What professional organizations say about the FTC disclosure rules

Should a blogger disclose “material connections” with a sponsor or advertiser? Of course. It’s one of those lessons we learned in kindergarten. Or should have.

For the most part, professional organizations line up behind practice that helps create trust and transparency. In the long run, it’s good business. But some have quibbles – or outright dismay – at the FTC’s rules.

While professional organizations generally support Federal Trade Commission rules, it’s important to note that most bloggers are not affiliated with these organizations. In the wild-west environment of today’s web, many will happily write a post in order to get free products, services or cash. The blogosphere is supported by a plurality of business models, including pay-per-play, and the barriers to entry are very low.

Here’s a look at how some major professional organizations have responded to the FTC disclosure rules:

Public Relations Society of America

PRSA’s Code of Ethics has a provision entitled “Disclosure of Information,” based upon the principle is that “open communication fosters informed decision making in a democratic society.” The intent is “to build trust with the public by revealing all information needed for responsible decision making.”

The code states that a member shall:

• Be honest and accurate in all communications.
• Act promptly to correct erroneous communications for which the member is responsible.
• Investigate the truthfulness and accuracy of information released on behalf of those represented.
• Reveal the sponsors for causes and interests represented.
• Disclose financial interest (such as stock ownership) in a client’s organization.
• Avoid deceptive practices.

Separately, PRSA has advocated for increased disclosure when there is an exchange between a PR practitioner and a journalist. Said Robert Frause, chair of the PRSA’s Board of Ethics and Professional Standards:

Readers, listeners, and viewers have the right to expect advance disclosure about anything that might compromise the integrity of the information they are getting. Journalists should be notified that any gift or in-kind service in exchange for placement should be clearly disclosed so the audience can make up its own mind about the information’s value, bias, accuracy and usefulness.

PRSA reiterated its stand on “Pay per Play” in Professional Standards Advisory PS-9, dated October 2008. While it precedes the FTC ruling, the document supports disclosure.

PRSA convened a panel on disclosure in social media at its 2009 International Conference, held just a month after the FTC’s ruling. Its online newsletter, PRSAY, offered a detailed summary of the FTC ruling on Oct. 9, 2009, placing it squarely inside the existing code of ethics, summarizing, “Essentially, the FTC applied longstanding principles to new media realities.”

International Association of Business Communicators

The IABC comprises membership largely working in public relations and corporate communications. Its code of ethics covers much of the same ground as that of PRSA. Specific to the FTC ruling is Article 10:

Professional communicators do not accept undisclosed gifts or payments for professional services from anyone other than a client or employer.

IABC’s magazine, Communication World, ran an article on the ruling in its Jan., 2010 issue (member-only paywall). Additionally, IABC hosts a blog by Laura P. Thomas, who has written several posts on the ruling as it applies to so-called “mommy blogs.”

Word of Mouth Marketing Association

The Word of Mouth Marketing Association, or WOMMA, has emerged as a leader of ethical behavior in the social space. The organization offers a detailed resource list on the FTC disclosure ruling as well as a code of ethics that includes specifics on disclosure.

The first four of eight standards of conduct reference some aspect of disclosure:

Standard 1 – Disclosure of identity:  A WOMMA member shall require their  representatives¹ to make meaningful disclosures of  their relationships or identities with consumers in relation to the marketing initiatives that could influence a consumer’s purchasing decisions.

Standard 2 – Disclosure of consideration or compensation received:  A WOMMA member shall require their representatives to disclose meaningfully and prominently all forms of consideration or compensation they received from the member, marketer or sponsor of the product or service.  In other words, WOMMA members shall not engage in marketing practices where the marketer/sponsor or its representative provides goods, services, or compensation to the consumer (or communicator) as consideration for recommendations, reviews, or endorsements, unless full, meaningful, and prominent disclosure is provided.

Standard 3 – Disclosure of relationship: A WOMMA member shall require their  representatives involved in a word of mouth initiative to disclose the material aspects of their commercial relationship with a marketer, including the specific type of any remuneration or consideration received.

Standard 4 – Compliance with FTC Guides: A WOMMA member shall comply with the Guides Concerning Use of Endorsements and Testimonials in Advertising promulgated by the Federal Trade Commission.  See 16 C.F.R. §§ 255.0–255.5.

WOMMA offers a comprehensive document (.pdf) with examples and best practices on how to disclose on blogs and in social media. It clearly describes good practice for disclosure in social media.

Interactive Advertising Bureau

One group that has taken issue with the FTC Disclosure Rules is the Interactive Advertising Bureau.

In an open letter to the FTC, President and CEO Randall Rothenberg acknowledges the FTC’s role in regulating communication:

All of us would agree that false and deceptive advertising should be stopped, and penalized when it slips through and is caught. We agree that paid testimonials and endorsements should be labeled. But in taking business ethics and attempting to give it the force of law, the Commission is stretching the definition of remuneration to ludicrous lengths.

But in a quote in an IAB press release he bristles at the notion that online media should be subject to these regulations while traditional media are not.

What concerns us the most in these revisions is that the Internet, the cheapest, most widely accessible communications medium ever invented, would have less freedom than other media. These revisions are punitive to the online world and unfairly distinguish between the same speech, based on the medium in which it is delivered. The practices have long been afforded strong First Amendment protections in traditional media outlets, but the Commission is saying that the same speech deserves fewer Constitutional protections online.

While the FTC denies that online publishers are second-class citizens in this regard, Rothenberg offers passages from the 81-page ruling that show otherwise. The FTC’s interpretive guide contains softer language than the full document. For example, in the guide, the FTC states that its main interest is the advertiser’s behavior, not the endorser’s.

From a practitioner perspective, it’s easy to support basic disclosure requirements. Rothenberg is taking a legal perspective to support long-term freedom for online publishers. To paraphrase Supreme Court Justice William O. Douglas, the FTC represents the nose of the camel inside the tent. Are the government’s ends benevolent or sordid?