If your winery provides free samples, or other benefits, to wine bloggers, you should have a firm understanding of the Federal Trade Commission’s (the “FTC”) new Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Guides”). [1] Under the Guides, a blogger who reviews a wine must disclose that the winery supplied it for free or otherwise compensated the blogger. If the blogger fails to make the required disclosure, the FTC could fine the winery up to $16,000!

In the Guides, the FTC clearly states that it considers a blogger’s review of a product it received for free, or a review of a product made by a company that somehow compensates the blogger, to be an “endorsement.” The FTC is concerned that consumers reading such reviews, without knowing of the relationship between the blogger and the company, may be mislead into believing the review is entirely independent.

When a blogger reviews a product, he or she must conspicuously disclose whether the company provided that product for free or otherwise compensated the blogger. If the blogger fails to make the required disclosure, the FTC could penalize both the blogger and the winery with fines of up to $16,000. Interestingly, the FTC explicitly states in the Guides that the disclosure requirements do not apply to reviewers in traditional media. Our winery clients should take special note that FTC personnel have indicated that the likely targets of enforcement action under the Guides are the manufacturers themselves, and not the bloggers.

We should note that FTC personnel have indicated that they would not likely impose a $16,000 fine for a first offense. Rather, the FTC would likely institute a proceeding with a cease-and-desist order and mandate compliance with the law. Nevertheless, no one wants to deal with FTC enforcement action or fines and we believe it is prudent for our winery clients to take appropriate steps to ensure compliance with the guide. In the Guides, the FTC made it clear that a winery can best protect itself by advising bloggers about their disclosure obligations and then monitoring the conduct of those bloggers.

Recommendation

We recommend that any winery providing free samples or other compensation to bloggers who review the winery’s products (a) advise those bloggers of their disclosure obligations and (b) implement a policy for monitoring those bloggers’ compliance. We have drafted sample notification language for our winery clients to provide to bloggers. Please contact the author at [email protected] to receive our sample notification language or to further discuss the implications of the Guides.

Erik Lawrence is an associate in Dickenson, Peatman & Fogarty’s Business and Real Property practice groups. Erik is a member of the firm’s Wine Industry Practice Group. With a background in commercial banking, Erik joined the firm after beginning his legal career at Shartsis Friese in San Francisco. Erik can be reached at 707-252-7122 or by email at [email protected].

Attorney Advertising: This “To The Minute” bulletin is distributed and published for our clients and friends for general informational purposes only and is not intended as legal advice.

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