May 24, 2010   

On December 1, 2009, the Federal Trade Commissions New Endorsement Guides took effect.  One of the requirements in the endorsement and testimonials guide states that a blogger must disclose any material connection or remuneration received in connection with their review of a product or service.  If such disclosure is omitted the advertiser may be liable for any deceptive or misleading claims made in the blog.

In late January, only weeks after the FTCs New Endorsement Guides went into effect, the retailer of womens apparel, Ann Taylor LOFT, hosted a fashion show to preview the chains summer 2010 collection.  As is customary at these events, the attendees received special gifts.  Furthermore, to stir up excitement the attendees were told that if they blogged about the show they would be entered into a drawing for a gift card.  Sure enough, a few blogs appeared on the web, several of which did not disclose the bloggers “gift card incentive.”  Ann Taylor had placed signs around the event advising all would-be bloggers to disclose the “gift card” incentive in blogs reviewing the fashion show.  However, some bloggers did not see the sign and posted reviews without revealing the gift incentive.  The FTC took notice and launched the first public investigation into “compensated bloggers” since the guides took effect.

After the investigation, the FTC decided to forgo an enforcement action in which it would have sought a monetary penalty from Ann Taylor.  In the April 20th closing letter the FTCs Associate Director, Mary Engle, explained that the FTC was withholding enforcement because  “the January 26, 2010 preview was the first (and, to date, only) such preview event.”  Second, the number of overall bloggers at the event was small with an even smaller subset failing to disclose the gifts.  Third, Ann Taylor “adopted a written policy in February 2010 stating   [Ann Taylor] will not issue any gift to any blogger without first telling the blogger that the blogger must disclose the gift in his or her blog.”  While the letter closes the door on the investigation it stands as a warning to advertisers to be vigilant over how the blog-o-sphere reports on their products and services.