subscribe: Posts | Comments      Facebook      Email Steve

FTC, eat this

42 comments

You remember how last October the Federal Trade Commission issued a new rule mandating that bloggers who review products have to reveal if they were paid to do so by the company that sent them the product.

The key phrase, from the FTC’s press release, was: …“material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers.

That sent a few shivers down the spine of the wine blogosphere. It meant, in effect — well, what exactly did it mean? Nobody was sure. “Material connections” — what the hell was that? “Payment” is easy enough to understand: If wine blogger “A” gets cash for reviewing a wine, that’s pay-to-play, and must be revealed. But what about the free wine itself? Is that “payment”? Probably not, but it is a “free product.” If I tell my readers repeatedly, over time, that this is the case, is that information consumers “would not accept”? If the wine blogger is reviewing wine on his website, does every single review have to include a disclaimer?

Note to readers: I received this wine for free and received no other benefits from the winery

What if the blogger tasted the wine on a junket that was paid for by a regional wine association of which the submitting winery was a dues-paying member? What if the blogger drives to wine country, then stays the night in a winery guest house? What if he let a winemaker buy him a danish yesterday, a coffee 8 years ago?

Note to readers: I accepted a free $3.25 cappuccino [low-fat, wet] from the winemaker

Does his wine get an extra two points? Is it perceived as being favored?

Bloggers have been waiting eagerly to see what the FTC would do next. Now, the agency has taken a step, and it seems to be one that will have the bloggers breathing more easily — at least, for now.

“No Fines Levied in FTC’s First Blogger-Advertiser Investigation” is the headline on this article from an online site, Mashable: The Social Media Guide. Seems that Ann Taylor, the clothing manufacturer, hosted an event early this year to which they invited bloggers. Ann Taylor promised the bloggers they would get a “special gift” and also be eligible for a gift-card drawing, worth up to $500. That seemed a clear violation of the new FTC rule. But the FTC decided not to fine anybody, although it’s hard to understand just why. There was some talk that the bloggers might not have clearly understood the rule, which is natural enough, given how opaque it is; also, they may not have seen a sign, posted at the event, advising them to disclose any gifts they received from the clothier. Maybe the FTC just got cold feet at the last minute. It’s one thing to issue a statement. It’s another to actually enforce it, especially when the “criminals” are underpaid bloggers who are probably just scraping by, trying to figure out how and if they can make a living in this new media.

California wineries seem to be largely ignoring this silly rule, but Rodney Strong recently sent an electronic email warning us critics they won’t send samples unless we comply with FTC guidelines. Here it is. [I have edited the email for length]:

In accordance with the Federal Trade Commission, below is Rodney Strong’s digital influencer agreement.  To receive future releases of Rodney Strong Wine Estates wines for possible review, please review and reply YES to this email….

Please do not alter the subject line. Please know that I am sending this to all my media contacts, whether you blog or not.  Everything seemingly gets online one way or another.

Please know that we greatly appreciate your voluntary participation with us and we do not require any influencer to blog or discuss Rodney Strong Wine Estates, its labels, products, initiatives or events related to the company regardless of any material compensation.

Because we believe true advocacy can never be purchased, we do not pay for editorial placement.  However, we do provide free product, host regional meetings and sponsor Sonoma County wine education trips for qualifying journalists, bloggers and other digital influencers.

In order to remain compliant with the Federal Trade Commission (FTC) blogger guidelines, Rodney Strong Wine Estates respectfully requests that you adhere to the below listed disclosures and best practices.

Standards of Conduct in Working with Rodney Strong Wine Estates:
·         We ask that you disclose in each post if you received free product, a trip, or any other material compensation received from Rodney Strong Wine Estates.

Tips on compliance:
·         Disclose in each post.
·         Create a disclosure policy that is visible and easy to read on your website, blog or Twitter account.
·         Include brand affiliation and /or your likelihood that you will receive compensation in the future in your bio.

If you are in agreement with the above guidelines, please reply YES to this email.

[This is Steve again] I don’t review wine on this site, so I suppose the FTC’s law, or Rod Strong’s threat, doesn’t apply to me. But I am a “digital influencer,” so maybe Rodney will sic the thought police on me. I hope and trust not.  But this officious, troubling warning from a major California winery is troubling.

Look, the new FTC law is unenforceable. To support it, in any way, is stupid and cowardly. All self-respecting wine writers should oppose it. If there are bloggers out there who are flagrantly violating well-known ethical standards, the market will out them. We don’t need a new government rule mandating a new warning on the label nobody cares about except opposite legal counsel.

