Skip to main content

FTC: No Guidelines Needed on Buzz Marketing

The Federal Trade Commission has concluded that it does not need to issue guidelines on so-called buzz marketing, and that it is not, on its face, deceptive to pay people to talk up your product or service, even if you don't disclose the relationship.

That came in a letter to watchdog group Commercial Alert, which called the failure to disclose the practice fundamentally fraudulent and misleading.

The FTC said it wasn't, but did say it would judge each case on its merits and was not saying that any particular case was not deceptive, only that it was not necessary to issue a broad prohibition. It did say that there was a higher bar for kids either being targeted or used as the marketers.

Word-of-mouth marketing is when companies pay people to promote their products in social situations. Commercial Alert used the example of Sony Ericsson Mobile sending actors out to pose as tourists and handing their camera phones to passersby, asking them to take their picture.

Another example was Procter & Gamble paying 250,000 teens to talk up their products.

The FTC told Commercial Alert that its deceptiveness standard was sufficient to handle ad hoc reviews, pointing out that "when there exists a connection between the endorser and the seller of the advertised product which might materially affect the weight or credibility of the endorsement....such connection must be fully disclosed."

It's that "affect the weight or credibility" that is the key to a deceptiveness finding.

The commission pointed to a couple of buzz marketing techniques that might run afoul of that deceptiveness standard. For example, "if a sponsored consumer raves to her friends about how her new dishwasher cleans dishes even when they are not pre-rinsed, such an opinion is likely to be given greater weight or credibility without a disclosure of sponsorship than with a disclosure" and would appear to be deceptive "unless the relationship [between marketer and consumer] were otherwise clear from context."

The FTC encouraged Consumer Alert to submit complaints and said it would take action "where appropriate."