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The FTC’s Endorsement and Testimonial Guidelines: “Unconstitutional” says Harvard Law Review

Posted: July 14th, 2010 | 1 Comment »

Unconstitutional. It’s such a cool word.  As an American, it evokes the most powerful feeling of wrong.  It doesn’t matter what it is, if it’s unconstitutional, you know it’s wrong.

Guess what the Harvard Law Review called unconstitutional.  The FTC’s Endorsement and Testimonial Guides covering consumer generated media.  The one that told bloggers that you had to disclose certain  things if you wanted to write about it.  The one that made you feel like some kind of slimy lowlife for being influential enough to be asked to test free products.  The one that said newspapers didn’t have to disclose anything at all.

There are many parts of the Guidelines and the FTC’s actions that troubled me.  First off, the thought that any group of people could smartly legislate something so nascent and developing like social media seemed like a non-starter.  The brightest minds in the country don’t know where social media will take us…where is the value that will be pursued? what are the metrics that will be measured?  what is the activity that will be developed?  Sure, if there is obvious social malfeasance going on that is not readily fixing itself, then the government can say they are compelled to take an interest no matter what stage an industry is in.  Especially if you’re just extending rules you have in place for, say, legacy media.  But I really had to ask myself whether the need to identify those bloggers who partied with Ann Taylor required the government to set new rules for emerging media that differ than those for legacy media?  And while I’d love to hear the FTC opinion because I’m sure they’ve studied it carefully, I think issuing Guides as opposed to encouraging discussion was irresponsibly, innovation-chillingly early.

The second point of trouble for me was the apparent limiting of free speech that I thought the guidelines promoted.  Having helped develop one of the only open social platforms for consumer product discussion, I am especially sensitive to anyone telling me what my members can say, how they can say it, and pretty much any interference at all.   Being brave enough to let total strangers benefit from your experiences is just one of the overwhelmingly powerful advances of the new social web.   Therefore, what bothers me is the encroachment on my community’s free speech on a platform specifically built to let them speak in a safe, relevant and helpful environment.  I work on it every day, and have for years.  We are constantly debating what the exact right mix of moderation, disclosure, community mores, and content guidelines is best to make our our library of experiences valuable and helpful to other consumers.  The market, our clients, the community, and the users of our content are still helping us determine what is helpful, what is irrelevant, what is valuable.  If I had known the FTC had all the answers, it would have saved me a lot of entrepreneurial time.

Before stepping in and potentially chilling innovation or free speech, the government should always ensure that 1) there is a compelling state interest and 2) the limitations on speech they put in place are as tightly defined as possible.  I don’t think either has been addressed in these Guides.

At the risk of being Googled by the FTC, and because I’m not a lawyer so I didn’t really have a cogent POV, I didn’t write much about it.  See my very ‘factual’ blog post here.  So, I was happy to read that while the Harvard Law Review wasn’t as morally outraged as I was, they were as legally peeved.  I first found the HLR article through some bloggers, and even loved that the HLR cited a blog in their article.  All this analysis (some more emotional than others) gave me the backbone to write about it now.

The Headline:  Unconstitutional

Within the first paragraph, the HLR stated “the Guides should be ruled as unconstitutional as applied to unpaid bloggers.”

The reaction in the blogosphere to the FTC’s announcement of the rules was unsurprisingly negative.  Bloggers expressed particular concern that the rules were overbroad, exceedingly vague, and expressly did not apply to legacy media.  Bloggers are right to be upset; the Guides violate the First Amendment. The Guides treat blogger endorsements as advertisements and attempt to regulate them as such. Unlike other speech, advertising is considered commercial speech and thus receives reduced First Amendment protection. However, under current Supreme Court doctrine, unpaid blogger endorsements should be classified and be given the same protection as noncommercial speech, just like product reviews found in traditional sources. Courts should therefore apply strict scrutiny to the Guides and hold them unconstitutional as applied to unpaid bloggers. The burden the Guides impose, as well as the unfairness of holding bloggers to a higher standard than legacy media, supports this result. (HLR)


There is a high bar to defining speech as commercial speech

The big revelation in the HLR article that is never addressed in the FTC Guidelines, but I think should be, is why they have determined blogger writings are “commercial speech”, and therefore subject to FTC legislation.  Non-commercial speech, as you can imagine, is well protected by the First Amendment.  So when does speech that you say, write or video cross the chasm from non-commercial to and turn into commercial speech?  There’s actually a test that has been developed through the courts.  It’s called the Bolger test, and it is very tightly defined since the threat to infringing on non-commercial speech is very serious business to the law.  There are three pieces of the Bolger Test, and if all three are positive, then there is ‘strong support’ that the speech is commercial:

  1. The speech refers to a specific product
  2. The speech is conceded to be some sort of advertising
  3. The speaker “has an economic motivation”

The last one…the speaker’s economic motivation needs to be “where the speaker’s main goal is either to sell his own products or to get paid by the product’s manufacturer.” (HLR)  Clear cut cases of commercial speech include where the blogger was employed by the manufacturer to blog about their products in a positive light.  A direct economic relationship seems to be nothing short of: “I pay you directly in exchange for stating these positive things about my product.”  Anything short of that should fail the Bolger test and be seen as noncommercial speech.  Free product that is not directly tied to your  agreement to write a positive review in return is not a black and white case to be legislated.  The HLR states, “Even where a blogger’s positive endorsement might yield a benefit in the form of free products in the future, the blogger’s speech is not fundamentally premised on a direct economic relationship between the company and the promoter.”

