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Posts Tagged ‘Tom Chernaik’

Another Company Pinched by FTC for Deceptive Consumer Reviews

Legacy Learning Systems, producer of a DVD series featuring guitar lessons, and its owner Lester Gabriel Smith has settled with the Federal Trade Commission over charges that it deceptively promoted its products using online affiliate marketers. These affiliates posed as ordinary consumers and posted positive reviews and endorsements about Legacy Learning. Sound familiar?

Legacy Learning is settling for $250,000. According to the FTC’s press release, “such endorsements generated more than $5 million in sales.”

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FTC: We’re Not Fining Ann Taylor Because Their Social Media Efforts Were A Failure

FTC – Ann Taylor

In recent weeks, PRNewser had heard about the FTC potentially investigating brands for violating their recently revised, “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

The guidelines read in part, “bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.”

The FTC told PRNewser in late March that they there have not been any cases brought for failure to disclose. However, the agency recently announced that it looked into a promotion from retailer Anne Taylor for a program that offered bloggers gift cards in exchange for covering an event.

What is interesting is that the FTC decided to close the case against Ann Taylor in part because the program was not a success.

In a letter to Kenneth A. Plevan, Esq., Counsel for AnnTaylor Stores Corporation, FTC associate director-advertising practices Mary K. Engle said:

Upon careful review of this matter, we have determined not to recommend enforcement action at this time. We considered a number of factors in reaching this decision. First, according to LOFT, the January 26,2010 preview was the first (and, to date, only) such preview event. Second, only a very small number of bloggers posted content about the preview, and several of those bloggers disclosed that LOFT had provided them gifts at the preview.

Tom Chernaik, Principal at Digital Communications Group, which has developed a service called CMP.ly to help brands and bloggers disclose endorsements online, told PRNewser, “It should be made clear that the gifts were valued between $50 to $500 and the FTC has made it clear that there is no minimum threshold to the value of a gift or payment.”

“This announcement confirms that material connections must be disclosed and that compliance and monitoring are not optional,” he said.

An FTC spokesperson again declined to comment on any additional pending investigations.

RELATED: Harvard Law Review: FTC Blogger Guidelines ‘Unconstitutional’