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The FTC and the Unreasonable Case of Disclosure

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I had a different post planned for today. Really. It was from Louisa Edwards and Tessa Dare on the topic of the unlikeable heroine. But yesterday news broke that the new revised Guide from the FTC on endorsements was going to go into effect on December 1, 2009.

Let me start off with saying that I believe in transparency. When I remember, I almost always state in a review whether the book was provided to me for free or whether I purchased it because I’ve always thought that a reader’s decision making process is interesting. To some extent, DA serves as reading journal for myself.

If you note, we have ads in the feed and it says that we are paid an affiliate fee. When we had an Amazon bookstore, we told you we received an affiliate fee from that. When we got the Sony Readers, we told you that as well. We believe in transparency. We believe that it is one of the most important parts of our relationship as bloggers with you as the readers and commenters.

However, I don’t believe that the new FTC guidelines actually help to further the goals of transparency but rather, instead, the new rules will be rife with abuse and misuse and uneven application.   Here’s why:

1.   Adversely affects smaller blogs. Small blogs like ours do not have editors.   We don’t get paid to review and what we do is truly a labor of love. Yes, we are starting to host ads but we cannot afford a full time editor for our reviews.   Blogs without editorial staffs will be subject to the new rules while blogs and mainstream publications, regardless of other issues and relationships, will not.   Let me state it this way: the blogs with the highest earning capacity will likely be exempt while the blogs with the lowest earning capacity will not.   I found it fascinating that Richard Cleland of the Bureau of Consumer Protection said this:

Cleland said that a disclosure was necessary when it came to an individual blogger, particularly one who is laboring for free. A paid reviewer was in the clear because money was transferred from an institution to the reviewer, and the reviewer was obligated to dispense with the product. I wondered if Cleland was aware of how many paid reviewers held onto their swag.

“I expect that when I read my local newspaper, I may expect that the reviewer got paid,” said Cleland. “His job is to be paid to do reviews. Your economic model is the advertising on the side.”

From Cleland’s standpoint, because the reviewer is an individual, the product becomes “compensation.”

2.   Uncertainty. Looking at the interview Ed Rants had with Cleland, it’s unclear who will be held to this new standard and what will be the trigger.   Each situation is viewed on a case by case basis and dependent on the “degree of relationship between the advertiser and the blogger.”   By having buy links at the end of the blog, we are engaged in activity that would “raise the eyebrows” of the FTC.   To avoid scrutiny, Cleland suggests that we return the ARCs and, I suppose, remove the buy links.

I’m even uncertain if I buy the book post review but still hold onto the ARC whether I am in violation of the Cleland interpretation. The fact is that a) none of us keep our ARCs because we aren’t supposed to sell them. All of mine go into the recycler and b) I often buy ebook copies of paper books that I have enjoyed.

Again, the lack of clarity in the drafting is so difficult for the blogger in trying to comply.

3.   Inappropriate publisher involvement. The new Guide makes advertisers (or those that provide the product so in this case either authors or publishers) liable to the FTC for any misleading statements made by the blogger.   Thus, if a blogger says something misleading, then the advertiser (publisher/author) is responsible for misleading the consumer as well.   The Guide, in fact, says

In order to limit its potential liability, the advertiser should ensure that the advertising service provides guidance and training to its bloggers concerning the need to ensure that statements they make are truthful and substantiated. The advertiser should also monitor bloggers who are being paid to promote its products and take steps necessary to halt the continued publication of deceptive representations when they are discovered

Like I want publishers breathing down my neck while I try to write fair and honest reviews. We’ve already turned away publishers who wanted to have oversight over our reviews. And frankly, I feel like I should be giving instruction to publishers on labeling issues.

