Often when faced with the task of purchasing a high-end product, many consumers jump online to find out what’s available. Brands, models, features and price points are all considered and compared, culled from company and store websites around the web.

In my case, after a thorough spreadsheet is created with the various product specs, I often still don’t have a decision made. That’s when I start searching through online reviews of the top 3. Now that particular behavior is just me - I’m sure most buyers don’t build a thorough spreadsheet and some might possibly even go straight to the reviews.

Ah the power of peer reviews. Where there are no loyalties to any one brand in particular, where anything goes, where it feels like you’re just chatting with a friendly neighbor. Or not?

Recently, the FTC published a set of proposed rules that would pull the bloggers who write commercial endorsements under its jurisdiction. This has the potential to completely change the landscape of online reviews.

As BNET Advertising reported, it all began when, “the FTC began its review of endorsements in 2007. The agency is concerned that when, for instance, celebs appear in weight-loss ads claiming they lost 50 pounds, that consumers might believe these results were typical even though on-screen small print displays a disclaimer.” Since then, the FTC has moved towards blogs and bloggers, inviting debate on proposed amendments.

Now, from the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising:

the potential liability of advertisers who use bloggers to promote their products and of the bloggers themselves.

and

the general principle material connections between the endorser and the advertiser should be disclosed to several new forms of marketing – blogs, discussion boards, and “street teams.” The Commission specifically seeks comment on these examples, with particular focus on the expectations held by consumers as to the relationships that exist between advertisers and endorsers in these new marketing contexts.

For companies, that means placing your brand in the hands of potentially fabulous brand carriers will suddenly become much harder. Pay per posts will be particularly impacted. The example that the FTC uses concerns skin care products (emphasis mine):

A skin care products advertiser participates in a blog advertising service. The service matches up advertisers with bloggers who will promote the advertiser’s products on their personal blogs. The advertiser requests that a blogger try a new body lotion and write a review of the product on her blog. Although the advertiser does not make any specific claims about the lotion’s ability to cure skin conditions and the blogger does not ask the advertiser whether there is substantiation for the claim, in her  review the blogger writes that the lotion cures eczema and recommends the product to her blog readers who suffer from this condition. The advertiser is subject to liability for false or unsubstantiated statements made through the blogger’s endorsement. The blogger also is subject to liability for representations made in the course of her endorsement. The blogger is also liable if she fails to disclose clearly and conspicuously that she is being paid for her services.

Their suggestions for preventing unsubstantiated statements is for the advertiser to provide guidance and training to the blogger and to carefully monitor their posts to halt any untrue claims. Now, how does that make regular consumers want to engage in the dialogue on a blog when they can read between the lines that the advertiser is pulling the strings? Sure, it is important for bloggers to disclose any gains they’ve received in writing a product review; however, such close monitoring of such posts could lead to the deterioration of blog-like articles on the web.

Another example speaks more closely to this situation:

A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. The readers of his blog are unlikely to expect that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact would likely materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge.

So what does this mean for your brand? Well, for one, the relationships you forge with bloggers do need to be clean and honest. Requesting the that blogger disclose what he or she got in exchange for writing a review is important. Your customers will ultimately respect that you’re associated with this honesty. Moreover, an unfavourable review is not necessarily a bad thing. As we’ve talked about in a previous post about listening to your customers, catching those reviews enables you to make improvements, to respond directly in a forum that accepts your contribution, and to re-engage alienated customers with your brand, potentially regaining their loyalty.

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The $54 million lawsuit against Best Buy for a lost laptop has been in the news for days now. Long story short in case you haven’t heard the details, a woman, Raelyn Campbell, brought her laptop to Best Buy (NYSE: BBY) for repair under Best Buy’s extended warranty plan. The power button had broken off, and Ms. Campbell was told it could take 2-6 weeks to repair it. Three months later and hours of time wasted contacting Best Buy to get her laptop back, Best Buy confessed it was lost.

Best Buy offered her a $900 gift card to make up for losing her laptop along with all of her personal files and data. She told them her laptop had cost $1,100 and her data was worth more than that. She asked for $2,100. Best Buy ignored her. At this time she was told that she was at risk for identity theft and Best Buy had not filed a legally required notice that she was at risk. She filed a lawsuit (representing herself) for $54 million. Best Buy then offered her $4,100 if she would drop the lawsuit. Read more

Consumers International today announced the 2007 winners of the International Bad Products Awards.  400 delegates from national consumer organizations and governments met in Sydney, Australia to attend Consumers International’s World Conference.  The result - the worst products in the world were selected.

The purpose of the International Bad Products Awards according to the Consumers International website is, “to highlight failings of corporate responsibility and the abuse of consumer trust by internationally recognized brands.”  Consumers International’s Director General, Richard Lloyd further explains:

“These multi-billion dollar companies are global brands with a responsibility to be honest, accountable and responsible. In highlighting their shortcomings Consumers International and its 220 member organisations are holding corporations to account and demanding businesses take social responsibility seriously.”

I think these awards are a great idea.  I agree that companies have a responsibility to consumers who trust the brands those companies sell.  Unfortunately, once a company gains consumers’ trust with a brand, that trust is often taken advantage of as companies prioritize profits over social responsibility and consistent branding. 

Here’s a rundown of the International Bad Products Awards winners: Read more