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Ed has a link to the proposed new FTC guidelines on bloggers and compensation (effective December 1, 2009) and also a revealing interview with Richard Cleland of the Bureau of Consumer Protection. The whole post is a must read and part of the larger conversation on the FTC's decisions that pretty much set twitter on fire today. Here's some of the relevant bits for online book reviewers:

"The primary situation is where there's a link to the sponsoring seller and the blogger," said Cleland. And if a blogger repeatedly reviewed similar products (say, books or smartphones), then the FTC would raise an eyebrow if the blogger either held onto the product or there was any link to an advertisement.

What was the best way to dispense with products (including books)?

"You can return it," said Cleland. "You review it and return it. I'm not sure that type of situation would be compensation."

If, however, you held onto the unit, then Cleland insisted that it could serve as "compensation." You could after all sell the product on the streets.

Do you understand that? If you receive a book (or ARC) from a publisher and review it, then it must be returned to the publisher. You must not only return it but also retain proof that the book was returned. You must box it up, send it to Random House, Harper Collins, FSG, etc and you must ship it (I assume) return receipt requested. Then you must keep files of these receipts for what - five years? seven years? forever?

Now if you do not review the book then I assume you do not have to return it. However you would have to retain proof that the book was not reviewed. I'm not sure how to prove nonreview of a book but there you go. I assume also that you must not mention the book in any way on your blog that might constitute a recommendation. I'm going to assume you must also not verbally recommend the book to anyone. If you do this, then you would have to return the book because even though you did not formally review it, you have still recommended it and by keeping the book you retain compensation for that recommendation.

And if you send those nonrequested nonreviewed books to your mother or brother or niece or nephew as gifts? Have you, by sending them, recommended the books to others? And if they then recommend the books to others are you responsible for those recommendations even if you did not recommend the books to begin with?

Are you still with me?

In many ways, this all seems laughable. As Cleland states himself it hard to imagine how you could handle the mechanics of this rule: "I think that as we get more specific examples, ultimately we hope to put out some business guidance on specific examples. From an enforcement standpoint, there are hundreds of thousands of bloggers. Our goal is to the extent that we can educate on these issues. Looking at individual bloggers is not going to be an effective enforcement model." However, it does not matter if one guy at the FTC says it is hard to enforce because once the rule is in place, any guy at the FTC can enforce it. And that means that you need to disclose the source of every book you review online and you need to return every book you review online.

That's what he said: "You can return it," said Cleland. "You review it and return it. I'm not sure that type of situation would be compensation."

For everyone who thinks this is insanity central and a joke, I ask you what you will do when the FTC audits you based on the number of reviews you have written. And if you can not prove you have mailed all of those books back, expect the IRS to then audit you based on the compensation you clearly received (even though the value of an ARC is impossible to judge on a general basis). You will be fined by the FTC and then by the IRS. It will cost you money to review online - it will cost you a lot of money.

How do I feel about this? Simple. Reviewing books from publishers is going to be too expensive, both in time and money, for me. I will stop doing it. I will still talk about books I purchase or check out from the library but honestly maintaining my column? I'm not sure how I could do it. More importantly, I'm not sure I would want to do it at the risk of getting sucked into some audit/investigation vortex with multiple government agencies. Think I'm over reacting? Have you ever been audited? I've dealt with the FAA on aviation issues many many many times. There are stories I could tell you that are not to be believed. If the rule exists, it must be followed, regardless of the unreasonableness of the rule.

That is just how it is.

So authors, most of whom are being urged to market their books on their own these days, I wonder how you would cope in a blogosphere that is strongly hampered in its ability to review your new book? Do you understand what this will mean for you and the buzz buildup for your latest release? Are there enough print reviewers out there these days to get people excited about your book?

And hey - whose going to track where all those amazon reviewers get their books from? And what if you don't formally review a book but comment on other blogs about how much you love it? That's a review isn't it? Will they track you down and demand proof you returned that book?

Is it worth it to talk about books anywhere - even if you buy them yourself? You will have to retain proof of every book purchase for every book you write about. And yet we know you can't do that - not from used bookstores and garage sales. You can't prove that a lot of books were bought by you (and what about gifts?). So will they just audit the publishers to find out who they sent the books to for review and then go after you from there? And what if you received two or three or four copies of the same book? I have - and it's hard to stop. Do you have to return every single one? And how do you prove that?