4.   Encouraging negative reviews. Sarah Weinman jokingly said that FTC guidelines would be encouraging bloggers to be snarkier and meaner.   This is because the FTC equates endorsements with positive reviews.   According to Cleland, publishers send product in the hopes of a positive review.   In the examples in the FTC guidelines, a blogger who receives product and then gives a “positive review” will be said to have given an endorsement requiring appropriate disclaimer.   Therefore, the F reviews at Dear Author will be named FTC Review (because these don’t require disclaimers).   Alternatively, if we never gave another positive review or recommendation, we would probably be okay.

5. Author endorsements. Author blurbs are some of the worst offenders of the Guide in the business. Some of the authors giving endorsements haven’t even read the book. Some will give endorsements to everyone who asks. Read this piece by Jenny Crusie on author blurbs. The FTC Guides have long covered these as inappropriate but has enforced its own rules against publishers?

6. International Effect. A commenter on Mashable noted that ‘Anti-Cyber Squatting Act’ extended to Canadian bloggers

For example the ‘Anti-Cyber Squatting Act’ has seen Canadian companies suing Canadian citizens under US law because the servers that were used (to perform domain registration in this example) resided on US soil.

But the effect could be that publishers will refuse to send books to bloggers, no matter where they are located, if the blogger isn’t complying because the possibility of publisher liability.

7. Eliminating any relationships.  § 255.5 requires disclosure of “material connections”.

When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.

I’m not sure what this pertains to. I have attended luncheons, parties with publishers. Do I need to explain each and every piece of swag I am ever given? Could I even possibly remember every pen and mint tin I picked up? I doubt it.

It’s important to note that in various interviews around the web and in the Guide itself, the FTC contemplates that any comment, tweet, post on a facebook page, participation on a message board, must be accompanied by the relevant disclosure.

As for Twitter, the FTC isn’t letting you get a pass with the excuse that 140 characters–Twitter’s famous text limit–is simply too short. “There are ways to abbreviate a disclosure that fit within 140 characters,” Cleland said. “You may have to say a little bit of something else, but if you can’t make the disclosure, you can’t make the ad.”

8.   Violates the First Amendments. The reviews at Dear Author go far beyond a product description.   Commercial speech is speech by a manufacturer or seller designed to sell a product. It’s pure advertising. I defy anyone to say that a review, even an A one, is pure advertising.   Yes, the government can regulate commercial speech and it can regulate truthful, accurate commercial speech. I would argue, though, that Dear Author reviews are not commercial speech.

9. Potential for abuse. You might not be aware of this but there are people who not only hate Dear Author but despise me personally. There are people who enjoy posting my legal name and place of employment on the internet, I’m sure in hopes of getting me to shut up.

The FTC says that it is going to focus on advertisers and not bloggers but if the FTC   gets enough complaints, there is no doubt the blog will be investigated. The fact is that this sort of thing will actually serve to chill speech instead of encourage honest dissemination of thoughtful opinions. The end effect will be that fewer discussions of books will take place. Fewer books will be reviewed.

Book bloggers’ compensation is so tiny that it’s not likely to influence a reviewer. I mean, do you really think we are for sale for $7.99?  Relationships are much more likely to influence reviews.   There are plenty of established review sites that don’t divulge the private breakfasts, meet and greets, email exchanges and so forth that aren’t subject to these sorts of regulations. You have to rely on those reviewers to be impartial without knowing everyone who is in the inbox. This is the reason that we have always tried to disclose these relationships because we know that you all rely on us to tell you these things.

The FTC issue is not about whether transparency is good or bad. It’s about placing an uncertain burden on those who are least able to manage the compliance. This doesn’t protect the consumer because the most insidious relationships aren’t required to be disclosed. (For example, we disclosed that Janine is critique partners with Sherry Thomas and Meredith Duran. The FTC Guide would not require this).

I would like to see the FTC Guides revised to include some kind of monetary floor.   I think that there should be a warning system so that the blogger gets the opportunity to cure the defect.   The Guide should require the complainant to show links, tweets, comments, that would be considered to be violative of the new regulation.   There should be some qualification in the guide that reviews that are not commercial speech should be exempted. There should also be some time expiration so that a person doesn’t have to keep receipts or proof of payment for products after a significant period of time.   The fine should be equal to to the value of the product. (i.e., I could live with paying a $7.99 fine, not an $11,000 fine). These are all I can think of for the moment. The problem is that the Guide is now a new Federal Regulation and short of a lawsuit, I’m not sure we’ll get more clarity.

