According to the Financial Times, the Federal Trade Commission is considering holding companies liable for false statements made on blog posts and social networking sites. The Commission is revising its guidelines based upon advances made in new media and is looking particularly hard at the practice of paying bloggers and social networking brand evangelists. 

As we have opined in previous articles, the concept of "pay for play" - whether in traditional media or social networking - has serious flaws. Paying somebody to provide a positive opinion on your product or service can backfire if it becomes common knowledge that they are in fact a paid spokesperson and not an objective third party. A PR program that is not based on earned media coverage from legitimate new and traditional third party outlets is essentially worthless. 

The question becomes how far this concept can be taken. For example, if a company provides a free sample of their product to a blogger for evaluation, and the blogger makes exaggerated claims about the product, can the company be held accountable? 

Additionally, the FTC has become increasingly concerned about the fact that social media and interactive online sites offer marketers an opportunity to better target a visitor's behaviors. 

According to the Word of Mouth Association, spending on social media was over $1 billion in 2007 and is expected to surpass $3.7 billion by 2011. In response to this growth in spending, the FTC has issued a report considering the implementation of stronger privacy protections based upon four principles: 

• Transparency and Consumer Control. Websites that collect information to target behavior and preferences should disclose this and allow web visitors to opt-out. 

• Reasonable Security and Limited Data Retention. The FTC maintains that companies should only retain data that is necessary to fulfill legitimate business and legal needs. 

• Affirmative Express Consent for Material Changes to Existing Privacy Promises. If a company changes their privacy rules, they will need a consumer's consent before making those changes. 

• Affirmative Express Consent to (or Prohibition Against) Using Sensitive Data for Behavioral Advertising. This would require a company to obtain permission from a customer before they receive any sensitive personal data.