CONTROLLING VIRAL MARKETING MAY NEED WHISTLEBLOWERS

Posted on October 6, 2009 by Jeffrey Newman

This week’s announcement by the Federal Trade Commission that it would revise rules about endorsements and testimonials in advertisements ignores the complexity and power of viral marketing on the net. Bloggers who endorse products are supposed to reveal whether they are connected with advertisers and whether they were paid in any way. Celebrities will also need to report ties to companies they promote. The increasing influence of social media in marketing may make enforcement difficult if not impossible. However, some laws which offer bounties to whistleblowers might even the playing field. The most significant law of its kind is the Federal False Claims Act which allows the whistleblower a “bounty” of between 16-30% of what the government recovers as a result of fraud. Presently, it is common for bloggers who endorse products to receive free samples. This is so widespread that enforcement has been likened to the music industry’s attempt to halt downloading via lawsuits against college students.