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Legal Issues of Compensating Reviewers

April 14, 2010

I recently discovered I may need a new car.  Because of this, I started searching around for small, relatively inexpensive cars.  The Ford Fiesta caught my eye, so I looked around the web for reviews.  There were tons.

The first review I found was mostly positive.  What was striking, though, had nothing to do with the car.  The reviewer was a participant in the Fiesta Movement.  Apparently, Ford allowed a bunch of bloggers to use their cars for six or seven months so they could help build hype before the Fiesta’s summer release.

So, I wondered, how often do companies do this?  They do it all the time.  Sometimes, companies even outright pay for reviews.

A little research revealed this article, giving tips to companies for how to best utilize bloggers as advertisers.  The article also talks about paying for blog posts to boost search engine results.  It even goes on to advocate that advertisers encourage bloggers to hide the fact that they have been compensated.

My advice to advertisers: DO NOT hide the ball from consumers.  The Federal Trade Commission is leery of all things new media, and has specifically addressed this issue. The law is complicated, and often turns on whether the blog has “endorsed” the product (though the definition of endorse is a little ambiguous).  The bottom line is this: “Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers.” [See this guide if you are really into the law]. 

A clear statement, such as I have been compensated or given a product free of charge (which I found on this “amateur” reviewer’s blog), can probably absolve most liability.  Acknowledging the receipt of compensation is a good idea, though I would like to see more. 

A good tool for bloggers who do this kind of work is cmp.ly.  [Full disclosure: I have NOT been compensated in any way to endorse this service, http://cmp.ly/0].  Cmp.ly reminds me a lot of Creative Commons.  It boils down the complexities of disclosure into simple categories.  Bloggers can simply include a cmp.ly disclosure rather than listing out what they received from a review sponsor.  Cmp.ly is neat because the shortlinks allow you to post them even in a tweet.

The whole thing is ethically questionable, but unavoidable, I suppose.  Just be honest.

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