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Social Media Makes It Easy To Blog Or Tweet Your Way Into FTC Fines

Written by Mark Rasch
January 31st, 2013

Attorney Mark D. Rasch is the former head of the U.S. Justice Department’s computer crime unit and today serves as Director of Cybersecurity and Privacy Consulting at CSC in Virginia.

Restaurant reservations Web site Open Table just paid $10 million to purchase the app developer Foodspotting, which enables people to take pictures of, well, food. The idea behind the synergy is that consumers looking to make reservations can not only read the menu but actually see the food presentation “in the real world” by looking at pictures taken by bona fide customers. This continues a trend of technology empowering consumers. It’s also a way for restaurants and other retailers to get themselves into real legal trouble if they’re not very careful about how they identify their use of this type of social technology.

Now, I don’t personally get this trend of taking pictures of food. Even with great presentation, food is intended to be eaten. But I may be in the minority. The Foodspotting app apparently has over three million subscribers, and part of their value lies in the fact that other subscribers trust the authenticity of the pictures posted to the site.

This is just one technology that empowers consumersWasserrutsche Sea Theme. Treated badly by an airline? Go to Twitter and post your experience. Unsatisfied with a consumer appliance? Put it on your blog. Want to compare prices? Scan the product or barcode and use any of the dozens of price-comparison apps to find the best price.

Retailers are reacting to these trends in many ways. Some are monitoring social media for comments (good and bad) and responding to criticism and/or republishing good reviews. With the food picture trend (which has been dubbed “food porn”), some restaurants are prohibiting their patrons from taking pictures of their food.

But one possible response that retailers need to avoid is posting their own pictures, reviews or “stars” without disclosing the source—or paying others to do so. That can get them into trouble not only with consumers but with the Federal Trade Commission and other regulators.

Back in October 2009, the FTC, as part of its mandate to regulate “unfair or deceptive trade practices,” for the first time took on the issue of paid or endorsed bloggers. The regulation required bloggers who were employed, or otherwise compensated, by the company or industry promoting or endorsing a product or service to disclose the nature of that compensation. Moreover, the postings or comments of the compensated consumer then fall under the FTC’s rubric of “deceptive trade practices.”

Thus, while an unaffiliated and uncompensated blogger or twitterer might post, “I lost 50 lbs. with Nutrisystem,” whether it is true or not, if a paid blogger made the same post, not only would it actually have to be true but, in context, the company (or its advertising company) would have to discuss whether such results are typical. The regulation discusses the amount of “compensation” necessary to make someone a “paid blogger,” including whether simple discounts or free products to demo are sufficient.

But that is so 2009.


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