  1. I consider myself an “analog influencer” in that I am human and not digital. Though now that I think about it, I’d *be* digital for a while if it mean that I could glow like the dudes in TRON!

  2. Bob Rossi says:

    An outstanding and well thought-out posting. The hypotheticals you pose near the beginning are excellent; were you a lawyer in your former life? BTW, my first job out of law school, 30+ years ago, was with the FTC, and inane rules like this infuriate me even more. Hopefully it will be withdrawn, disavowed, or at least rewritten so that it only covers egregious situations (if there are even such situations, which there may be in some fields).

  3. “But what about the free wine itself? Is that “payment”? ”

    YES – according to the attorney at the FTC that I spoke to when this all hit the fan originally.

    She gave me plenty of time of day and we went through scenarios where someone like me (who writes and produces and publishes an on-line magazine/newsletter/what have you) receives a single bottle to review – to taste and evaluate as a consumer good – or a 12-bottle shipper containing all of the particular winery’s current releases. She asserted that for all points on the spectrum of possibilities the answer is “YES, it is payment”.

    The implication that we came up on is that if these bottles are payment, they are potentially reportable and taxable……

    I also pointed out that the logic of this “guideline” makes as much sense as considering test-driving a top of the line Mercedes for a week “payment”. You use the product as its intended in order to gather information to convey to your audience and then return it. Nothing gained. Imagine if that were taxable……

    Now, the person I spoke to indicated that wine bloggers were not really their target. Reading in between the lines, I surmised it was situations like the one described here and the “mommyblogs” which are apparently notorious for this kind of payola practice.

    The person I spoke to also indicated that the FTC (at least) would not really go after enforcing these “guidelines”…..

    But if wine samples were to somehow be established as income/payment, there is another persistent government agency which could come into play.

  4. If wine writers have to report free samples as “income,” then so do the following, all of whom get free stuff as part of their jobs: sports writers (free admit to games), travel writers (free cruises, hotels), tech writers (free gadgets), and so on. Crazy.

  5. Lisa Mattson says:

    Amen. Great post, Steve.

  6. David Furer says:

    Steve’s points are all well-made and I agree that non-compliance is a better path to follow. However, RS is merely covering their ass and I don’t think it serves any of us to take them to task for this. Rather let’s kick up a fuss with the FTC and be outspoken in our support for wineries who choose the path of greater resistance.

  7. I am sorry but the idea that work product you receive should be categorized as income is just foolish. Wineries or any other supplier do not send the product as compensation for past or new reviews. The product is sent so it may be reviewed it is a tool or part of the work process and not compensation. As always we run into problems when we try and put laws in place to manage a very gray area such as morality and influence. Take a business lunch as an example a standard lunch good meal bottle of wine is part of day to day interaction. However a five course spread a Cyrus with a vertical of Littori could be considered over the top of influencing. This is why situations such as this should not be managed through FTC rules or legislation but through voluntary disclosure and social pressure.

  8. Phil: Amen brother! Could not agree more.

  9. Steve, there is a clear agenda on the part of the folks at the FTC who are behind this “guideline”. While their argument is built around the premise of consumer protection, I think that their efforts will have very untoward consequences on many (initially) unintended parties. These folks at the FTC seem to be dug in on some critical philosophical points. Thus, I think there is a valid concern that this issue may be taken to an extreme where goods and services received for the purpose of review will be considered reportable income (and thus taxable).

  10. Hmmm… I would love to see a successful legal precedent established that the samples I send out have no value, i.e. are truly “free.” Currently the BOE requires that I pay “use” tax (rather than sales tax) on all wine I sample out, albeit valued at our cost rather than at retail.

  11. I like the idea of disclosure in every post. I only read blogs with a subject of interest, so if it was disclosed before I wouldn’t catch it. It might be overkill for the free latte, but nothing wrong with it, and lets the reader decide how much influence was in place.

    I don’t care for government rules, they seem to take a sledge hammer out when some jackass blows it for everyone.

  12. Steve F says:

    So if you visit a winery tasting room and because you are media, blogger, trade or whatever and don’t get charged the tasting fee, is this “free product”.

  13. Steve F: That would seem to be the case.

  14. If samples ever get to be a problem, it will not be just winewriting and winery needs to get their products introduced to the public that will be in trouble. The entire universe of product review will suffer. I don’t see that happening, although I certainly agree that we need to stay clued in to any further moves down that slippery slope.

    I disagree with Steve that signing the Rod Strong letter is an act of cowardice. I see it rather as a substitute for what really should happen, and that is the complete disclosure of the rules of engagement that we all practice, coupled with specific disclosure (in a wholesale sense, not wine by wine) when we do things like taste with the labels showing and not blind. Transparency is the best practice. But few of us practice it as completely as we should. And that includes me, which is why I will be amending and extending my comments about methodology on my website when it is next upgraded.