I understand the FTC wanting to go after bloggers who post product endorsements without stating they do. So post on your site where the stuff comes from and be done with it. That simple. But return these items? Claim a case of half eaten Fritos on your taxes or return them? Is that what we are doing here - and are we really ready (and equipped) to do this?

Welcome to regulation of the internet frontier folks. And if this rule goes through, expect a lot more quiet in the lit blogosphere where even linking to an author's site - where the author then links to sites where their books can be purchased - could constitute advertising. Think I'm crazy? Then you do it, and let us all know how it works out when you get that letter from the FTC.

We need to push back against this, and hard. Any ideas?

comments

Add to this that the stuff being said at the interview show that the FTC (or this individual) doesn't understand things about book reviewing to begin with. "The copy remains the property of the newspaper." Huh; I don't know of any traditional print reviewers who return the book to the journal/paper they review for.

They can have my ARCs when they pry them from my cold, dead, hands...

I don't mind saying after a review if I bought the book, got it from the library, or for review. But the idea I should have to give it back is ridiculous to me. So then I have to incur the double expense of mailing it back AND buying a new copy if it's a book I want to keep? so stupid.

Tiff

And what of sites like goodreads, where I personally review books all the time - books I own, books I borrowed from friends, books I borrowed from the high school library I run, ARCs I received at BEA, etc - are such sites going to shut down? Are the thousands of reviewers on there going to be held accountable for their reviews and recommendations, which is the very purpose of the site?

As a librarian and book-lover, this whole thing concerns me. When I went to BEA last spring, I received many ARCs, several of which I shared with students, and yes, I recommended those, because reader's advisory is part of my job. Am I not to do this anymore?

And what of events like BEA, where there is no record kept of 'who got what' - will this no longer be allowed? Should I start mailing back my ARCs now?

My favorite part is the stipulation that testimonials must reflect "typical results." So if I really enjoyed John Green's latest novel but everybody else thought it was just okay, am I in trouble?

did i miss something here? how is my blogging a review proof that i received that book in compensation? are they going to look at my blog, make a list of titles and publishers, contact the publishers to determine from them which titles i was shipped? can they insist i identify the source of my review - ARC, library, personal copy? if i say all reviews are from personal copies (after all, they were sent to me personally) how will they prove otherwise?

it might be that the burden of proof is upon me to show that i did or did not send back books i received, but the FTC has to make its case first and they don't have the resources to do that large scale.

now, does that mean they won't find one or two cases to make a national stink about? perhaps, but i doubt it. i suspect they'll do what the FCC does with obscenity cases: investigate complaints. the law will be in place as a "fair warning" and will be used to prosecute those cases that are brought to their attention.

i anticipate that both sides - publishers and media that frequently publish reviews - are going to lobby against this on the grounds that it interferes with their ability to conduct business. no publisher is going to want to deal with record-keeping and processing of returned books, and it prohibits their ability to promote their products.

like is said, it's going to take a case of prosecution to underscore the problem. i sincerely doubt the FTC has really thought through the enforcement element, and it may devolve into a first amendment case when it's all over.

It is all crazy town, that's for sure David. And as everyone points out here - there are a million ways that people get books and recommend them that the FTC does not even know about. Which brings us back to Liz's original point - these people don't know a dang thing about the publishing industry and how reviewing works.

What really bothers me though is how in terms of publishing they are completely ignoring precedent - people have received books and reviewed them and kept those books FOREVER. We suddenly have to change that system because of the Mommy bloggers and celebrities? How about tackling those individual issues (say compensation over tens of thousands of dollars as the celebs receive w/o acknowledging endorsement) before addressing books?

It will be interesting to see how this continues to unfold, that's for sure.

Colleen, I think part of the problem is that the FTC left Mommy Bloggers unregluated for so long. Now they feel as if they must make up for that mistake but this isn't the way to do it.

ARC's are compensation. Please. They can't pay my rent or buy me food.
Does the FTC thinks bloggers make money. Please. I HAVE MADE NOTHING. I WILL CONTINUE TO MAKE NOTHING.

I hardly ever say where my books come from because I don't think it matters. Though the majority are from the bookstore or the library.

I always thought there would be some backlash for some bloggers waving their ARC's like they just don't care but I didn't think it would be this. I thought it would be publishers cracking down not the FTC.

Instead of cracking down on honest bloggers who don't do it for money, but simply for the love of the book, they should focus their attention on ARC's being sold on ebay. Do some kind of undercover sting operation and catch them.

Its easy enough for me to simply talk about books that are already out and avoid ARC's. I would hate to do it but I will.

