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FTC Gives HP a Pass for Endorsement Guideline Violations

Earlier this month, Hewlett-Packard and its public relations company received a pass from the Federal Trade Commission for allegedly providing bloggers with $50 gift certificates for themselves and $50 gift cards for their readers in exchange for positive reviews regarding the company’s “Inkology” product.

The Guides Concerning the Use of Endorsements and Testimonials in Advertising are applicable to promotions and advertising, including social media, in which consumers or celebrities are given inducements to provide endorsements of products and services.

Specifically, the Guides require disclosure of a material connection between an advertiser and an endorser when such a relationship is not otherwise apparent from the context of the communication that contains the endorsement.  This includes bloggers, who are required to disclose whether they receive gifts from a company or have any other material connection.

The FTC was concerned whether the bloggers disclosed that they received the gifts to keep for themselves I exchange for blog content.  However, according to the FTC, the Commission decided to close the investigation and not to undertake an enforcement action, based in large part, upon the belief that a relatively small number of bloggers posted content after receiving the gifts and some of those bloggers actually did adequately disclose their material connections.

The investigation was also closed because both Hewlett-Packard and its public relations company revised their social media polices to address the Commission’s concerns and have committed to take reasonable steps to monitor bloggers’ compliance with the obligation to disclose gifts they receive.

The HP regulatory investigation is strikingly similar to the abandoned Ann Taylor investigation of 2010.  The Ann Taylor investigation was the first involving blog disclosures.  It involved invitations to bloggers to attend a runway show and preview the retailer’s summer 2010 collection.  In exchange for posting coverage, the bloggers were offered “special gifts.”

Similarly, the Commission decided not to take action against Ann Taylor because only a small number of bloggers posted content about the preview, several of those disclosed the gifts and the retailer adopted a written policy regarding its interaction with bloggers shortly thereafter.

Despite the abandonment of these two regulatory investigations the Guides have teeth.  Advertisers must educate and monitor bloggers, and are well advised to consult with an Internet advertising and regulatory attorney in order to assess compliance and best practice considerations.

It certainly appears that the Commission is attempting to set an appropriate standard and highlight the importance of compliant social media policies.

Information conveyed in this article is provided for informational purposes only and does not constitute, nor should it be relied upon as legal advice.  This information is not intended to substitute for obtaining legal advice from an attorney.  No person should act or rely on any information in this article without seeking the advice of an attorney.

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Richard B. Newman

Richard B. Newman is an Internet Lawyer at Hinch Newman LLP focusing on advertising law, Internet marketing compliance, regulatory defense and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

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