They're calling it "interest-based targeting" rather than behavioral, but Google's finally allowing advertisers to target users based on what they've been surfing on the Web. With a twist. The company is handing over both tools and power to consumers who can find out why they're being served the ads they see, and also opt-out of the targeting by segment (if not entirely).
The program's still in beta (and beta at Google can last a long, long time). But once publishers get on board, consumers will have the option of viewing the categories they've been placed in: expectant mother, say, or travel. While they have the option of opting out of the program entirely, they can also opt out on a bucket-by-bucket basis, which may provide incentive for them to stick with the overall program.
Reading the blogosphere today it would be reasonable to think that Barack Obama has nominated Satan to lead the Federal Trade Commission. His name is actually Jon Leibowitz and all the talk about a "day of reckoning" for the online ad business will not be at the top of his agenda.
Leibowitz is a known anti-piracy advocate (good) and an aggressive proponent of regulating online advertising (maybe not so good). He made a speech on Feb. 12 while he was deeply into his job as one of the FTC commissioners and investigating behavioral targeting. In that speech he used the phrase "day of reckoning" about online ad regulation and although it certainly has a promise of biblical wrath, he will not smite this business.