Evan Schuman's StorefrontBacktalk

The same is true for false, deceptive or fraudulent postings. Consider a company that makes Uselace, a weight-loss pill that, well, does nothing. It can’t make health or diet claims about the pill, because it is effectively a placebo. If the company takes out an ad online or in print, on the radio or TV that says, “Uselace will make you lose weight,” or pays a spokesmodel to say, “I lost 50 pounds with Uselace,” the Federal Trade Commission would consider these actions a deceptive trade practice.

The FTC has taken the same position with respect to “paid” blogs or postings. If your spokesmodel, without disclosing the fact that she works for you and is being paid for the endorsement, blogs the same false claim about Uselace, bam! deceptive trade practice.

But what happens when you “incentivize” the public to post good things about Uselace and they post wildly inflated claims about the product. Are they then “paid” spokespeople? Are you liable for what they say? It may depend on the nature and extent of the incentives.

If you incentivize people to simply talk about the product, then you have to “reward” all the people who claim your product sucks and even those who file complaints with the FTC (as long as they post those complaints online!). If you only incentivize “good” comments, then those folks may be paid spokespeople.

Then there is defamation. First, of course, the user-generated content may end up being defamatory to the company itself. It may insult the company, its products, services, employees, staff, officers, directors, shareholders and their mothers. If, as a company, you “pay” consumers to post these things, you may in some sense “own” those postings. If you remove them (or seek to have them removed), you are exercising editorial discretion or control over the content of postings and, guess what, you may then be considered a “publisher” of the content that you allow to be maintained.

Section 230 of the Communications Decency Act notes that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” But by essentially “paying” for the creation of content, the retailer is not a “provider or user” of the service and may be held liable for the defamatory postings that it “paid” for. And you thought this would be easy.

The same problems exist with respect to privacy, clearing rights, etc. If a user generates a promotional ad on YouTube that markets your product (for which he or she gets reward points), did the people in the background consent to a use of their image to promote your product? Did they sign a model release? What if they are under age?

One of the goals of promoting user-generated content is to encourage creativity and the use of many new media. If you found out your 14-year-old daughter was being used (with or without her consent) in an online user-generated “ad” for condoms, you might have some concerns. If you found out the condom manufacturer actively incentivized the creation of that “ad,” you might run to a lawyer.