FTC penalizes 4 companies for payments to bloggers

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FTC penalizes 4 companies for payments to bloggers

Consumers tend to trust reviews on personal blogs more than overt advertisements, but they may need to pay extra attention to the seemingly innocuous personal postings.

The Fair Trade Commission yesterday fined four companies a total of 390 million won ($363,000) for paying bloggers in return for positive reviews in which the connection between the advertiser and blogger was not revealed.

The four companies - Oriental Brewery, Caffe Bene, Audi Volkswagen Korea and CTO Communication - contacted popular bloggers between 2011 and last year through an advertising agency to ask them to write glowing reviews of their products in exchange for a payment of 2,000 won to 100,000 won per post.

Phony reviews of OB’s beer were found on 20 blogs while 13 postings were found promoting Audi Korea without disclosure that it was an ad. Caffe Bene arranged 15 deceptive reviews and CTO Communication, an operator of an online shopping mall for men’s clothes, organized six.

By company, OB must pay the highest penalty of 180 million won while Caffe Bene and Audi Volkswagen Korea have to pay 94 million won each. CTO Communication faces 13 million won in fines.

But the paid bloggers are exempt from punishment given that the reward they received was small.

The FTC noted that bloggers can be subject to penalties if the rewards they accept are significant. Bloggers can also be penalized if they were actively involved in seeking out advertising agencies or companies.

This is the first case pertaining to deceptive reviews on blogs since the FTC revised its guidelines for online advertisement in 2012. The revision requires advertisers, companies and bloggers to notify the reader if a post is sponsored or paid.

The regulator also warned consumers to be wary of overly positive reviews online.

“As more and more people turn online when making purchasing decision, some companies and advertisers are trying to take advantage of that tendency,” said a representative of the FTC. “Given that online postings can have significant sway over where consumers spend their money, we will strengthen the monitoring of those reviews online.”

In June, the FTC released a standard statement reminding bloggers to notify readers of paid postings.

BY PARK EUN-JEE [ejpark@joongang.co.kr]

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