How the FTC's Endorsement Rules Unfairly Favor Celebrities

A few weeks ago, I reported on actress Gwyneth Paltrow, who appeared to have violated new Federal Trade Commission guidelines by endorsing a hotel she'd stayed at without disclosing what sort of compensation, in the form of cash or freebies, she'd received from the hotel. At the time, I was unable to get a hold of Rich Cleland, who, as associate director of the FTC's advertising division, has taken the point on explaining the guidelines to reporters like me. But Cleland and I spoke Wednesday, and he had some very interesting -- and potentially controversial -- things to say.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% To be clear, Cleland didn't address the particulars of what Paltrow wrote in her newsletter/blog, Goop, or what, if anything, the FTC is doing to respond. "We wouldn't publicly comment on whether or not one specific website is in violation of the FTC act," he said.

But he did walk me through the thought process the agency uses to determine whether consumers are being misled. "The first issue is: Is she purporting to make a personal recommendation here?" he said. "Secondly, what kind of compensation did she get? Thirdly, what would consumers' expectations be about compensation in that context?"

The average consumer, Cleland said, might well be aware that celebrities of Paltrow's stature often receive free clothing, trips and other swag. "It is one of the issues where celebrity endorsements are a little different than person-on-the-street endorsements," he said. "Would consumers understand that celebrities are always getting free stuff? It's a factual question."

You heard that right: The FTC rules on product endorsements may be lessstringent for celebrities than for the hoi polloi. Because they already get so much free stuff, celebrities may not have to disclose when some tequila or sports car they're extolling was gifted to them.

Conversely, because they don't get a lot of free stuff, bloggers do have to make such disclosures. This even though the celebrity's recommendation presumably carries more weight. (How often do you hear about a no-name blogger getting paid $1 million to record a promo?)

Talk about favoring the haves over the have-nots.

Wildly counter-intuitive as this may sound, it's not the only part of the FTC's new guidelines that seems to get things backwards. As I've noted before, the guidelines also single out digital media outlets for scrutiny while giving ink-and-paper newspapers and magazines a pass:
In other words, consumers trust newspapers and magazines, so it's not necessary for the writers who work at them to behave in a transparent manner. Consumers don't know if they can trust bloggers, so bloggers need to put themselves above suspicion.
Of course, I never was able to determine to a certainty that Paltrow's visit to La Mamounia Hotel in Marrakech was comped, since her spokesman declined to address the question with me and with other media outlets that asked him. I asked Cleland what he would do if celebrities like Paltrow simply refused to comment on whether endorsements they made were compensated. "We generally don't have people respond that way to an FTC request," he said. If one were to do so, he added, "We have the power to investigate."
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