Until the FTC regulations are more clear, I don’t feel comfortable stating my positive opinion outside of Dear Author but don’t blame me, blame the FTC.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

46 Comments

  1. Terry Odell
    Oct 06, 2009 @ 06:04:25

    My head hurts.

  2. SarahT
    Oct 06, 2009 @ 06:28:31

    As they stand, the FTC guidelines leave too much to interpretation. However, the basic wish to implement controls over people promoting products online – and profiting from this promotion – is laudable. Many people buy products on the basis of reviews. I know I do. I want to know if a reviewer profits from writing the review or if there is any other potential conflict of interest in their endorsement of a particular product.

  3. GrowlyCub
    Oct 06, 2009 @ 06:56:44

    So, let’s see if I understand this right: if you had an editor for your reviews/site, you’d be in the clear?

    If so, I hereby volunteer for the position. I’m really good at fixing typos and heterographs.

    And I’m curious about something. I won an ARC from you. If I now write a review on my LJ is the publisher liable for it and do I have to disclose I got the book for free from you?

    How typical this is: a good idea (consumer protection) put into law before somebody thought things through. Punish the small guys, have exceptions for the big ones (sounds like some lobby was crafting this piece of idiocy, what else is new)…

  4. RStewie
    Oct 06, 2009 @ 07:10:39

    The most disturbing thing about this to me is the fact that the major players are exempt from the law…this makes no sense to me, because they are the “major player”…if the law can’t be applied evenly, then there are flaws in it that need to be addressed.

    I also want to throw out there that I don’t believe review sites can be equated with sales or advertising sites, even with a buy now link at the end. Review sites are read to get the review’s POV of the book; I read DA because, generally, the reviews and insights to the books are relevent to my decision to purchase the book.

    This whole thing is just not right. There are so many issues and unanswered questions about the application of the law that it seems obvious to me there ought to be (and will, hopefully) some clarifications.

  5. rosecolette
    Oct 06, 2009 @ 07:17:26

    I’ve perused the guidelines and am curious about one thing: What about fan supported websites? By fan supported I mean those blog sites that are kept running via reader donations rather than storefront clicks. Are they exempt from this because it’s more a reader supported or membership fee type site?

    I’d be more than willing to donate to Dear Author and Smart Bitches. Your two blogs have introduced me to some great books I might’ve passed up on otherwise. (Though, now that I think about it, more of a headache because the IRS will become involved? Maybe we can donate books?) And if you ever do want a freebie editorial staff, I’d be happy to volunteer. I spend so much time on book review sites someone might as well benefit from it.

  6. Maria Zannini
    Oct 06, 2009 @ 07:19:10

    Of all the things the FTC could have fixed–they chose this.

    While I do think there should be some disclosure when it’s a big time reviewer who gets PAID, I don’t hold individual reviews to the same guidelines.

    I read the reviews on Dear Author because they very often reflect my standard for good reading. Sometimes we disagree, but mostly on minor points. So when a book I thought about purchasing comes up for review, I know I’ll be getting the opinion of someone who has been “right” before.

    How they got the books is inconsequential because short of Consumer Reports, I can’t think of one organization that buys all the products they review.

    The only cause for concern is when you have a relationship with the author on review. It’s dicey because even if you put up a disclaimer, I automatically go into it thinking the review is already slanted.

    The bottom line is, in the government’s earnest to “protect” the consumer, they once again go too far.

  7. katiebabs
    Oct 06, 2009 @ 07:22:20

    I guess this means that bloggers have much more power and influence than we thought.

    And what about review print publication like RT, PW and even Entertainment Weekly? Why are they excused? What if I name myself as an editor? Would I be free and clear?