I think authors and publishers must push back. This is going to hurt them more then us.

This is not good.

And how long before other countries catch on to this idea? And how long before people start asking 'Hey how do we know this guy is telling the truth about having bought these books themselves?' And how long before you ahve to state after every review 'and once again I bought this book myself'?

Wow. First I learned that ARCs can't be put into library circulation, and now I should return them. I have been giving them away to students. I will seriously consider this and decide what I need to do. Returning them would certainly be cost prohibitive. Thanks for the heads up on this topic.

What about if you receive an electronic copy? As a PDF ARC, for example?

Ha, Colleen: you hit upon the real problem: they're trying to treat book bloggers like mommy bloggers. Sure, I can see that there's compensation in reviewing a computer, or a stroller, but as Doret points out: where's the monetary value in a book, especially an ARC. Sure, we could resell some of the books (though the ARCs specifically say that they aren't for resale) but for how much. Five bucks? Two?

I'm thinking we all need to get off our rears and stop preaching to the choir and start hounding our representative and senators. Either that, or start hounding the FTC directly. What if we all sent Richard Clealand emails explaining our complaints?

They came to get the crafters and the thrift store owners and the cyclists, but I said nothing because I was not a crafter or a thrift store owner or a cyclist.

Now they're coming to get the book bloggers, and the incredulous squealing begins.

Go ahead and contact your congressmen and the FTC, but I doubt they'll listen any better than the Consumer Products Safety Commission listened to the thousands who wrote and called to tell them that lead in bicycle helmets and red ink was not a danger to ten, eleven and twelve year old children.

In a word, I am floored. Baffled. And dismayed.

Okay, three words. But I could think of many others.

Does anyone have the contact info for FTC? I will contact my congress person as well.

The resale value of even brand new, just came out books is so low to be laughable. I sold 15 recently released hardcovers after I read them to my local used book store and got $20.

I think you messed up a major point here. This isn't a "Disclose and Return" it's a "Disclose OR Return". If you return the book, then it is not compensation and you do not have to disclose it. If you keep the book then it is compensation and you do have to disclose it.

Actually I did (along with a lot of others) speak out about the crafters, etc. Sherry - and they did alter that a smidge in that at least Etsy is still up and running just fine. It's that you can't donate some used items now (like used stuffed animals) to thrift stores, etc.

But I still think most of those lead-based rules were lame.

Kevin, if you read the interview at Ed Champion's site, it is "Disclose AND Return". That is why I specifically put that quote in bold in my post. You can keep the book if you then disclose it ALSO on your taxes as compensation. But no one can tell us what the value is of an ARC or used book. As to returning the books - well, the publishers have not said a word but right now there is no place to return them to but the general shipping warehouse and I guarantee they won't want them. Further, I receive over 1,000 books a year (most unrequested) and there is no way I'm going to pay to send all those back yet I also do not think I should claim them as compensation with the IRS as I do not read them and instead donate them (primarily to Children's Hosp in Seattle.)

So - here we sit. FTC doesn't know the system enough to answer questions and we all wait until someone "big" gets tagged to work it out.

Hopefully there will be a place to file complaints with. I'll look into it.

Wait. I thought it was disclose OR return. I'm going to have to go back and reread that interview. I didn't realize it was disclose AND return. Now I'm just confused.

We've got a lot of grey area here, Natasha - which troubles me the most. Dealing with feds in a grey area is not good. I want black and white but if you read the rule it says nothing about mailing back - that is what Cleland said in the interview. So already you have interpretation going on that might not adhere to the spirit of the rule. And that is scary.

Can the Feds even do anything in black and white? It seems like everything from the government is a gray area.

This seriously disturbs me. If you do ever find a place to send complaints, please share Colleen. I agree this needs to be squished, but how do you even write to the FTC. The FTC has executively-appointed positions, aren't they? So I don't think contacting senators will do anything.

It really makes me wonder not only what will happen to blogs, but to reviewing sites like amazon.com, goodreads, librarything. And what about ALA, BEA, etc. What about the Cybils awards? And as someone else pointed out, I don't make money on my blog. In fact, I lose money! But I do it because I love it. But if I'm going to have the threat of a federal audit on my hands, can I afford to keep blogging?

Yet another example of the government sticking its hands in something that it doesn't fully understand.

Thanks for posting this, as someone that is just getting into book blogging it is definitely something I will keep on my radar. I don't currently receive any ARCs, but I have won 1 or 2 in a contest before, and then blogged about it. Guess that would count against me too, huh? I am very interested to hear where this goes and will be looking up ways I can do my part to speak out.

