In 2009, the FTC revised its guidelines for advertisers who use product endorsers, requiring the advertisers to disclose to consumers any "material" financial connection between it and the endorser. One of the most controversial aspects of the new rule was its extension to product endorsements through blog entries by consumers. Under the new agency guidelines, if an endorser received any compensation for providing an endorsement through blog entry, that fact had to be disclosed to consumers in connection with the endorsement. How this rule would play out in FTC enforcement actions was a hotly debated subject.
In January 2010, Ann Taylor invited selected fashionistas to preview its LOFT division's Summer 2010 Collection, promising participants who did so and posted comments about it on their blogs an opportunity to win through a random drawing a "mystery gift card" worth between $50 and $500. The agency opened an investigation but ultimately decided not to recommend enforcement action, citing among other things the small number of posted comments about the collection. http://www.ftc.gov/os/closings/100420anntaylorclosingletter.pdf
What's interesting about the investigation is that the "material connection" at issue was contingent (the "gift" consisted of an opportunity to win a gift card) . Also, as the agency noted, Ann Taylor had tried to comply with the endorsement rule by posting a sign at the preview telling bloggers that they should disclose the gift in his or her blog; this was not a defense, however, because is was unclear how many bloggers actually saw the sign.
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