    I also read somewhere there maybe a smack down on Twitter if you tweet about products and or receive money for tweeting this information.

  8. Anna DeStefano
    Oct 06, 2009 @ 07:33:26

    The more I read into this, the more it seems that the FTC is protecting major players and sites by restricting the work of the “upstarts” doing the job for free, often doing a better job of it, and competing with the bog dogs for readers/click throughs. Or am I wrong…

  9. Liza
    Oct 06, 2009 @ 07:37:52

    I guess I don’t understand why an unpaid opinion piece seems to have the FTC all up in arms. I started my blog so I could keep up with all the books I’ve read and what I thought about each book. Now, to even give my opinion on a book I paid for, was given, or borrowed from the library, I have to put a disclaimer up with each post. I’ve even heard that facebook won’t be safe for the FTC either. Just seems like another way the govenment is trying to control everything the American people do.

  10. carolyn crane
    Oct 06, 2009 @ 08:12:55

    It’s so funny the FTC is pretending editorial (i.e. news stories, reviews, reporting) and advertising are unaffected by each other in major news organizations (cell phones and brain cancer, anyone?), or even minor ones with editors. Heck, I’ve written for, like, interior design magazines where the line between advertising and editorial barely exists.

    But thanks for this thoughtful piece, and clarification. I’m horribly guilty of pimping my pals’ books and I sort of assume people know we’re pals, but some may not. I need to start putting on a disclosure. I think I might make a fun little graphic.

  11. Denise
    Oct 06, 2009 @ 08:16:10

    I think the most blatantly wrong thing this new regualtion does is impose fines and restrictions on the little people. Why are only the non-commercial based blogs or reviewers being attacked?

  12. rebyj
    Oct 06, 2009 @ 08:23:02

    Consumers aren’t stupid. If we read a blog review on any kind of product we know to take it with a grain of salt and if it’s something we may purchase, one Google search brings up a multitude of other people’s comments about the same product. The days of taking one person’s opinion on ANYTHING are waaaaaaaaaaay past us now. This law is just unnecessary and a waste of tax payer money.

  13. The FTC and the Unreasonable Case of Disclosure | B12 Solipsism
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  14. XandraG
    Oct 06, 2009 @ 08:44:57

    Funny how this exempts the *editorial* decisions of newspapers to bury stories about the shenanigans and hijinks of major advertisers in newspapers.

    I’m sorry, but this whole thing just reeks of traditional newspapers whinging about dropping subscriber rates and wanting the gubmint to do something to stop their profits tanking. They blame the internet instead of their own lousy product and plummeting standards.

  15. azteclady
    Oct 06, 2009 @ 09:14:14

    I wonder how this affects blogs like Karen’s and the Book Smugglers. One partner in the good US of A, the other overseas.

  16. Laina
    Oct 06, 2009 @ 09:39:30

    Ahh, you gotta love being Canadian. You guys have it freaking rough.

    I’m wondering, though… I follow roughly 150 blogs at last count. The majority of those are book blogs. So my question, I guess, is who on earth is going to be responsible for finding people who aren’t doing this? And when and how is it disciplined? Do you get your blog taken away? A fine? Jail time? What if you’re busy with, you know, life, and forget the text? Do they penalize you for the first offense? Over a book review?

    Ah, ignore me, I’m rambing. This just doesn’t make sense to me.

  17. Melanie
    Oct 06, 2009 @ 09:42:54

    This is all so very, very confusing. So, does this mean that the affiliate links I post to Amazon will no longer be allowed?

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  19. Misfit
    Oct 06, 2009 @ 10:32:49

    So what does this do for the *professional reviewers* on websites as opposed to blogs? Do we then assume they are paid and thus exempt? What about the Amazon reviewers like Klausner (she is not alone) that also post on professional review websites. Shouldn’t they disclose whether or not they’re being paid?

