America to crack down on blogger payola

US regulators are to crack down on bloggers who fail to disclose money or gifts received from companies when reviewing their products. In the new policy from the Federal Trade Commission, offending bloggers could eventually face fines of up to $11,000 (£6,900) per violation, according to the BBC.

So-called payola schemes have increased in recent years, with marketers realising the potential of encouraging bloggers and forum contributors to produce reviews or testimonials on their products in exchange for money of freebies.

Although the guidelines released by the FTC are not binding by law, they are interpretations of the law that hope to help advertisers comply with regulations, such as those on disclosing endorsements.

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

Until now, the FTC's policy on endorsements had not covered bloggers, causing concern for consumer groups. "Consumers are increasingly dependent on the internet for purchase information," said Jack Gillis of the Consumer Federation of America, "There's tremendous opportunity to steer consumers in the wrong direction."

Reactions from the blogosphere have been somewhat mixed. Wayne Sutton, a social media strategist and podcast host at TalkSocialNews.com agreed, saying, "We're in a time when companies will try (to) leverage individuals who are community leaders or have a large audience for brand awareness... but if you want to keep them (readers/followers), being honest or 'transparent' is the best way to do so."

Meanwhile, Jeff Jarvis, a professor of journalism at New York's City University attacked the policy in his blog. He wrote, "I think that openness is the best fix for questions of trust and advise companies and politicians and certainly governments to become transparent by default as enlightened self-interest. But mandating this for anyone who dares speak online? Foolish." The new policy will take effect from December 1st.

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