The final general session of the event dealt with the topic of Federal Trade Commission guidelines and what they mean to WOM. Leading the discussion were Paul Rand, President, Zocalo Group and Tony DiResta, Attorney, Reed Smith LLP.
The new FTC guidelines have the ability to tremendously impact WOMM programs. Tony provided some background on the new proposed rules.
The FTC is making changes to the guides related to testimonials and endorsements. There are a few key points:
1. Results may vary will be a thing of the past.
2. Bloggers can be held responsible, personally liable, for failing to disclose material information.
3. Advertisers and sellers can also be held liable for the actions of the bloggers.
Why?
- There is a new FTC Chair and is pro-cosumer and has voiced concerns with self-regulation.
- The current guide was developed 35 years ago and was last updated in 1980.
- Two FTC-commissioned studies had results that concerned the FTC about testimonials and endorsements.
What the new principles mean:
- Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or failing to disclose a material connection between themselves and their endorser.
- Endorsers may also be subject to laiablity for their statements.
- The communicator of the message must be transparent and honest.
- The FTC requires substantiation or an appropriate basis for claims being made.
How is WOMMA participating?
- WOMMA has asked the FTC to make clear who is subject liability.
- WOMMA has asked the FTC to make clear what a reasonable consumer is defined as.
- WOMMA asked the FTC to reconsider requiring bloggers to request substantiation before making recommendations.
- WOMMA asked the FTC to be more specific on the role of employer liability.
Paul then took the stage and talked about the relationship between WOMMA and the FTC and how the organization is working for the industry in this time of change.
Luckily, WOMMA is viewed as a leader by the FTC in the WOM and social media space. The past ethical guidelines that have been issued by WOMMA help set the standard to date.
But how do these guidelines evolve? WOMMA has a review process that is constantly updating the guidelines as new issues surface.
