Social Media Makes It Easy To Blog Or Tweet Your Way Into FTC Fines

Attorney Mark D. Rasch is the former head of the U.S. Justice Department’s computer crime unit and today serves as Director of Cybersecurity and Privacy Consulting at CSC in Virginia.

Restaurant reservations Web site Open Table just paid $10 million to purchase the app developer Foodspotting, which enables people to take pictures of, well, food. The idea behind the synergy is that consumers looking to make reservations can not only read the menu but actually see the food presentation "in the real world" by looking at pictures taken by bona fide customers. This continues a trend of technology empowering consumers. It's also a way for restaurants and other retailers to get themselves into real legal trouble if they're not very careful about how they identify their use of this type of social technology.

Now, I don't personally get this trend of taking pictures of food. Even with great presentation, food is intended to be eaten. But I may be in the minority. The Foodspotting app apparently has over three million subscribers, and part of their value lies in the fact that other subscribers trust the authenticity of the pictures posted to the site.

This is just one technology that empowers consumers. Treated badly by an airline? Go to Twitter and post your experience. Unsatisfied with a consumer appliance? Put it on your blog. Want to compare prices? Scan the product or barcode and use any of the dozens of price-comparison apps to find the best price.

Retailers are reacting to these trends in many ways. Some are monitoring social media for comments (good and bad) and responding to criticism and/or republishing good reviews. With the food picture trend (which has been dubbed "food porn"), some restaurants are prohibiting their patrons from taking pictures of their food.

But one possible response that retailers need to avoid is posting their own pictures, reviews or "stars" without disclosing the source—or paying others to do so. That can get them into trouble not only with consumers but with the Federal Trade Commission and other regulators.

Back in October 2009, the FTC, as part of its mandate to regulate "unfair or deceptive trade practices," for the first time took on the issue of paid or endorsed bloggers. The regulation required bloggers who were employed, or otherwise compensated, by the company or industry promoting or endorsing a product or service to disclose the nature of that compensation. Moreover, the postings or comments of the compensated consumer then fall under the FTC's rubric of "deceptive trade practices."

Thus, while an unaffiliated and uncompensated blogger or twitterer might post, "I lost 50 lbs. with Nutrisystem," whether it is true or not, if a paid blogger made the same post, not only would it actually have to be true but, in context, the company (or its advertising company) would have to discuss whether such results are typical. The regulation discusses the amount of "compensation" necessary to make someone a "paid blogger," including whether simple discounts or free products to demo are sufficient.

But that is so 2009.But that is so 2009. Since then, many new ways have sprung up for retailers to interact with consumers or potential consumers. Apps enable sharing of information. Twitter enables people and companies to exchange information and ideas. Not to mention photo- and video-sharing Web sites and, yes, even food porn. Companies share information not only through their Web sites, their marketing materials, their advertising and their social media marketing but even through the Facebook postings of their employees.

This creates a legal and regulatory thicket for them to navigate. If an employee of a company posts a rave review of a company product without disclosing his employment status, is this "deceptive"? If he or she simply "likes" the endorsement of someone else, or reposts a rave review by someone else, again without disclosing the affiliation, does this violate the FTC regulation? What about so-called independent rating services—Angie's List, Yelp or others—that allow comments to be posted? They have the potential of being abused by both consumers and retailers.

And finally, what about entities like Reputation Defender that use tools like Google hacking to lower the page ranking of "bad" pages or bad reviews and to raise the page ranking of "good" pages or good reviews? If effective, these programs can present to the consuming public an inaccurate—or at least an incomplete—picture of the value of a good or service.

Of course, the answer is "be reasonable." The devil is in the details.

The law will allow a great deal of latitude in online and social media marketing. The touchstone is whether, taken as a whole, the advertising is "fraudulent or deceptive."

Take food porn. The reason, presumably, that Foodspotting is worth $10 million is because people using it believe it to be a place to get unbiased, unstaged and candid images of restaurant food (although The New York Times reported on one restaurant that permitted consumers to photograph their meals, but only in the kitchen, telling the consumers, "Wouldn't that look better on a marble surface?").

If Foodspotting is co-opted by the restaurants themselves, who post unrepresentative and staged pictures, not only is the Foodspotting brand diminished, but the activities might be seen as fraudulent and deceptive.

The area of regulation is in flux, as is the technology. So just ask yourself: If I was consuming this media, would I think of it as deceptive? There are no easy answers, and that's what keeps lawyers in business. And remember, leave the gun. Take the cannoli.

If you disagree with me, I'll see you in court, buddy. If you agree with me, however, I would love to hear from you.