FTC Closes Hyundai Probe, Broadens View Of Endorsement

money-laptopThe Federal Trade Commission doesn't plan to bring charges against Hyundai for a promotion that involved providing bloggers with gift certificates in exchange for linking to ads that ran during this year's Super Bowl.

The FTC takes the position that marketers should disclose any payment or gifts made to bloggers, and that bloggers also should disclose receipt of any gifts from companies they write about. Otherwise, the FTC contends, readers of the blog are likely to be misled. 

But the commission said in its closing letter that it was not commencing an enforcement action against Hyundai because the car company itself had not arranged for the bloggers to receive gift certificates in exchange for commenting on or linking to the ads. Rather, the promotion was the work of "an individual who was working for a media firm" that ran the blogging campaign.

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The FTC also noted that Hyundai's official social media policy was in line with the commission's stance on endorsements.

"Although advertisers are legally responsible for the actions of those working directly or indirectly for them, the actions at issue here were contrary both to Hyundai's established social media policy, which calls for bloggers to disclose their receipt of compensation, and to the policies of the media firm in question," the FTC said in its closing letter to Hyundai, which the commission quietly issued last month. "Moreover, upon learning of the misconduct, the media firm promptly took action to address it."

Although the FTC didn't take action against Hyundai, the closing letter indicates that the commission is taking a broad view of what constitutes an endorsement, says Jeffrey Greenbaum, an advertising lawyer with Frankfurt Kurnit Klein & Selz.

He notes that the bloggers appear to have been provided gift certificates merely for promoting the company's ads -- as opposed to its cars. Plus, it appears from the FTC's closing letter that the bloggers were asked only to publicize the ads, not necessarily to make positive comments about them.

"I'm not sure it's necessarily the case that asking someone to post your ad is an endorsement," Greenbaum says.

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