    I see the Strong gambit as extreme but harmless. It does not call for draconian measures but for transparency. It is not an intrusion into our personal freedoms but a request that we follow good practice. What is wrong with that? I would prefer to see winewriters and wineries develop an overall Code of Ethics that would require all of us to be more honest.

    I have mentioned increased Transparency on the writer side of the equation. I would start with lot numbers on the winery side. There are too many long production wines that hit my table tasting like wines twice their price. I solve that problem by buying any wine that makes me worry that a $15 Zinfandel made in 200,000 cases tastes blind like a $35 Zinfandel in fruit, structure, depth, expense of oak used. Very often the first lots sent to the market are very similar and the review stands. But, I want to know, and I think consumers need to know which lots are being sent for samples, how large those lots are and even where they are distributed. I may or may not publish all that but I and all other reviewers ought to know the truth and ought to share it whenever we feel that truth is helpful to the consumers.

    I can report this story from the Robt Mondavi winery now that the people who told it to me are no longer there. A group of writers attending a Fume Blanc blending seminar at Mondavi were told by a principal that the winery was going to make about 100,000 cases of its regular bottling Fume Blanc that year, and that the wine was going to be bottled at various times throughout the year, probably in four separate lots. The first lot, we were told, would be the most fruit forward because it could stand on its own, and the last batch bottled would be the most oak-influenced because that batch of wine needed something of a boost in interest.

    So, totally different wines being offered at a price that today would translate into $20+ and no way that anyone could know when the lots changed or what they consisted of. And no rational way for any reviewer to be able to help the consumer.

    And, we can reasonably assume that Franzia won a Gold Medal at the CA State Fair not so long ago with a lot of Chardonnay (fifty cases being the minimum standard employed by the Fair) that had nothing to do with the Two Buck Chuck product it was putting in stores.

    There may be nothing more to the Strong situation than a case of “Cover My Ass” by a winery and a PR guy who got burned in an earlier wine blog situation of its own making–but aided and abetted by bloggers who did not provide reasonable transparency in that situation. I personally saw nothing wrong with the earlier situation save for the lack of transparency. Let wineries send to whomever they want. But, let’s not attack Strong for trying to get it right the second time. We owe it to ourselves and our readers to take steps, voluntary steps, to insure that we always meet good standards for transparency. And wineries should be asked to do the same.

    We are not cowards for endorsing it. We ought to endorse it and call upon ourselves to be proactive in creating situations that make the Strong gambit unnecesary and redundant.

  15. Charlie, I’ll endorse transparency for its own sake — not because the FTC arm-twists me. Besides, where does transparency stop? How about this disclaimer: “I had a fever and headache when I reviewed this wine, so you’ll have to take that into account.” Or “I’d slept badly the night before I tasted this wine, so I was really sleepy.” Or “I was in a foul mood when I tasted this wine because I had a fight with my boss/wife/neighbor, and my grouchiness might have translated into a lower score.” Those three scenarios are all much more important for readers to know than whether or not the stupid sample was received for free! But I don’t hear anybody clamoring for full disclosure of emotional and physical status, in the interests of transparency!

  16. Steve,

    To your over-the-top response Charlie, I’d argue that transparency is useful (and needed) in cases of potential conflict of interest. The examples you provided, while potentially impacting a review, do not reflect conflicts of interest.

    While one can debate the specific implementation, I’m surprised that the very notion of being expected to disclose potential conflicts of interest is such an anathema to you. It seems to be gaining traction of late as a best practice in many venues — for example, in the financial media where individuals reviewing investment alternatives now generally disclose whether they have a financial interest in such position. Do you think that supporting such a policy in that venue “in any way” is “stupid and cowardly”?

  17. Steve, I am not fond of reductio ad adsurbum as a method of thoughtful discourse. The issue here is good practice and Strong’s attempt to get on the right side of that issue.

    The FTC is going to do what the FTC does. We can fight it, seek to amend it, etc, but the Strong gambit, which is largely a response to the fuss you kicked up about the Rockaway situation, just does not bug me. And you know me well enough to know that I am on your side on most civil liberties arguments.

    We might not have had the FTC issue or Strong’s gambit if all writers, not just bloggers in my personal opinion, followed good practice.

  18. Way to go, Steve.
    Let the market take care of it.

  19. Charlie, it’s the fault of some mommy bloggers who pitched products they were paid to pitch, without full disclosure. Or maybe the info was buried in the small print. I support FTC in overseeing that kind of deceptive practice. But wine bloggers who get nothing except a free sample, and who aren’t even making money from their blogs? Come on.