    Although since Harriet runs a few blogs as well it will be interesting to see what she discloses once she’s required to.

  20. Heather (errantdreams)
    Oct 06, 2009 @ 10:38:38

    It seems like someone’s trying to use this to target things like viral marketing, or paid “advertorials” that aren’t marked as such, but through either idiocy or some slick work on a lobbyist’s part, screwed up. Instead, major outlets that have biases are excused (hello, there are plenty of people, sadly, who don’t realize how much things like advertiser influence can affect review & article content in major magazines), and small-time bloggers get caught in the crossfire. The end result is ridiculous.

  21. Jane
    Oct 06, 2009 @ 12:15:48

    @Heather (errantdreams) I don’t think it was slick work on the lobbyists. I do think that the FTC wasn’t aware of the scope of the use of products provided to bloggers.

  22. Jane
    Oct 06, 2009 @ 12:16:37

    @Misfit If Klausner is part of a group that has an editor that takes in the money and books separate from those that review, I’m guessing she is okay. It all depends on the circumstances.

  23. Jane
    Oct 06, 2009 @ 12:17:16

    @Melanie No, it means if you have affiliate links that you will have to make a disclosure of those affiliate links.

  24. Jane
    Oct 06, 2009 @ 12:18:18

    @Laina The enforcement part hasn’t been worked out as far as I know. But there is established law on what the FTC has to do to penalize you. It cannot do it alone, but must present evidence of non compliance to an administrative law judge.

  25. Jane
    Oct 06, 2009 @ 12:19:34

    @XandraG I don’t think the newspapers had anything to do with it. Instead, I think it was consumer groups pushing for more oversight to prevent astroturfing – or fake grassroots.

  26. Jane
    Oct 06, 2009 @ 12:20:07

    @rebyj I told Robin earlier that if readers of the blog felt like the FTC made our reviews more trustworthy that I wasn’t sure we were the right blog for those readers.

  27. Jane
    Oct 06, 2009 @ 12:20:45

    @Denise Because we don’t have the barrier between who gets the money and product and who does the review. This “barrier” is supposed to bring with it an indicia of trustworthiness.

  28. Jane
    Oct 06, 2009 @ 12:22:09

    @Anna DeStefano I don’t think the FTC intends to protect major players, but I do believe that might be an effect of the regulations.

  29. Jane
    Oct 06, 2009 @ 12:22:51

    @katiebabs Any entity that has an individual that takes in the money and product separate from the individual that does the review would probably not have to run a disclosure.

  30. Jane
    Oct 06, 2009 @ 12:23:50

    @Maria Zannini I think that the disclosure is made so that you can have the option of totally bypassing the review. I completely understand your point. It’s easy to question the validity of a review when the disclosure is made and the disclosure isn’t meant to cleanse the review of bias, but to expose the bias so you can make an informed decision.

  31. Jane
    Oct 06, 2009 @ 12:24:39

    @rosecolette That’s so kind! I think we’ll do our best to comply with the disclosures here at Dear Author. For me, it’s going to other blogs or message boards where I’ll have to be careful.

  32. Jane
    Oct 06, 2009 @ 12:25:48

    @GrowlyCub No, it’s not merely an editor for fixing typos (although we always need those pointed out). It’s an entity that would be separate from the reviewers that would take in the money and the product and then disperse to the reviewers and then, I suppose, be responsible for returning the product to the advertiser (in this case, author or publisher).

  33. Wendi B ~ Wendi's Book Corner
    Oct 06, 2009 @ 13:49:50

    Love your post! I’m sure there is bound to be more confusion before this is all figured out, but you’ve helped me understand a little more than I did before. :) So. . . I guess I’ll be removing the Amazon Affiliate links (didn’t make much anyway – maybe $5-7 over the past year??, I’m also going to post a disclaimer or two on my blog stating what my purpose is (to document the books I read and share my thoughts). I’ve already got a special note saying “Thanks to ____ for sending me this book for review” or “This book was received courtesy of the publisher for review”. . . guessing those will fulfill the requirements. On second thought – think I’ll add to my profile stating that I don’t receive any compensation for sharing my thoughts – sure wish blogging was a real career!

