You May Be Covered By FTC "Paid Endorser" Rule

http://www.pcworld.com/businesscenter/article/173175/yes_even_you_may_be_covered_by_ftc_paid_endorser_rule.html

Yes, Even You May Be Covered By FTC "Paid Endorser" Rule
Tech Inciter
The tech world according to David Coursey
David Coursey Tuesday, October 06, 2009

New rules on paid endorsements may give readers a false sense that blogs are telling them the truth. While many bloggers will doubtless follow the Federal Trade Commission's requirements, there are too many blogs and too few enforcers.

Here's the problem: Some bloggers have been writing enthusiastic endorsements of products they were paid to write about, without ever mentioning the payments to their readers.

What seemed like personal endorsements on advice sites for parents, investors, dieters, and others, really amounted to paid commercials.

The FTC ruled that consumers have a right to know if the "opinions" they read are really bought and sold,

Now, such payments have to be disclosed or the blogger faces punishment ranging from a warning letter to an $11,000-per-incident fine.

You don't have to be a "professional" blogger to be covered by the new rules. If you get something for free and say something nice about it, the FTC wants you to mention the freebie to your readers. And that includes Facebook pages and other social media sites.

It will be interesting to see how such a disclosure can be worked into a 140-character Twitter post.

"The revised guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement," the FTC said in a news release.

"Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service."

The bigger hope is that companies who provide endorsement money to bloggers will require their recipients to obey the new rules and disclose. But, of course, blogs written and hosted outside the U.S. are beyond the FTC's reach.

Not sure what is and isn't legal under the new rules? Our Ian Paul wrote a piece that includes some examples and common-sense advice. And, yes, your social media pages are covered by the new rules.

In summary: Tell your readers the truth and let them make the decision about your credibility.

This is the first time in three decades that the FTC has looked at its rules covering paid endorsements, which will also impact celebrities, research firms, and others.

In the case of paid research, companies are now required to disclose their connection to reports they fund.

The new rules are effective December 1.

My take: This is a good rule that won't stop the unscrupulous but will help well-meaning (if crass) bloggers do the right thing by their readers. In my case, I will be more diligent about reporting when I am writing about software I've gotten as a free review copy, although I don't think the practice comes as a surprise to readers.

David Coursey tweets as @techinciter and can be contacted via his Web page.

Whole Foods CEO sorry for anonymous Web posts

http://www.reuters.com/article/businessNews/idUSN1725360820070717?feedType=RSS&rpc=23&sp=true

Whole Foods CEO sorry for anonymous Web posts
Tue Jul 17, 2007
By Nichola Groom

LOS ANGELES (Reuters) - The chief executive of Whole Foods Market Inc. (WFMI.O: Quote, Profile, Research) apologized to shareholders on Tuesday for anonymously posting comments about his company on the Internet as the organic and natural foods grocer said the U.S. Securities and Exchange Commission had launched a probe into the matter.

News of the SEC probe comes a week after court documents filed by the U.S. Federal Trade Commission revealed that Whole Foods Chief Executive John Mackey posted messages on a Yahoo! chat forum under an alias for years.

In the postings, Mackey talked up his company while predicting a bleak future for Wild Oats Markets Inc. (OATS.O: Quote, Profile, Research), the rival his firm is trying to acquire.

"I sincerely apologize to all Whole Foods Market stakeholders for my error in judgment in anonymously participating on online financial message boards," Mackey said in a statement on Tuesday. "I am very sorry and I ask our stakeholders to please forgive me."

Last week, Mackey had defended the postings, saying he "posted on Yahoo! under a pseudonym because I had fun doing it. Many people post on bulletin boards using pseudonyms."

Corporate governance expert Nell Minow of the Corporate Library said she did not expect him to remain CEO for long.

"The fact that somebody has twisted his arm into saying he's sorry just isn't enough," Minow said.

FTC LAWSUIT

The FTC cited Mackey's postings as part of its lawsuit aimed at blocking Whole Foods' planned $565 million acquisition of Wild Oats on the grounds the deal would hobble competition and increase prices for consumers.

SEC staff contacted Whole Foods late on Monday, the company said, adding that it was cooperating with the probe and would not make any further comments while the inquiry is pending.

