The Federal Trade Commission made headlines last week by issuing guidelines for product reviews, testimonials and endorsements by, among other folks, bloggers.
The mere fact that these new FTC guidelines specifically incorporate bloggers seems to have caused at least some of them to collectively twitch.
In reality, what the FTC is now requiring of bloggers; that is, that "material connections" between said bloggers posting endorsements and the advertisers whose product is being endorsed be disclosed; is already considered best practice. And bloggers have been discussing the ethics involved among themselves for quite a long time.
So, what's the big deal?
It is commonly thought that what makes government regulations burdensome for most small business owners is the ridiculous amount of paperwork involved. And that is a problem, particularly for small businesses with between twenty and fifty employees; large enough to have to comply but not large enough to have the spare personnel to do it.
But this whole episode reminds me that there's another kind of compliance burden that you don't hear about quite so often, a burden that affects a lot more of the nation's small businesses than the paperwork burden.
You see, many microbusinesses escape the paperwork because their firms are so small that they don't even have to worry about compliance issues. If you take a look at the federal regulations that have any sort of small business exemptions attached to them at all, they typically apply to firms with fewer than five or ten or twenty workers.
Once you get to twenty employees, nobody wants to give you a break but, on the other hand, once you get to twenty employees, you've exempted more than 95% of all the businesses in the country.
Those very small businesses still have to comply with all sorts of consumer protection regulations, many of which said small businesses know nothing about. And some of those regulations have to do with things that the typical microbusiness owner might not even consider.
For example, I've encountered a lot of microbusiness owners (mainly women) who have gotten into making and selling children's clothing. I don't know how many of those women know to check the FTC web site to find out about labeling requirements (that is, what sort of information is required to be on the label sown into those garments).
Another popular sort of online business for many women involves toys or games or communities that target children. In that case, they will need to be in compliance with the Children's Online Privacy Protection Act (COPPA). Again, they can get information about how to comply from the FTC but, again, many of them don't even realize the law applies to them.
And, as I discussed in a recent article for Small Business Trends, the zillions of us who use email for business need to keep ourselves on the right side of the CAN-SPAM regulations, guidance for which is also available from the FTC.
Are you beginning to see a pattern here?
There are all sorts of agencies that you hear about in the context of regulations and small businesses; mainly the Occupational Safety and Health Administration (OSHA), the Internal Revenue Service (IRS), and the Environmental Protection Agency (EPA).
You don't hear about the FTC as much but it's FTC regulations that probably impact the largest number of small businesses. Their regulations have less to do with filling out forms than they have to do with basic operations: how you do the things you do.
The agency is charged with ensuring fair trade and protection of consumers but, fortunately, it also has something of a reputation for being small business friendly. Most of the rules they write don't have to be an albatross about the neck because most of what those rules are trying to accomplish will be the same as the customer service goals of any reputable small business.
So why am I bringing it up?
You can't comply with regulations that you don't know exist. But, as I'm sure you've often heard, ignorance of the law is no excuse. The FTC won't throw you in jail but they can levy some pretty hefty fines for lack of compliance.
There may also be some indirect liabilities; such as the fact that both endorsers and advertisers are liable for violations in those new FTC guidelines I mentioned at the top of this article. You don't want those sneaking up on you.
It would be worth a few hours of your time to click around the FTC web site. Bookmark it and make friends with it. The agency offers plenty of compliance help, their guides tend to be written in plain language and, as rule makers go, they really aren't the bad guys.
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About the Author: Dawn Rivers Baker, an award-winning small business journalist, regularly reports and analyzes small business policy and research as the Publisher of the MicroEnterprise Journal, where the nation’s business meets microbusiness. She also publishes the Journal Blog.
