The Legalities of Free and Discounted Services

Thursday, August 26, 2010

Earlier tonight, celebrity wedding planner, Marcy Blum, twittered about her frustration with bloggers and editors getting married and then writing about and promoting all the services they received, but without disclosing that any of the services were free or discounted. Frankly, I don't know who Marcy was referring to. I haven't asked her yet because I wanted to write this post in as unbiased a way as possible.

Several people replied to Marcy saying they thought promoting the free goods without disclosing it was unethical. More than being unethical, it is illegal. Here is what the FTC (Federal Trade Commission) regulations and U.S federal law have to say about the matter:

*If you are receiving a wedding service for free or at a deep discount, and you post about that vendor anywhere online, you have to disclose that you received the service for free or at a discount. The fine for failing to do so can be up to $11,000 per infraction.

*If you are a vendor who provided the service for free or a deep discount and it is not disclosed in the posts written about you, you can ALSO be fined up to $11,000 per infraction. The onus does not just rest with the recipient. The FTC can fine one or both of you; you are NOT off the hook just because you did not post about it yourself.

*You must also disclose "material connections" or free products you may receive or give, not just services.

*These regulations apply not just to blogs, but to Facebook and Twitter updates, and other social media platforms as well. 

*The FTC regulations are retroactive to October 5, 2009 when they took effect and anyone can report a violation. You may think you can get away with it, but if you have a competitor or anyone with something to gain by you being reported, you could be in trouble.

The FTC implemented these regulations to bring more transparency to business interactions and the consumer. You can read the full guidelines here. If you're thinking about giving someone a free or discounted service or product because it could result in great a great press opportunity for you, make sure that both you and the recipient are committed to disclosing that fact before you donate your time and service so that you can avoid any legal issues.

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