The Austin, Texas company also said its board of directors formed a special committee to investigate the postings. Whole Foods hired Munger, Tolles & Olson LLP to advise it in its internal investigation.

Minow said the SEC would likely be looking at whether Mackey broke any disclosure rules in his postings and at whether his comments constituted an attempt to manipulate the share prices of Whole Foods and Wild Oats.

"When you are the CEO of a public company you no longer have the luxury of communicating in any way you like about what's going on at your company," she said.

The internal company probe would focus on Mackey's "monumental poor judgment," she said.

Whole Foods shares fell to $39.49 after closing at $39.97 on Nasdaq.

We Still Need Net Neutrality Legislation

http://www.freepress.net/news/24353

We Still Need Net Neutrality Legislation
From Information Week, July 4, 2007
By David DeJean

We haven’t heard much about net neutrality legislation lately. That could be because the current Congress might actually be able to pass it, and opponents like AT&T and Verizon are laying low, spreading lobbying money, and trying to wait out that shocking possibility. That makes the Federal Trade Commission’s anti-net neutrality announcement last week even more puzzling. Was it intended as a warning from the Bush administration to Congress to back off, or was it yet another shake of the money tree?

The news story about the FTC report notes that “the FTC sided with high-speed Internet providers such as AT&T and Verizon,” and trotted out once again hollow justifications like “such rules could stifle innovation” and “”This report recommends that policy makers proceed with caution in the evolving, dynamic industry of broadband Internet access, which generally is moving toward more — not less – competition,” which it probably didn’t even think up itself, but copied from industry propaganda.

The paradox is that these providers have been working very hard to stifle innovation and move toward less competition for years – take their well-funded resistance, at both national and state levels, to public WiFi and similar local initiatives, for example. U.S. Internet service providers deliver less service for higher prices than many other countries around the world. In April, when the House Energy and Commerce Subcommittee on Telecommunications and the Internet held hearings on broadband in this country versus others, the committee heard that the Organization for Economic Cooperation and Development (OECD) had just lowered the United States to the number 15 spot on the list.

Technological innovation in broadband access is a threat to corporate profits, and the FTC report comes down on the side not of the public interest but of the private interests.

As a government policy, this isn’t working. Communication Workers of America union puts it this way:

Our reliance on market forces, deregulation, and inadequate governmental programs has not served us well. We invest relatively less on communications; we are charged more for slower speeds; millions encounter a significant digital divide based on income and geography, and unionized jobs with good wages and benefits are being replaced by low-wage jobs with less training and higher turnover.

Of course, the CWA has a vested interest in this – the more broadband Internet access there is in the United States, the more jobs there will be for well-trained, well-paid members of their union. But that’s a better fit with the public interest than the FTC’s position, as far as I can tell.

The idea that net neutrality would somehow diminish competition is a strange one that I’ve never seen actually explained. It’s almost as strange as the FTC’s contention that we we live in a country where “the evolving, dynamic industry of broadband Internet access … generally is moving toward more — not less — competition,” in the words of FTC chairman Deborah Majoras.

Where exactly does she live? Not where Gigi Sohn and I live. Ms. Sohn is the president of Public Knowledge, a consumer advocacy group, and she said of the FCC report, “”Despite the fervent wishes of the FTC staff, there is not a competitive market for high-speed Internet services. New technologies, particularly wireless technologies, are not soon going to have the same robust qualities or market penetration as the duopoly cable and telephone-company services.” That’s the situation in my town, and in most towns across America where you can get high-speed broadband access at all.

Another quote from the Reuters piece I loved: “Proposals to impose new regulation actually threaten further advancements in broadband Internet connections. That hurts consumers by denying them new and better services,” said Verizon executive vice president Tom Tauke.

Verizon and AT&T and Comcast and other high-speed Internet service providers have seemed to be far more interested in innovating their revenues by cutting themselves into the content business than in innovating their technology. Net neutrality legislation would help drive innovation by clarifying the service provider’s business and focusing them on actually advancing broadband Internet connections, which this country sorely needs, as a way of building their bottom lines. That’s what the FTC and the FCC should be working on – how to get higher access speeds and truly innovative delivery technologies into the marketplace, not protecting their corporate masters from having to compete with them.