Reverberations: The FTC Means Business (and What PR Firms Should Do)
In recent weeks, the FTC has demonstrated that it is not fooling around when it comes to blogging ethics. We strongly encourage public relations agencies to consult with legal counsel and to adopt strong and clear policies regarding blogs and other forms of consumer-generated media.
In late August, the Federal Trade Commission (FTC) announced a settlement with Reverb Communications, a California-based public relations firm in the video game industry, and its sole owner. Reverb and its owner were alleged to have deceptively advertised on behalf of their clients by having employees pose as ordinary consumers and post game reviews on iTunes, and by not disclosing that the reviews came from paid employees working on behalf of the developers.
According to the FTC’s complaint, between November 2008 and May 2009, Reverb and its owner posted reviews about their clients’ gaming applications at the iTunes store using account names that gave readers the impression the reviews were written by disinterested consumers. Reverb employees endorsed their clients’ gaming applications by consistently giving their client’s applications four or five stars or by positively commenting on them (e.g., “Amazing new game,” “ONE of the BEST” and “One of the best apps just got better”). Reverb did not disclose that they had been hired to promote the gaming applications.
The FTC’s action against Reverb is noteworthy for several reasons. First, the FTC took action against a PR agency rather than the agency’s clients, signaling that the marketer’s public relations agency has the same duty to disclose their relationship with the marketer as the marketer’s own employees. Second, the FTC charged the agency’s owner as an individual, not just the agency. We now know that the FTC means business and may hold individuals personally liable when the individual is the owner of a PR firm and the individual directed and/or participated in deceptive acts or practices. Finally, the Reverb action demonstrates that the FTC will bring an action against misleading online endorsements that were posted before the effective date of the Guides.
Beyond consulting with your attorney, we recommend the following five key actions for public relations agencies:
- Advise your employees to disclose their relationship with their client whenever posting online about a client or a client’s products or services.
- If you become aware that an employee posted online comments about a client or a client’s products without disclosing their relationship to the client, ensure that all comments are immediately removed (even if comments were posted prior to the effective date of the Guides).
- Advise your employees that they should not post about a client or its product unless they have appropriate client approval (and by someone with authority to grant such approval).
- Institute policies and procedures concerning employee “social media participation.”
- Marketers should ensure that their public relations agencies have policies in place concerning employee “social media participation” and that these policies prohibit agency employees from posting online unless the employee discloses his/her relationship with the client.
Much about social media is still ambiguous and in the process of being worked out. Yet in taking action against Reverb, the FTC has made it clear that basic ethics rules do exist, and that they are prepared to enforce them. Now is the time to make sure that you understand the rules and take steps so that you and your employees comply.
Davis & Gilbert, on behalf of the Council of PR Firms, issued some practical guidelines for public relations firms to use with clients last fall.
This post was co-written by Allison Fitzpatrick, an associate at Davis & Gilbert.
- In: Disclosure, FTC
Honestly, it should not take FTC action to make the point that PR professionals should disclose client relationships in any communications activity. Sometimes ethics is just common sense.
PR Agencies should demonstrate their commitment to ethics, regardless of the fact whether organizations like FTC are watching. If incidents like the one under discussion are repeated, the credibility of the profession will get undermined. The code of ethics that the PR firms should follow should be enshrined in the day-to-day conducts of these firms. Cheap methods of using employees to promote the business interests of clients of the PR firm do not pay. It is time that Council of PR Firms should take a firm stand on this issue with its member firms.
Agree with both comments above, agencies trying to skirt ethical boundaries tarnish industry reputation universally as do bloggers who support them in guerrilla marketing mode. Transparency is key, and nonprofits like mine are watchin’ closely, since the blurred boundaries (particularly when it comes to targeting kids/youth) continue to be fuzzy and fouled up. (as an aside, the FTC should be policing its own watchdogs to enforce the sugary slop on TV that industry/netwks agreed to curb. Last I checked it’s still pervasive. The law was not meant as a ‘suggestion’ it’s a public health issue, people) Just sayin’. Might want to take some of the blogger watchdogs and redeploy to the networks/big food & bev industry giants/media moguls.
Deception and fraud have never been a good idea. Those choosing these practices tarnish our industry and deserve whatever wrath the FTC doles out!