[bholus10]

If you're a violator, you could be fined up to $11,000. In addition, you could be held liable for false, misleading, and unsubstantiated statements.

This all sounds like a great win for consumers; however, It doesn't take much creativity to imagine horror stories with the "material connections" requirement.

Example: suppose you're a book reviewer. Book publishers routinely send you free books to review. If you fail to disclose that the book was free in your review, will you be fined $11,000? Technically, your failure to disclose the free book would be a violation, but would you be fined? That's anyone's guess. If you're not fined, and someone else in a similar position is fined, is that selective enforcement? As you can see, there're a lot of potential problems with well-intentioned, but overbroad regulation.

No. 3 - Do You Recruit Other Bloggers To Pitch Your Products or Services?

If you recruit other bloggers to pitch your products or services, such as affiliates, you're an "advertiser" under the regulations. As an advertiser that sponsors endorsers, under the new regulations you're required to:

* provide guidance and training to ensure that statements made by your affiliate-bloggers are truthful, not misleading, and substantiated, and

* monitor your affiliate-bloggers and take steps necessary to stop the publication of deceptive representations when they are discovered.

The new regulations apparently embody the concept that advertisers can be held liable for the endorsement-related sins of their affiliate-bloggers. The FTC stated:

"It is foreseeable that an endorser may exaggerate the benefits of a free product or fail to disclose a material relationship where one exists. In employing this means of marketing, the advertiser has assumed the risk that an endorser may fail to disclose a material connection or misrepresent a product, and the potential liability that accompanies that risk".

Legal scholars are now debating whether this new liability exposure for advertisers is in conflict with a well-established legal defense provided by a federal statute (47 USC 230(c)(1)), which reads: