FTC Going After Bloggers = Epic Fail

The AP reported that the FTC is planning on going after bloggers that make fake endorsements or get paid in products for coverage without disclosing it:

"New guidelines, expected to be approved late this summer with possible modifications, would clarify that the agency can go after bloggers--as well as the companies that compensate them--for any false claims or failure to disclose conflicts of interest," the article explained.

The rules could be quite strict, even extending to the practice of affiliate links--for example, a music blogger who links to a song on Amazon MP3 or iTunes that earns an affiliate commission in the process.

What is absurd (to me at least) is how inefficient this process is. What needs to happen is better enforcement on ad networks, search engines, and merchants. Follow the money downstream rather than hunting for nickels upstream.

The people who are making fake sites are doing so because they are paid to. And amoral ad networks that syndicate ads based on *maximizing yield efficiency* (like Google AdWords) are designed to syndicate fraud because it is easy for advertisers to pay a lot for ads when their profit margins are nearly 100% because they scam people.

Look how sophisticated some of the fake sites are here.

You will never track them down one at a time because many domains are internationally owned, anonymously registered, and some domain names only cost a couple dollars to register. Wordpress.com and Google's Blogspot are free, which leads to automated spam pushing scams:

Three out of every four unique Blogspot.com URLs that appeared in the top 50 results for commercial queries were spam, the study said. Blogspot is the hosting site for Google's blogging service. Blogs created for marketing purposes are sometimes referred to as "splogs."

They need to police the distribution vehicles through which the scams find consumers - ad networks. Any individual blogger can remain fairly anonymous, but ad networks can not scale to efficiency and create publisher and advertiser relationships without being well known.

One recent article talked about how clicking on certain keyword search results was a bit like Russian Roulette. Ben Eddleman explained the issue well in his article titled False and Deceptive Pay-Per-Click Ads. After he showed a long list of scammy pay-per-click ads he wrote:

Each and every one of these ads includes the claim that the specified product is "free." (These claims are expressed in ad titles, bodies, and/or display URLs). However, to the best of my knowledge, that claim is false, as applied to each and every ad shown above: The specified products are available from the specified sites only if the user pays a subscription fee.

These ads are particularly galling because, in each example, the specified program is available for free elsewhere on the web, e.g. directly from its developer's web site. Since these products are free elsewhere, yet cost money at these sites (despite promises to the contrary), these sites offer users a particularly poor value.

Ben continues to the appropriate conclusion

Google's inaction exactly confirms my allegation: That Google's ad policies are inadequate to protect users from outright scams, even when these scams are specifically brought to Google's attention.

Once again, to prove Ben's point, here are some of the government grant ads that the FTC warned about

This issue has been aired many times. Lets not forget that Google lied to the government and media when they said they cleaned up the government grant ads, and these fraudulent ads are still running strong today.

Most searchers unaware that search results have ads on them, and likely less than 1:10,000 are aware of Yahoo!'s Paid Inclusion program that blends ads directly into the organic search results. Most SEO professionals can not point out which Yahoo! Search Submit results are paid.

A 2005 Pew study found that most users were unaware of sponsored search results:

Only 38% of users are aware of the distinction between paid or “sponsored” results and unpaid results. And only one in six say they can always tell which results are paid or sponsored and which are not. This finding is ironic, since nearly half of all users say they would stop using search engines if they thought engines were not being clear about how they presented paid results.

Worse yet, Google's automated ad networks (AdSense + DoubleClick) are responsible for monetizing nearly 70% of online copyright violations.

These networks go so far as monetizing warez websites, and Google doesn't always disclose the ads they place on content websites, either. But may as well police everyone who is not a current business partner ;)

When Google wanted to fight paid text links they penalized the Text Link Ads website to send a message. It is far more efficient to police at the network level. Why can't the government do the exact same thing?

As many times as they have sued and/or fined ValueClick you would think they would notice the pattern.

Force ad networks to have editorial integrity. Make small gray text with reverse billing fraud terms of service illegal. Make the networks run a clean show. If they do that there will be little to no incentive for scamming consumers. And it is easier to force self-policing onto 200 ad networks than it is to try to police millions of bloggers.

Published: June 22, 2009 by Aaron Wall in marketing


June 22, 2009 - 11:37pm

Yahoo Search Submit used to show a Yahoo redirect URL when you moused over the paid "organic" results.

They recently removed the visible redirect and cloak it with the "display URL".

So even if you know what the search submit program is, you'll never figure out who's using it, or who you're competing against if you are a Search Submit customer...

June 23, 2009 - 2:20am

If they threaten 30,000 bloggers/webmasters they make an impressive show and everyone will attest to their effectiveness when budget approval time comes around. If they attack one network, and force it to clean up its act, no one hardly notices (even if the problem is fixed).

This should not be surprising... if there were no awareness of problems to be managed, there would be no support for funding government. The FTC like any other government beaurocracy, needs to justify its existence and budgets.

The real FAIL here is the journalism integrity FAIL which traded investigative reporting away for sensationalist crap reporting, further emboldening the corporate-level scams and the corrupt politicians. They now have nothing to fear. We'll continue paying for that for many years to come.

June 23, 2009 - 2:25am

I think that is why self policing (or policing at the network level) is so much more efficient. Once a government organization is created to fix a problem it rarely if ever will because then it would no longer be able to justify its own existence. Which sorta reminds me of that The Power of Nightmares documentary...which reminds us that the "good" guys need to have an enemy to fight at all times. ;)

June 23, 2009 - 2:42pm

Your post reminds me of a couple of quotes from Ronald Reagan:

"Welfare's purpose should be to eliminate, as far as possible, the need for its own existence."

"No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth! "

June 23, 2009 - 3:31am

Aaron, you fail to understand how a regulator enforces.

Section 5 of the FTC Act gives the regulator broad authority to regulate against misleading advertising.

However, Section 5 also requires a great deal of leg work and evidence.

The cleanest regulatory action requires little or no evidence, for example the FTC actions against business opportunities, or buy a job schemes. Since these schemes have to be registered or have disclosure documents, which they don't, it is very easy for the FTC to shut them down after a couple of years.

And who are the new business opportunities that the FTC is going to target? Guys like you, Shoemoney, Copyblogger, etc. because you are selling buy a job schemes without registering or producing a disclosure document.

Google "inadvertent franchise" for more on this issue.

June 23, 2009 - 4:05am

mjwebster: Are you saying that affiliate programs by nature would be considered "accidental franchises"?

Is disclosure documentation the only separator between an commissioned agency model and a franchise?

June 23, 2009 - 4:12am

I don't sell a "buy a job" or "business opportunity" program. And I don't market this site in that sort of manner either. Most of those people sell scams.

Our members buy real value & professional training/consulting advice. How is an SEO training program any different than a marketing training program or a typical consulting service or a book?

There are college level courses that want to use our materials as part of their training, and it looks like we may proceed with that. Why should I have to register as a "biz op" when that is not what I am selling?

June 23, 2009 - 7:05am

What needs to happen is better enforcement on ad networks, search engines, and merchants.

Governments rarely go after large organizations that have a vested interest in a productive industry. Instead they go after small decentralized entities that don't donate to campaigns or pay substantial taxes.

June 23, 2009 - 9:48am

It's nonsense to go after the blogger when the problem clearly lies with the placement supplier.
Lets look at the flip side - legitimate advertisers using Google's content network cannot control the sites they appear on until after they appear there. In an arguement about clarity for the consumer G don't have a leg to stand on. More "clarity" would of course cripple Google's adsense revenues (as few legitimate advertisers would chose to display their ads on 30-50% of the content placements given to them by default).
Google make vast profits from both spam advertisers and spam sites upon which to place their ads... they make money by facilitating spam... they're not going to clean up their act at either end until forced.

June 23, 2009 - 4:12pm

Aaron below commentary is a joke, please take it as a joke.

The Youtube video you posted in April (above posted) still exists so four (probably not accurate) possibilities.
A) Google could not care less about what others think because they own the government
B) Google classifies Aaron as a conspiracy theorist and what ever he says can be used against him since he can be classified a crazy lunatech who repeats the same anti-Google preaching over and over again
C) They don't care because they make more money from the scam than what they would lose in a court case
D) They care but they are afraid of the mighty Aaron creating enough noise if they erase the video.

By the way FTC will never have enough budget or manpower to hunt down enough small fish to scare the general public. Keep up the good work Aaron.

June 23, 2009 - 6:15pm

As a blogger, I approved of the FTC proposed guidelines for disclosure of product review terms. If a blogger receives money or products and services in exchange for a blog review, I see nothing wrong with being honest about that relationship.

This affiliate marketing addendum is ridiculous. Again, I'd like to see splogs disappear as much as any other legitimate blogger does, but the proposal seems to go after the people who are not trying to game the system... not the spammers creating hundreds of splogs. If I pay my own money to buy a book, and I talk about it on my blog, they can come after me for posting an affiliate link to buy the same book on Amazon? That's ridiculous. Going forward, I'm sure we can all be diligent about tagging our affiliate links as such if it's required, but are we supposed to go back over hundreds of blog posts we've written over the last few years to edit and identify previous affiliate links we've inserted? That's just crazy talk.

June 24, 2009 - 1:40pm

This is pretty consistant with all current policy being spewed out right now. It's all about controlling business... it also neatly fits in to Google's hatred of paid links that they have been FUD ing about for a while... isn't this admin real chummy with the CEO of Google? seems like I saw him in some photos with them?

I agree that everyone hates splogs and other such nonsense but
it's sad that people that work hard for their money are being squeezed out at ever turn.

June 24, 2009 - 3:17pm

>so four (probably not accurate) possibilities.<

I have this nagging hunch from deep inside that A is probably the closest to correct out of the four options listed, however it occurs to my generally over-paranoid mind that there is a 5th option that actually sounds plausible based on a history of past actions.

E. why give a shit if we don't need to?
Just let the algo place whatever it wants and let's not waste any time or effort on it if and UNTIL it becomes an issue worth taking action on. When it does, remove it, move it or make it look like something else. We control the whole damn thing so why worry about it as long as the only people looking at it are seo's. If someone we care about for some reason looks at it and actually remarks about it, THEN we'll deal with it anyway we want.


June 24, 2009 - 3:47pm

Concerning "What is absurd (to me at least) is how inefficient this process is. What needs to happen is better enforcement on ad networks, search engines, and merchants. Follow the money downstream rather than hunting for nickels upstream."

Aaron, have you ever watched "The Wire"? It was the most realistic cop show. It was on HBO. (NetFlix it if you haven't)

Well, instead of going after the drug dealers and suppliers, the cops were too busy going after the little guys. "Arrests going up" was better and easier to pad than "Crime Going Down". This is almost MORE than an analogy in this case. Perhaps the FTC would like to fine some 30 something mom a few million $$ like the RIAA.

June 24, 2009 - 4:21pm

I get that the role of government is police and oppress the common man to remove market competition from the marketplace for bigger companies (or other big financial interests) that made campaign contributions. I just find it sad & disturbing. :(

Thanks for the movie recommendation!

June 24, 2009 - 5:38pm

Can I get an "Amen"?!

June 27, 2009 - 9:43pm

Correct me if I am wrong but the FTC only has jurisdiction in the U.S. correct? So how is any of this really going to do any good?

There are numerous blogs ran by marketers outside the U.S. so if I am correct in my thinking, it will only be American bloggers that will be penalized by these new rules?

This really does not make much sense to me. As no one else has mentioned this part of it please tell me if I am wrong in my thinking here.

June 28, 2009 - 4:10am

Exactly right twheeler. If enacted + enforced this would put U.S. based publishers at a financial disadvantage to foreign publishers.

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