Today, randfish over at SEOmoz explored the topic of the legality of social media marketing under the somewhat curious and seemingly arbitrary regulations defined by the Federal Trade Commission (FTC). The article is written from an American SEO marketer’s perspective, obviously, but the implications and applications of the law can be followed into conversational marketing as well as the PR business as a whole.
Recently, SEOmoz’s own Sarah Bird was interviewed by Eric Enge on a wide variety of contract and legal topics. As I was proudly browsing through the piece, I was especially curious about what Sarah had to say around marketing on social media networks
(the FTC) made clear that online advertisers are covered by rules about so called stealth marketing. This basically means that if it’s not obvious that the advertiser is being paid to do this advertisement, there needs to be a disclaimer saying he or she is in fact being financially compensated.
Like Tiger Woods advertising golf balls, we all know he is being paid to do that, so they don’t have to put a little disclaimer up there saying "Tiger Woods received money to do this." However, there are more subtle things, like if you are going through a chat room and you leave a comment on a blog about a product and link to it, it is not necessarily obvious that you have a financial association from the merchant that would require disclosure
As we’ve discussed here on the blog, social media is blurring the lines between social media consultant, public relations, and advertising. That’s why it’s frightening to see analysis of SEC rules like this:
So if your company pays you to do social media marketing, and you’re posting about the product or linking to the product, then you should also be disclosing your relationship. If you’re just blogging and friending people, and it’s not in the context of talking about a product, then you probably don’t have to disclose. Disclosure is really only relevant when you’re actually pushing a product.
That means if you’re in PR, or you’re a community manager, under these FTC rules, any time you’re working to promote a brand or engage a community, and you’re collecting a check for it, you’d better say something to that effect, or you’re in trouble.
This immediately brings to mind the debacle that we went through last year when John Culberson was under fire for Twittering and using live-streaming utilities like Qik and YouTube in Congress.
Last summer, Representative John Culberson received a rebuke from Representative Michael Capuano for not including disclosures on his Tweets denoting that they weren’t officially sanctioned by the government. Instead of pushing for a relaxing or elimination of unnecessarily restrictive rules, they made more regulations that required that YouTube remove advertising from political speech designated “official communication.”
Just as then, now the FTC is choosing to interpret their guiding principles and dated rules in the most untenable way possible, essentially outlawing the usage of micro-blogging utilities for individuals who are paid to talk about companies for a living.