• by Wendy Davis  @wendyndavis, October 7, 2009

The FTC's recommendations that bloggers disclose freebies has drawn much controversy this week, with some commentators questioning whether such a governmental mandate is either necessary or appropriate. But another portion of the FTC's new guides to endorsements and testimonials might be trumped by a separate federal law, according to law professor Eric Goldman.

The guides say that marketers who have deals with companies that hire bloggers to write reviews might be liable if the reviews contain unsubstantiated claims. For instance, if a marketer signs up with PayPerPost -- a company that pays bloggers to write reviews -- and a blogger says something misleading, the marketer might be on the hook for deceptive advertising.

The FTC illustrated its point by discussing a scenario involving a skin care products company that participates in a blog advertising service. In the example, a skin care manufacturer requests that a blogger try a new lotion and review it. If the blogger does so and makes an unsubstantiated claim -- such as that the lotion cures eczema -- both the blogger and the advertiser could be liable for making misleading representations, according to the FTC.

But, says Goldman, the Communications Decency Act specifies that users of interactive services are not responsible for material published by other content providers. In the lotion scenario, the marketer would be the "user," the blog advertising service would be the "interactive services provider" and the bloggers would be the "other content providers."

"The FTC appears to think advertisers can be liable for a blogger's rogue content merely because there is an underlying sponsorship relationship," writes Goldman, director of the High Tech Law Institute at Santa Clara University, in a blog post about the issue. "This situation is prima facie preempted," he adds. "Frankly, this doesn't even look like a close case."

But not everyone agrees with Goldman. Rebecca Tushnet, a professor at Georgetown Law, says that an advertiser who pays for posts might not be considered the type of user of interactive services who is entitled to immunity under the Communications Decency Act. "I don't think that 'user' is that broad," she says.

At least one court has confronted this issue, but has not yet definitively ruled on it. Several years ago, Subway sued Quiznos after Quiznos invited users to submit videos comparing Subway and Quiznos sandwiches to those made by Quiznos. Subway alleged that the user-created clips were misleading, and sued Quiznos for false advertising. Quiznos countered that the Communications Decency Act immunized it from liability for any statements made by users in their clips. That case is still pending in federal district court in Connecticut.

The FTC's guides are not technically regulations, but they put companies on notice about the type of activity that the agency considers deceptive.