Pay to post a comment? This practice could cost your company $11,000

My interest in the subject of paying for posts has piqued. Geno Church, keynote speaker at the Multifamily Brainstorming Sessions this year, commented on the practice of paying bloggers and fans to post good things about a product or service. He warned that this is a violation of FTC rules. For many people, this is the first time they have heard about such law.

There is a $11,000 fine per post in place and is to be enforced by the FTC. We understand this applies to companies paying people to make a post no matter what the subject matter. You can still employ this practice but each post must provide a disclosure saying they were paid to do so. Here is an explanation of the fines the FTC can impose:

FTC to Bloggers: Disclose Freebies or Face $11,000 Fine
By Frederic Lardinois / October 5, 2009 10:41 AM

According to new guidelines from the Federal Trade Commission (FTC), bloggers who fail to disclose that they have received freebies when they write about a product can now be fined up to $11,000 per post. The new FTC Guide Concerning the Use of Endorsements and Testimonials in Advertising argues that any post of a blogger who receives "cash or in-kind payment to review a product" should be considered an endorsement. Because these posts are now officially considered endorsements, bloggers who receive freebies must now disclose this fact on their site.
Freebies and the Independent Blogger

While the FTC will obviously have a hard time enforcing these regulations, there can be no doubt that marketers regularly approach independent bloggers (and especially mommy bloggers) with freebies. When bloggers accept these exchanges, they may not always disclose them in the posts that result. So, while bloggers who are involved in these schemes often tend to say that they would have reviewed the product anyway or that their reviews are often critical, there can be little doubt that payments and freebies influence these stories.

These new rules and rather large fines should bring some bloggers and marketers into line, though others will surely continue to push the ethical boundaries. And blogging Payola is unlikely to go away completely because of these new rules.
This marks the first time the FTC has updated endorsement and testimonial rules since 1980. The new rules also take on celebrity endorsements. If celebrities endorse a product and make false or unsubstantiated claims, or don't disclose 'material connections' between themselves and the advertisers in ads and outside the context of the ads (talk shows, social media, etc.), these celebrities can be held liable under the FTC Act. Judging from this, it would seem that celebrities who tweet about a product they endorse are now risking large fines.