    Thanks so much for your insights! ~ Wendi

  34. Wendi B ~ Wendi's Book Corner
    Oct 06, 2009 @ 14:40:36

    I hope it is ok, but I linked to this post from a Books Ning discussion group for the new FTC Regulations. Please let me know if you would like me to remove the link, but I found your post to be very helpful.

    :) Wendi

  35. Carolyn
    Oct 06, 2009 @ 14:43:23

    Thanks for posting the link to the interview with Richard “Clueless” Cleland. Did he or anyone at the FTC even bother to talk to any bloggers before they made up their rules? It sounds like they made up some rules for imaginary problems with wayward bloggers. Here’s a gem of a quote from Mr. Cleland:

    “If a blogger received enough books, he or she could open a used bookstore.”

    I predict one good lawyer will blow down this house.

  36. joanne
    Oct 06, 2009 @ 15:01:24

    For me, it's going to other blogs or message boards where I'll have to be careful.

    I understand, I think, but if you comment on twitter or on another review site, not as Jane @ Dear Author but as Jane Private Citizen, does that make a difference to the FTC regulators? Or is it a such a thin line that you would prefer not to test those waters?

    By the way, may I say, this all pretty much sucks.

    Are ALL the fake and/or dangerous diet plans off the internet so the FTC has time/manpower to worry about this? ALL Automobile ads are true and free of hyperbole? Spammers and Credit Scams have been eliminated? ID Theft is no longer a problem? Health devices sold online are all safe and work as described?

    As someone above said it’s such a waste of taxpayers money. Please.

  37. Evecho
    Oct 06, 2009 @ 21:17:58

    What happened to caveat emptor?
    Oh, look she/he made me buy this but I didn’t like it, I’ll sic the FTC on them.

  38. ag
    Oct 07, 2009 @ 00:33:03

    After all the progress we’ve made in the last century, we’re back to being watched by Big Brother. Boy, oh boy.

  39. Eirin
    Oct 07, 2009 @ 08:36:45

    @Carolyn:

    Here's a gem of a quote from Mr. Cleland:

    “If a blogger received enough books, he or she could open a used bookstore.”

    Right, ’cause opening a used bookstore is a surefire way to earn huge wads of money in a hurry. Can’t think why Get Rich Fast spammers aren’t flogging that.

  40. Eirin
    Oct 07, 2009 @ 09:15:30

    @joanne:

    Are ALL the fake and/or dangerous diet plans off the internet so the FTC has time/manpower to worry about this? ALL Automobile ads are true and free of hyperbole? Spammers and Credit Scams have been eliminated? ID Theft is no longer a problem? Health devices sold online are all safe and work as described?

    This.

    Especially for bloggers who review fiction. It’s not like buying a romance or fantasy novel is a major investment, nor is there any of the inherent danger one could possibly envision in the case of unvetted self-help, non-fiction books.

    At most, the buyer is out a few bucks, and if someone thinks following the script of The Millionaire Amnesiac Sheik’s Secretary in pursuit of happiness is a good idea…she’s likely beyond FTC’s help anyway.

    It’s a law that’s designed to pick at nits, while simultaneously ignoring the big pile of fail right up front.

    It also, as someone else mentioned, either assumes consumer stupidity, or ignores (or doesn’t understand) how readers follow blogs. Most people don’t seek out reviews on blogs; they follow blogs that review. It’s the distinction between going to a blog, any blog, to check out reviews for a specific product; and following a blog/blogs because the content, reviews included, is interesting.
    Readers/consumers aren’t stupid. I’d even venture to say that it’s impossible to, consistently and over time, write a deceptive advertisment-disguised-as-a-review-site and keep any sort of following. Astroturfing isn’t hard to spot. There’s no meaningful community-building and maintenance.

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