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“O frabjous day! Callooh! Callay!” He chortled in his joy.  — from Jabberwocky by Lewis Carroll

December 1, 2009 dawns a new day for anyone trying to sort wheat from chaff in the feng shui market. Your job will be much easier! That day is when new rules set by the Federal Trade Commission go into effect to monitor claims and disclosures on websites.

I’m sure you’ve read a site that contains gushing claims like the following:

Master Blah-Blah has accomplished hundreds (maybe thousands) of feng shui consultations! Master Blah-Blah will load your bank account, create your knight in shining armor, inspire love and devotion, and increase your energy and stamina!

Now websites selling products have to explain whether they get something in return for endorsing a product (disparagingly known as “blogger payola”). The FTC now requires full disclosure of any monetary relationship between a website and a sponsor, and will make websites responsible for any unsubstantiated statements they make.

People are not barred from accepting gifts or cash. Rather, the new policies are to ensure honesty and full disclosure of any transactions, and to ensure that websites contain accurate claims about products and services. (The FTC is also clamping down on infomercials, celebrity endorsements, and advertising that uses the “results not typical” disclaimer.)

In effect, the new regulations are no different than those governing newspapers — which is not a bad thing as Lyssa in Austin explains:

See, in the newspaper world there exists an incredibly strong “separation of church and state,” that is, advertisers and editorial. Newspaper employees/reporters/staff are prohibited from taking anything that remotely resembles a free gift/sample/perk. It goes so far that I remember a Statesman staffer having to turn down a sailing trip with a friend she’d made through the paper because they’d met through the paper and she didn’t want to risk breaking the rules.

How this change affects you

When a website receives a free product or a cash payment to review a product, they must disclose the material connections (exchange of money and/or products) they share with the seller of the product or service. Similarly, if a website or individual endorses a product, they must disclose any material connections they share with the seller of the product or service.

If I write about a product that someone gave to me or paid me to write about or that gives me a commission on sales, I have to tell you that.

If a website fails to follow the rules,

both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement — or for failure to disclose material connections between the advertiser and endorsers.

And the fines are steep.

But things get even more interesting

If a website refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. Disclosure is the only way for you to know whether there is a conflict of interest. It is too easy right now for companies to advertise using biased research and inflated claims.

A paid endorsement — like any other advertisement — is deceptive if it makes false or misleading claims. As the FTC says,

advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect.

A review that does not accurately reflect someone’s experience is dishonest — just as dishonest as a review that presents the writer as a customer rather than a paid spokesperson.

This means that anyone selling “chi enhancers” and other gadgets must clearly disclose their relationship to the supplier, and accurately state the results you can typically expect from using the products.

It also means that websites full of testimonials about a feng shui practitioner’s skills must clearly disclose the results you can typically expect from the practitioner!

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