The Office of Fair Trading, the British equivalent of the United States Federal Trade Commission, has determined that the hiring of bloggers and other social media contributors to promote particular products without adequate disclosure of the relationship may violate U.K. consumer protection laws. Handpicked Media Ltd (Handpicked Media), Case Ref. CRE-E-25932 (OFT Dec. 13, 2010).  This is the first time these laws have been applied online.

This is similar to the stance that the FTC has taken in a 2009 update to its "Guides Concerning the Use of Endorsements and Testimonials in Advertising," which includes disclosure requirements for similar arrangements.  I and others have written extensively about the guides and their application.

"The OFT was concerned that individuals engaged by Handpicked Media were publishing online content which promoted the activities of Handpicked Media's clients, without sufficient disclosures in place to make it clearly identifiable to consumers that the promotions had been paid for. This included publication on website blogs and microblogs (forexample Twitter)," the British agency wrote in its ruling.  "As a result of its investigation, the OFT formed the view that Handpicked Media may be operating in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs)." 

The agency reports that the company cooperated with the investigation, and agreed to adopt policies consistent with the consumer protection regulations. This is another similarity to the FTC, which has reached similar resolutions.

The Guardian and Daily Mail speculate that the ruling may be the start of an OFT crackdown on celebrities, such as model and actress Elizabeth Hurley, who endorse products in their social media postings.

In a list of "questions and answers" about the ruling, the agency states that it is simply applying existing consumer disclosure rules to the Internet, not creating new law. "These rules apply irrespective of whether the activity is offline (for example, promotional activity in newspapers and magazines) or online (such as websites and social networks)," the q&a list states. And that's where there is a difference from the FTC guides, which do not apply the same way to traditional media (a distinction that I've previously criticized).

But it is now clear that Internet marketers in both the U.S. and the U.K. must pay heed to endorsement and sponsorship disclosure rules in their online social media postings.