To be clear on this, it is disclose OR return.

The way I read it, it was disclose ON YOUR TAXES AS COMPENSATION or return.

Not just disclose on your post as "I received this reviewed book as an ARC".

You have to list it as compensation as well to the IRS or return, correct?

I am still trying to grasp how ARCs could be considered compensation.

Be it disclose and return or
disclose or return.

I would "assume" that if you retain it as compensation you would have to declare it as such on your taxes. Technically you should be doing that now. Anything you receive for services rendered is considered compensation I believe. On the flip side if you go this route you open yourself up to all types of tax write offs (you office, your bandwidth, your pc, etc...)

Finalized copies are easy, it's the list price. ARC's are a whole other issue...

Actually the IRS's position on this (and pretty much their only stated position) is quite old - 20 years or so and states that compensation for the books must only be filed tax-wise if you donate the books and then claim that write-off. In other words, if you just keep the books (finished or ARC) then the IRS has not considered this compensation thus far. The FTC now stating that they are indeed compensation opens up a can of worms that has not existed with the IRS.

As to the ARC issue - yeah, that will be a lot of fun for anyone to sort out.

[My info on the IRS comes via Liz Burns at A Chair, a Fireplace and a Tea Cozy who has researched that extensively.]

I wonder if the IRS or FTC would except ARC's as payment for a fine.

My understanding of write-offs has been what you stated - if you sell or donate books and then claim write-off. Using this word "compensation" is just confusing. ARC's do not have a resell value. Review copies I could see as list price. Is this all from the interview or is this in the actual FTC document? It seems that the FTC document would need a whole section on the IRS and tax claims. I must admit that while I have skimmed it, I haven't yet read it word for word.

Accept not except. Note to self don't apply for any editing positions.

marie

I always say Review copy provided by___.

If getting a free book is compensation for a review on my blog.. then I take the review down, how does that work? Are they going to print out hard copies of all our reviews to prove it was there, (oops! it's not there now so now what?)

What if I review a book, and don't link it to anything? That's not linking to a bookseller/advertisement. This is free speech.

What if my time it takes to read a book, and write a review, at $7.25 (minimum wage) an hour, is MUCH more then the cost of the finished book.. will the IRS/FTC compensate ME?

Selling ARC's is not allowed. So how does that equate to any monetary value?
What are the Publishers going to do with used, old ARC's that I am required to send back? A year or two later perhaps?

I think this puts a serious damper on the whole process, and I would certianly stop accepting review copies if there was legal mumbo-jumbo to go with it.
If the publisher sent me a pre-paid return label that I could stick in a mailbox for pick up, I would send it back that way. But to go through the return receipt requested is ridiculous and we are talking at least $2.38 for the media mail rate, $2.30 for return receipt via mail, .070 for delivery confirmation, & 2.80 for certified mail.
RIDICULOUS. All this for an ARC that is not supposed to have ANY retail Value!!

and ESPECIALLY the books that magically land on my doorstep that I did NOT request!

I do understand the Mommy-blogger issue, of clothes, baby items and jewelry and the MEGA load of Advertisments and links they DO have, but that is such a different realm that I wish they would discern the difference between a book blog and a mommystyle-product-reviewer.

I vented, preached to the choir, and know that no one in LaLaLand at the FTC gives a crap or even understands that book blogging is a hobby. That we enjoy. Till now. They must be jealous. =)

Part of the concern from this though is the notion that people practicing a hobby can be easily "bought" by a book. If you do not consider yourself a professional then the thought process goes that you will happily write whatever the publisher wants in order to get free books - thus you are being compensated to be a mouthpiece for RH, HC, S&S, etc.

This is why I have always pushed hard for people to develop and maintain professional standards. Do you see the perception difference?

The odd thing is that when writing for Booklist or Jacket Copy I would be perceived as professional whereas for Bookslut I am not. And yet my connection to all those editors is just via email. Someone printing the reviews makes a difference to what I would write or how easily I would be persuaded to write whatever the publisher wants. This is the same argument we had with the NBCC a few years ago - which might explain why they have been so quiet.

I loved Marie's postal price breakdown. So far from priceless.

Would an ARC still be considered compensation if a blogger gave it a bad review

Colleen, I agree with maintaining professional standards. Blogger must decide for themselves what that means.