Assuming the FTC considered the Bolger test in order to decide it had the right to legislate your language, it seems to be concluding that the economic benefit of receiving free products in many cases is the main reason you wrote favorably about the product. It overrides the possibility (probability?) that sharing your expertise and experience with others was actually the main reason you wrote about the product, and getting the product for free was the way you could accomplish that.  The possibility (probability?) that you thought you had some kind of expertise that would be worth sharing with others regarding the evaluation of the product, as opposed to the need to get someone to send you a freebie.  No, by broadly sweeping free products within their authority, the FTC is stating that the main reason you wrote positively about that product was simply because you wanted to get that free product, or more of it.  It’s a demeaning and dangerous overreaching.

Why should the FTC’s disclosures bother me as a blogger?

Make no mistake that by requiring disclosure, the FTC is saying that your opinion is commercial and you wrote your content in order to receive a freebie.  Your content is seen by the FTC as no less biased than if you were sent a paycheck by a manufacturer and your staff title was “Positive Blog Poster About Our Products”.  By requiring you disclose your bias, the government is saying that your speech is equivalent to an advertisement, and not free speech.  The government believes they need to protect people from your point of view, and seek to diminish the impact of your opinion with a disclosure.

A blogger who does not wish to disclose receipt of free products may seem an unsympathetic case, but there are nonetheless important free speech principles at stake. The Guides require disclosure of the mere fact that the product was provided for free, whether or not an endorsement was written in exchange for free products. This required disclosure directly interferes with the content of the speaker’s expressive message. Disclaimers have an “inherently pejorative connotation” that reduces the effectiveness of the message, even if the speaker is acting in good faith. In addition, restricting a blogger’s receipt of free products makes it more difficult for the blogger to write any product reviews at all. Thus, in the name of protecting consumers, the Guides would deprive consumers of information.  (HLR)

The HLR then even showed a better guideline that the FTC should have employed if it were going to opine about disclosure in order to not be found unconstitutional.  The HLR suggested that FTC should have narrowed its recommendation that any actual quid pro quo between the endorser and the advertiser be disclosed (i.e., “If you do this, I will do this.”), or if there was actual intent to deceive the public.  The HLR is saying, yes, the FTC might have been okay if they ruled that employees of manufacturers with the job “Positive Blog Poster About Our Products” should disclose that.  But by lumping in all recipients of free product and not utilizing the tests for commercial speech clearly defined in court precedence, the FTC’s Guides were overbroadly infringing upon a basic right of free speech.

Favoring one type of media over another:  A warning sign that you’re doing something wrong

The HLR took specific attack on the FTC for segregating speech in legacy media (ie newspapers) as being exempt from the bias that they put onto bloggers.

The FTC asserts that knowing whether a blogger received a product in exchange for consideration “might affect the weight consumers give to his review,” whereas knowing whether a newspaper paid for an item would not. But this distinction is unfounded. The material relationship between an endorser and a manufacturer includes not only the value of the free product, but also any other transactions in which they engage, like the purchase of advertising space in a newspaper. Paid advertising is a far more serious conflict of interest, both because its value is likely to be far more than the value of a free product, and because legacy media, unlike blogs, depend on it for their very survival.  (HLR)

After centuries of scrutiny, imagine how high the bar needs to be for the Government to be able to interfere with the speech contained in the newspaper you read.  The FTC has given our individual speech, now recently given greater exposure through the advancements in the web, less consideration.  The HLR summarizes better than I could:

The Court has already ruled that the government may not legally prescribe editorial standards for newspapers; to do so would violate the First Amendment by interfering with newspapers’ “exercise of editorial control and judgment.” Yet the principle underlying the Guides is that the FTC may distinguish between blogs and newspapers based on its perceptions of “editorial responsibility.” Even if bloggers are, on average, less “editorially responsible” than print media, allowing the government to favor certain media forms would allow it to manipulate the “marketplace of ideas” just as direct interference with editorial content would. Worse, favoritism may encourage favored media to moderate their criticism of the government. As consumer-generated media gain an increasingly important role in our society, they should receive the same robust speech protections enjoyed by legacy media.  (HLR)

Obviously, there is more to come on this subject, and more shoes to drop other than a few blog posts.  I look for challenges to whether or not the Guides were necessary to achieve a compelling state interest, and to watch the FTC try to demonstrate that the legislation is narrowly tailored to achieve the intended result. Short of this, the policy should be radically reigned in.


  • FTC overstepped their authority by stepping on the Constitution’s right to free speech
  • The FTC needs to narrow WAY BACK to the strict definition of commercial speech: where you agreed to write something specifically positive in return for direct compensation.  Samples for trial is not direct compensation.  It’s…for….trial.
  • This post is the essence of TL;DR.  But man, the SEO value!

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One Comment on “The FTC’s Endorsement and Testimonial Guidelines: “Unconstitutional” says Harvard Law Review”

  1. 1 Tweets that mention GirlFounder » Blog Archive » The FTC’s Endorsement and Testimonial Guidelines: “Unconstitutional” says Harvard Law Review -- Topsy.com said at 11:14 am on July 15th, 2010:

    […] This post was mentioned on Twitter by Adam Barrera, Daphne Kwon. Daphne Kwon said: "Unconstitutional." I finally spewed about FTC Guides for Endorsements on bloggers. Beware, I am not a good writer. #…http://bit.ly/dAx0EQ […]

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