This morning I carried on a discussion with a Realtor friend of mine. I noticed his last blog post on my Google Reader and it caught my eye. Rather then just comment like I normally do on his blog, I wanted to carry the conversation to the next level. Yep, I actually picked up the phone and called him.
He had written-ed that the FTC had contacted him about a recent post. Apparently, someone didn't like the post and turned him in. He had done what most Realtors and social media experts probably do on a weekly basis, or should be doing. He wrote about his favorite vendor. In his case he wrote about his favorite inspector. He wrote a positive review about how his home inspector communicates to his clients, the incredible wealth of knowledge and how thorough he is in inspecting homes. Seems pretty innocent, right?
Well someone turned him into the FTC Police. Apparently there are laws that protect the news media, but not bloggers and social media experts. Break the laws and you could be subject to hefty fines. In my Realtor friends case he had written a very favorable review about his home inspector. During the course of an investigation, the FTC found out the truth.
The FTC found out that the home inspector actually contributed to the Realtors charity he was supporting back in 2008. They also found out that the Realtor received a “FREE RADON INSPECTION” certificate to give off as a raffle on his blog. And if that isn't bad enough, the FTC found out that the inspector gave the Realtor a 100% discount on the inspection of his personal home. Can you believe this?
The FTC told my Realtor friend that he is no longer protected by “FREE SPEECH” like the newspapers. He is now a compensated blogger or a paid endorser. What this means is that my Realtor friend needs to disclose that he compensated for his review. Yep, that is right, my Realtor friend is a “PAID CELEBRITY.”
Here is a sample from the FTC's 81 page guideline: For example, a blogger could receive merchandise from a marketer with a request to review it, but with no compensation paid other than the value of the product itself. In this situation, whether or not any positive statement the blogger posts would be deemed an “endorsement.” According to the FTC, by not disclosing, an compensated endorser is breaking the law and is subject to stiff penalties.
Why is the FTC going after people who write endorsements and reviews, whether its on a blog, Facebook Page, Twitter Page, Ning Page or some other social media site? Because endorsements work and there are people who get compensated for good reviews on crappy businesses. Too many consumers are getting defrauded. Although the laws are written more for MLM companies and fly by night companies, they can be loosely applied to good companies. I personally don't know any reputable Realtor who would knowingly put their stamp of approval on a bad company or service. That is a surefire way to be out of business really fast.
The FTC regulations apply to anyone who receives any kind of compensation for writing, good or bad, a review of a product, place, service or business. That means your social media status updates on Twitter, Facebook and Linkedin are affected. It is also extended to your blog post. If you don't receive compensation, you are protected under "FREE SPEECH". When you receive compensaton, you need to disclose. The penalties can be some hefty fines.
A couple weeks ago I received a “FREE MEAL” at a local restaurant and reviewed that restaurant on my Facebook page. The restaurant owner said 32 people mentioned that review to himself and staff over the following week. He even said that he noticed that his Saturday business has doubled.
Since endorsements are typically from celebrities, I guess I'm a Web Celebrity. I get products and services to review on my social media sites like KC Realty Talk, Facebook Page, Twitter Page and so forth. I guess this is a coming out party of sorts. I would love to review your product, service or business. I'll probably be attaching a 3,000 page disclosure at the end and as always I will state my opinion.
Blog post authored by: Chris Dowell of the Dowell Taggart Team