  20. Sid, like I’ve said, about a million times: most of the wine I get for review is sent to me free of charge. There. Is that transparent enough? I just don’t want to attach that phrase to every single wine I review. It eats up valuable print space (always a premium in a print publication), and after the first thousand reviews or so, it gets really annoying to see.

  21. Well said Steve and I am grateful to know that you are no coward and of course, a danish and a coffee is fully disclosed…amen to you bro.

  22. Come on, Steve. You are still engaging in absurdity. No one, not even the FTC, has said that you must identify the source of every wine you taste. There are intelligent ways of being transparent that will not be intrusive. You already engage in them.

    But, I will not back down from my belief that the biggest failure in the Rockaway situatiion was the total lack of transparency. You did a great job of bringing that out.

    And you believe in transparency. You are on the side of the angels–except for this dramatic dive in economic populism when it comes to someone actually trying to implement it. I don’t get your attitude here.

  23. With apologies to Alder… I’ll post the same thing over there in just a sec. Seems that today, the topic has come to the top again because of Steve, so I’ll first post here.

    Really, a threat? I really do get the frustration. Believe me, I too am miffed by this whole mess. Shoot there are states that I can’t even ship wine to, for crying out loud. As I recall, however, there’s a bit of language in the endorsement guides from the FTC that refers to “intent.” Most folks get the intent behind my first correspondence and I’ll wager to say that very few thought it a threat. I (Rodney Strong) attempted to think of both sides of the equation, the manufacturer and the influencer, and come up with a reasonable solution to an issue put forth by the FTC. If the language of the email was too harsh, I take responsibility and I do apologize. The conversation that ensued after my initial send was a rebirth of frustration and confusion about what and who the FTC really wanted to control. In light of that, and again with a similar level of frustration about having to do something, I (Rodney Strong) will change our stance a bit to this… We’ll include a note at the bottom of every letter that accompanies wine samples. It will read…

    NOTE: The Federal Trade Commission (FTC) requires manufacturers to ask digital influencers (bloggers) to comply with the Guides Concerning Use of Endorsements and Testimonials in Advertising published by the FTC.
    FTC Endorsement Guides PDF: http://www.ftc.gov/os/2009/10/091005endorsementguidesfnnotice.pdf
    FTC Endorsement Guides video: http://ftc.gov/multimedia/video/business/endorsement-guides/endorse_mary-q1.shtm

    That’s it.

    Say, Steve, let’s hook up for dinner at Rivoli next Thursday. I’ll bring the wine. ;-)

  24. Steve, I was fortunate to get free help designing and programming my blog. Should I post a disclaimer?

  25. Dear PaulG: I am agent 52-X-11 from the Federal Trade Commission. We are monitoring this blog for confessions of evil doing, which you just did. Make your check out to the U.S. Treasury in the amount of $100,000 or we will send you to Gitmo!!!

  26. Hey there Robert Larsen, thanks for writing in. Question: Why was RS the first and, so far as I know, the only winery to take this step?

  27. Charlie, I’m moving on to the next thing. So tired…

  28. Readers: In the interests of full disclosure, Tim McDonald once bought me a cup of coffee.

  29. Mark Osmun says:

    Seems like a tempest in a teapot. First, as I understand it, the FTC guidelines just that: only guidelines, not requirements, not a law. Second, wineries are probably under no legal obligation to promote the FTC guidelines and thus become FTC agents. Third, the FTC can’t possibly enforce these guidelines if they ever did become law. Fourth if a blogger felt he or she simply must follow the guidelines (though for some weird reason no other media is asked to do so), it would still be no great inconvenience: a simple blanket disclaimer somewhere on the page would do it.

  30. Sounds like Mr. Larsen has solved your problem–except for the hundreds of dollars of food and wine you will consume at Rivoli. And, now, because I have disclosed it for you, you do not need to. :-}

  31. The John & Dottie methodology deserves mentioning in this exchange. As we know, the former husband and wife wine writers for the Wall Street Journal would normally do their weekly column on a wine variety from a different grape growing region e.g. Australian Chards. They would buy 50 +/- wines in a particular category from various retailers, online and brick and mortar, reimbursed by The Journal. That the wine was purchased added a measure of integrity to their column, both because they wouldn’t take freebies, but also because they bought wine at the store like regular people, so producers couldn’t pull a fast one by sending a reserve or– perish the thought–sticking their label on someone else’s superior wine.

