New FTC Rule for Bloggers Has Its Limits

Dear Mommy bloggers,

If you think the Federal Trade Commission’s new guidelines on product endorsements aren’t fair, you’re not alone.

Interactive Advertising Bureau CEO Randall Rothenberg has weighed in, arguing the rules would “shackle online media while exempting our offline cousins and competitors from equivalent constraint.” So you have at least one business association on your side.

An online debate over at BusinessInsider.com raises other questions: What is the definition of a blogger? Will the FTC’s measures silence small businesses more than big ones? Will lobbyists and lawyers find ways to circumvent the rules? So you’ve got libertarians and other free market advocates on your side.

A commenter who goes by the name “dean wermer” offered this objection: “sites that do not publish reliable reviews will generally lose their credibility with readers, and thus lose readership. It is by and large a self-policing area that does not need FTC involvement.”

He’s right about that. Consider “Consumer Reports.” One of the top magazines in the nation, it has millions of readers offline and online because it provides independent and impartial product reviews — without the government’s involvement. But don’t look to ConsumerReports.org for a sympathetic ear; it published this post, praising the FTC’s move.

What Is an Online Review?

Online reviews can take many forms, not just those found on blogs.

Just about every major e-commerce site, from Amazon.com to Walmart.com, gives consumers a place to rate and comment on products. Closer to home, consumers can comment and rate local businesses and services on sites such as Yelp and Citysearch. Over on YouTube, video channels focus on autos, gadgets, and more; consumers can comment or post their own video responses. Don’t overlook Facebook or Twitter.

Can anyone answer this: What’s an online product review and what’s not?

In my view, consumer commentary about products in any of these channels could be characterized as an online product review. Not one single entity will be able to police all that information, thus the FTC is assured of staying in business for a while.

Think of it this way: online reviews are so popular that several companies, such as Bazaarvoice, PowerReviews, and Zuberance, have sprung to build out tools that help e-commerce sites and other businesses manage these comments.

Not everyone agrees that these reviews come under the purview of the FTC.

Wrote Sam Decker, chief marketing officer at Bazaarvoice, on his company blog: “In our view, these guidelines don’t relate directly to the authentic consumer-generated content in the form of Bazaarvoice Ratings & Reviews.”

Still, Decker hedged his bets, offering this practical advice to businesses: “If an employee reviews a product, the review should be badged as such.” As an example, he pointed to Free People, a clothing boutique that encourages store associates to write reviews; these reviews are labeled “FP Employee.”

The FTC Cannot Regulate All Bad Business Practices, Can It?

Businesses that publish consumer product reviews have the ability to kill negative ones. Why is that not seen as a dangerous threat to the authenticity of consumer reviews?

At Bazaarvoice, that’s a serious offense. So serious, Decker said, Bazaarvoice has refused to do business with companies that insist on deleting unflattering reviews. “It impacts us as a company if brands we work with are not authentic and ethical,” he said in an interview.

But, a search for “negative review” on Twitter and Google suggests other businesses may not hold such high standards. Consumers suspect that some unflattering reviews are getting killed. And in a community that depends on trust, that’s not a good thing.

While I scanned status updates on Facebook last week, one friend’s comment jumped out: “Posted a negative review on Overstock yesterday and, surprise surprise, it is nowhere to be found today.”

Truth be told, the review was published, but several days had passed before it appeared. Why the delay? Stormy Simon, SVP of Overstock’s marketing and customer care, said it takes up to 72 business hours before a review is published. She promised that Overstock’s reply message to people who submit comments would be clearer in coming weeks. (Overstock is a Bazaarvoice customer.)

“It’s always good to be kept on our toes through social media,” she said.

With that kind of response, who needs the FTC? Facebook, Twitter, and my friends and followers will help me determine who’s a shill and who’s the real deal.

Meet Anna Maria at Search Engine Strategies, Chicago, Dec. 7-9, 2009. Note to FTC: ClickZ and Search Engine Strategies are both part of Incisive Media, where she’s an employee.