Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
In a move to bring advertising rules into the digital age, the Federal Trade Commission has announced revised guidelines that require bloggers to disclose when they receive payment or free products from advertisers whose products they endorse.
In a move to bring advertising rules into the digital age, the Federal Trade Commission announced this week revised guidelines that require bloggers and other online commentators to disclose when they receive payment or free products from advertisers whose products they endorse.
The revisions go into effect Dec. 1 and include several changes to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, which were last updated in 1980.
The guidelines were written to show advertisers and endorsers how to comply with the Federal Trade Commission Act, which sets rules regarding endorsement and testimonial ads. Parties found in violation of that law following an FTC investigation can face federal court-issued civil penalties of up to $16,000 per violation, an FTC spokeswoman says.
The revised guidelines require bloggers and other word-of-mouth marketers to disclose when they have a material connection with the provider of a product or service they have endorsed. “The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement,” the FTC says. “Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.
Both bloggers and advertisers can be held liable under the FTC Act for endorsements that make false or unsubstantiated claims, or if they fail to disclose material connections, the FTC says.
The revised guidelines clarify that when endorsers cite an unusual level of beneficial results personally received from a product or service, they must also disclose the level of results that consumers in general are likely to receive.
For example, if a blogger claims to have lost three dress sizes in three weeks with a diet plan, the FTC would want her to also say how much most would people have been likely to improve under the same plan. The new guidelines have replaced former guidelines that had let endorsers simply say that their personal results were not typical.
In other changes, the guidelines note that, if an advertiser refers in an ad to the findings of a research report it sponsored, the advertiser must disclose its relationship with the organization that conducted the research.