    This is impractical for wine pubs, I suppose, and certainly for Charlie’s. But I for one liked that this widely followed column used a cross section of wine types to make their points instead of trying to cover the entire waterfront.

  32. Tim McDonald is just the type. I’ve heard about that guy.

    Steve, RS was the first because that’s what we felt needed to be done. I for one want the blogging community to thrive. It might be a tough time right now, but progress toward more outlets (newprint writers keep disappearing) rather than fewer, is a good thing. And, I hear that others wineries have done notes in letters, too. You’d be more familiar with that than me, though.

  33. Tom, if Rupert M. promises to buy all my wine, I won’t accept freebies anymore.

  34. Steve,

    I don’t think you’ll get Rupert to pony up, but how about Adam? He’s wealthy enough. What price integrity.

  35. You’re talking about something like 20,000 wines a year (a loose guesstimate) including Bordeaux first growths, Grand Cru Burgundy, top Champagne, etc. etc. No publication in the world is rich enough to buy all that. This is a silly issue. It boils down to trust. If people don’t trust a reviewer who gets a free sample, fine. Don’t read that reviewer.

  36. Oh for [insert the deity of your choice here]‘s sake, Steve, educate yourself before your next tantrum. The FTC did not “choose” to levy fines because they CAN’T levy fines in this situation.

    <>

    If the FTC thinks you’re breaking the rules, they send you a notice and set it for a hearing. If they win, you get a “cease and desist order;” an order saying “Don’t Do That!” So, if the Commission thinks you’re breaking the rules, they send you a notice. You can agree that you will stop doing what they don’t like, or you can go to a hearing and fight it.

    Yes, there is one situation in which they can levy fines without first giving the “cease and desist order:”

    <>

    Except for one thing … That doesn’t apply, because this is an interpretive rule:

    <>

    As for what Strong did, they are not to be castigated, but applauded, for they are attempting to not only comply with the regulation, but to make sure bloggers with whom they do business do as well.

    Truly, the very idea that Steve Heimoff, who gets free samples by the boatload for a print magazine that is not subject to this rule, is throwing a tantrum with a complete absence of understanding, and not even the slightest effort to garner any first, is embarrassing.

    You can start here if you wish- http://palatepress.com/2009/10/the-ftc-bloggers-and-free-samples/ It’s written in plain English and would have saved you this silly post.

  37. Just a question – With the exception of the hoopla over parker and his statement about buying samples for review. I was under the impression that pretty much all wine writers receive free samples. So what is the point of disclosure when the process of free samples to trade media is common practice. If anything disclosure when you purchase samples makes more sense as this is more likely to skew judgment as you have put an investment into the product. Just a thought.

  38. Phil, THANK YOU for a common sense approach!!!

  39. Dear David, you’re right, I probably don’t fall under the shadow of suspicion of the FTC because I review wines for print, not blogs. Look, the Feds have been poking their noses into freebies of all kinds (cruise ships, wines, etc.) for years, looking for what? I can only speak for myself, but I have said over and over and over that I get my review wines for free. I’m not ashamed of it. It’s the only way I could perform my job. If wineries are upset, they’re free to stop sending. You can call it a “tantrum” if you wish to cast aspersions on my point of view. From my perspective, the issue of whether or not a reviewer pays for his wine is pointless and stupid. As I told Tom Merle, it comes down to trust. I don’t care if a blogger “reveals” the truth of free wine, if I think that blogger is incompetent, I don’t care what he says. I don’t care if Parker buys his wines or doesn’t, as long as he’s transparent.

  40. Steve, I agree with you on the absurdity of the rule. The problem I was pointing out was not that. There, we are on the same page. The problem is that your presumptions about why they did not impose fines was so off base. They didn’t impose fines because they CAN’T impose fines in that situation.

  41. David, we’re closer than you think. I called the rule unenforceable. What is the point of making a rule if you can’t enforce it? It’s the same as the California Highway Patrol’s HOV lanes. Nobody respects them. Well, I do, but it really pisses me off to see single occupancy drivers racing past me, with no risk of arrest. This sort of thing diminishes one’s respect for law and authority. If you pass a law, enforce it. If you can’t and have no intention do, then don’t.

  42. Ah, I think I see the error. You see, they didn’t pass a law. They passed what we lawyers call a “guideline.” Yup, as in “…the code is more of what you call guidelines than actual rules, welcome aboard the Black Pearl, Miss Turner…” They can’t enforce it with immediate fines. The enforcement mechanism is actually through first a cease and desist order, and then a fine for violating that order. Legal stuff.

    And I’m with you on the HOV, too.

Leave a Reply

*

Recent Comments

Recent Posts

Categories

Archives