There are some blogs I won't visit because there are simply too many adds on the sidebar. I wonder if the FTC took issue with new release countdowns on sidebars.

I wish I knew which and how many review blogs the FTC looked at to decide this new act was needed? Did they use a large enough sample? I am guessing no.

What they are saying is that if you received the ARC/Book and KEEP IT FOR YOURSELF - you would have to disclose that you did receive the book from the publisher to review and that the copy was your compensation for the review. However if you were to review the book but you sent the book back or disposed of it (giveaway, etc) in another manner, then you would NOT have to disclose it because you would not have been compensated.

Basically if you receive anything - material or monetary from the book - link to Amazon affiliate program, the book itself from publisher, you have to disclose that you are being compensated in some way, shape, or form for the review.

I simply post a disclaimer at the beginning of each post stating how I obtained the book. I have no affiliate links in my of my posts (I used to but stripped them all out) and each post that has a book from a publisher, I have disclosed where I got it and that it was the only compensation I received.

If the new FTC rules were really that much of a problem, then the publishers, etc would say "ok, we aren't sending out review copies anymore because we don't want you to get into trouble over it." When the publishers stop sending out the copies, I'll stop accepting them and stop blogging them.

Until then, I'll post the disclosure/disclaimer and keep writing.


I'm in agreement with Charity. I just started my blog a year ago and if publishers wish to continue to send me ARC's I will continue to review them. I have a ARC policy posted on the About page of my blog which states that if I review a book that is sent to me by a publisher I will let my readers know. That's just having integrity. I don't have advertisements, because I don't expect to make any money off of this.

As for disclosing ARC's on my taxes - sure. No problem. I'll also disclose the books I reviewed that I paid for out of pocket. Let's see who comes out ahead, me or the IRS.

I understand that many of the more established bloggers have more ARC's sent to them than I do (even ARC's that are sent on spec), but won't you only have to disclose the one's you review? If you don't review the book, then where is the relationship?

As I stated above, the IRS has never required that books received for review be claimed on taxes. If you donate those books and then claim the donation as a write-off then you must also claim the books as compensation as well. Otherwise there is no claim.

No one can agree on the value of an ARC. Most have no value but some highly anticipated ones have a high value - until the final copy comes out. And then maybe 20 years later they are valuable again. So ARCs are pretty impossible to value.

And honestly I have NO interest in getting into some sort of disclose/not disclose situation with the IRS. It would be incredibly difficult to track and maintain a paper trail on what books were bought by me, checked out by me or given to me by someone else or sent by publishers.

Thinks about all that paper for SEVEN years. No way.

I received just under 1,000 books last year and I'm nothing compared to larger sites. No print reviewer has ever had to claim the books - and when I review for print I don't have to claim the books. I don't see why I should have to do online. And no one at the FTC can seem to explain this.

WARNING: Rant Ahead (I've had this stewing around in my mind for days and have to let it out.)


There are dozens, even hundreds of teens and pre-teens who review on personal blogs because they ENJOY READING and have no knowledge of how to deal with anything legal/taxes/etc. I know of an 11-year-old with a book blog. Do you think she knows how to deal with taxes? Are they really going to fine the 13-year-old whose favorite author sent her a book to review on her blog? How are teen book bloggers supposed to keep their blogs? For many of them, book blogging is a hobby. They aren't try to cheat anyone. Yes, there are free books involved... but they are kids who like reading! Some of them can't afford to buy their own books. Neither can they afford to mail back all the books they receive. I don't understand why it would be so wrong for them to keep their books.


I've been hearing that bloggers who accept books for review (and keep them) are obligated to write a positive review. I don't know if this is true, but if it is... something is wrong with the FTC. I know that most bloggers aren't "selling" positive reviews for a free book. It is generally understood that when a publisher or author sends a blogger a book that they will get an HONEST review. That's the point! The FTC doesn't know the reality of book blogging. Most of us blog because we love books and like to help people find good reads.


I honestly don't know how I'm going to be able to keep my blog if these new regulations go into effect. I started my blog almost a year ago and I put a lot of my free time into it. I don't know what I'm supposed to do, especially with all the conflicting information I'm getting. This whole thing has just made me depressed and sickened.


Thought you'd be interested in Galley Cat's post, she attended a session with an FTC representative at kidlit con and has some clarification:

http://www.galleysmith.com/2009/10/18/ftc-guidelines-kidlitcon-session-recap/

Thanks Jodie - I have a brief follow-up thought here:

http://www.chasingray.com/archives/2009/10/ftc_question.html

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