Last week, the Financial Times reported that the FTC planned to adopt legislation which would regulate some forms of social or word of mouth marketing. Specifically, the new laws would "hold companies liable for untruthful statements made by bloggers and users of social networking sites who receive samples of their products".

Raphael's The Three Graces (1501-5)

We've touched on this idea before when discussing WOMMA, when we agreed that it is unethical for marketers to hide their identity or to manipulate consumer's opinions through coercion (bribes, in this case).

The FTC has additional concerns. Since they are not officially advertisers, bloggers can make any claims about a product that they want. Without regulation, some of these claims might be harmful to the public (e.g. this product is safe for babies, cures cancer, etc.).

While the legislation does not shut down bloggers and their opinions, it attempts to draw a line between real and manufactured word of mouth. If a company tries to induce a statement from a blogger by giving them free product or other compensation, then that person is considered a marketer. Under the new laws, it's not just the companies that are on the hook: bloggers who receive compensation would be liable for any statements they make about products.

The problem is: how can you tell who is getting paid and who isn't? What if someone receives a legitimate free sample and decides to write about it? Are we questioning the intent of all samples, now? Enforcing the law could be very messy.

Regardless, I agree that the laws regarding advertising have to try to catch up to technology. Hopefully these new laws will have a chilling effect on the most overt attempts to manipulate word of mouth and companies will refocus their efforts on the best way to turn customers into cheerleaders: make great products.