1. Why did the FTC introduce new guidelines in 2009?
2. What was the nature of the complaint against Reverb Communications?
3. Considering Reverb’s position in its widely distributed statement in response to the settlement of the complaint, was there an ethical transgression here?
4. Given that there was no admission of guilt or financial penalty applied, do you think this settlement will prompt companies such as Reverb to be more ethical in their postings in the future? Why or why not?
In October 2009, the Federal Trade Commission (FTC) announced its new“Guide Concerning the Use of Endorsements and Testimonials in Advertising,” marking its first regulatory update since 1980. Concerned about the new trend of “official” blogs and social media sites that companies weresetting up to create buzz around their products, the FTC now required allbloggers to disclose any financial relationship with the company whoseproducts they were reviewing or face fines as high as $11,000.Critics, while applauding the intent to ensure planted reviews were beingcontrolled, found the guidelines to be confusing for consumer and personalWeb sites where advertising content and editorial content overlap. Forexample, if a blogger uses Google Adwords as a revenue source on his orher blog, the selection of advertisers is automated by Google’s keyword“bots,” and the blogger has no control over whether or not readers’ chooseto click on the ad (generating pay-per click revenue for both the blogger and Google). Should the blogger beobligated to disclose that he or she may be receiving revenue from an advertiser? The guidelines are vague onthat issue, leaving advertisers and bloggers alike to wait for legal precedents to establish guidance on how theguidelines will be enforced by the FTC.