NEWS RELEASE
For More Information Contact: Eva Seidelman (202) 588-7751
For Immediate Release: December 11th, 2006

FTC Gives “Giant Christmas Present” to P&G, Word of Mouth Marketing Industry

Today, the Federal Trade Commission sent a letter to Commercial Alert denying its request to investigate the word of mouth marketing industry for deceptive marketing.  The FTC also declined to issue guidelines to the industry.

However, the Federal Trade Commission agreed with Commercial Alert that companies can deceive people by deploying “sponsored consumers” who hide that they are paid to promote products.

The Commission stated that “in some word of mouth marketing contexts, it would appear that consumers may reasonably give more weight to statements that sponsored consumers make about their opinions or experiences with a product based on their assumed independence from the marketer….In such circumstances, it would appear that the failure to disclose the relationship between the marketer and the consumer would be deceptive unless the relationship were clear from the context.”

“At least, the Commission acknowledged that companies can deceive people when their word of mouth marketers hide that they are trying to sell products,” said Gary Ruskin, executive director of Commercial Alert. “But the Commission gave the word of mouth marketing industry a giant Christmas present by refusing to launch a wholesale investigation of the industry for deceptive marketing.”

“The Commission should have used its own reasoning as the basis for an investigation of Procter & Gamble’s Tremor and other unscrupulous word of mouth marketers,” Ruskin said.  Procter & Gamble has enlisted a word of mouth marketing sales force of approximately 250,000 teenagers.  But P&G does not require them to disclose to their peers that they are part of a marketing scheme.

“Instead of acting like a watchdog, the Commission is more like a docile lapdog nestled in the lap of its corporate masters,” Ruskin said. “Next year, Congress should hold hearings on how companies trick millions of people—and especially teens – with word of mouth marketing.”

Today’s letter from the Federal Trade Commission to Commercial Alert is available on the Commission’s website, at http://www.ftc.gov/os/closings/publicltrs.htm.

On October 18th, 2005, Commercial Alert sent a letter to the Federal Trade Commission requesting it to investigate whether word of mouth marketers are violating federal law prohibiting deceptive advertising.  The letter asked the FTC to review evidence that “companies are perpetrating large-scale deception upon consumers by deploying buzz marketers who fail to disclose that they have been enlisted to promote products. This failure to disclose is fundamentally fraudulent and misleading.”

The full text of Commercial Alert’s letter to the FTC is available at: http://www.commercialalert.org/buzzmarketing.pdf.

Commercial Alert is a nonprofit consumer and public health group.  Our mission is “to keep the commercial culture within its proper sphere, and to prevent it from exploiting children and subverting the higher values of family, community, environmental integrity and democracy.” For more information, see http://www.commercialalert.org.

Commercial Alert’s web page on word of mouth marketing is at http://www.commercialalert.org/issues/culture/buzz-marketing.

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