FTC to Scrutinize Viral Marketing

WASHINGTON — The Federal Trade Commission said it will take a closer look at viral marketing campaigns in an effort to better protect consumers against possible instances of fraud and false advertising.

In a staff opinion, lawyers for the FTC, which has the power to oversee advertising, said for the first time that the agency would monitor and investigate incidents of fraud and deception using the fast-growing online marketing tactic.

In Oct. 2005, Commercial Alert, an advertising and marketing watchdog group, petitioned the FTC to take action against viral marketers. Citing viral marketing campaigns employed by T-Mobile and Procter & Gamble as possibly deceptive, the group asked the FTC to issue guidelines for viral marketers requiring paid agents to disclose their relationship with the company whose product they are promoting.

Viral marketing has quickly become a popular tool for online advertisers, who encourage users to plug products on Internet properties ranging from MySpace pages to blogs.

Under current FTC rules, word-of-mouth advertising — the most analogous tactic to viral marketing — is governed by regulations that deal with commercial endorsements. The FTC’s staff opinion clarifies the rules by noting that viral marketing could be considered deceptive if consumers were more likely to trust the product’s endorsers “based on their assumed independence from the marketer.”

“We wanted to make clear, if you're being paid, you should disclose that,” FTC Associate Director for Advertising Practices Mary Engle said.

The FTC said it would investigate alleged violators on a case-by-case basis by issuing cease-and-desist orders, fines and civil penalties.

To date, the FTC said it has not brought actions against any viral marketers.

“This letter tells marketers like Procter & Gamble that their 'sponsored consumers' must disclose that they are shilling, or they are probably in violation of the prohibition against deceptive advertising,” Commercial Alert Executive Director Gary Ruskin said. “That's big. “It will change practices in the word-of-mouth marketing industry.”

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Jennifer White Launches Official Site, Debuts 1st Release

Reigning XMAs Female Performer of the Year Jennifer White has launched her new website, JenniferWhite.com, and announced the first feature-length showcase from her new production company.

Adult Game Fest Announces Nominees for Inaugural Awards Show

Organizers for the inaugural Adult Game Fest convention and trade show have announced the nominees for the event's awards ceremony, taking place Saturday, Sept. 26, at 5 p.m. (PDT).

Byborg Enterprises Joins Pineapple Support as Sponsor

Byborg Enterprises has joined the ranks of over 70 adult businesses and organizations committing funds and resources to Pineapple Support.

XBIZ 2027 Hotel Room Booking Now Open

Hotel booking is now open for XBIZ 2027, giving attendees the opportunity to secure their stay at the host venue, JW Marriott L.A. Live.

FSC Case Against Tennessee AV Law Can Go Forward, Court Rules

A U.S. district court on Tuesday denied the Tennessee attorney general’s motion to dismiss a Free Speech Coalition lawsuit challenging the Protect Tennessee Minors Act.

AEBN Publishes Popular Searches for July, August

AEBN has published the top search terms for July and August from its straight and gay theaters in all 50 states and the District of Columbia.

2027 XMA 'Fan Favorite' Pre-Nominations Period Now Open

XMA event organizers have announced that the pre-nomination period for Fan Favorite categories for the January 2027 ceremony is now open.

California Legislature Passes Stricter UGC Rules for Adult Sites

A bill to impose tighter compliance standards for user-generated content (UGC) on adult websites has been approved by the California state legislature and now awaits the governor’s signature.

CollabGPS Rolls Out 'Verification Badge' Update

CollabGPS has launched a badge system for user verification.

X3 Amsterdam Imports Hollywood Glitz With Continental Style

A throng of fans from across Europe and around the globe descended on the Passenger Terminal building on Friday, eager to meet their favorite adult stars at the inaugural X3 Amsterdam fan expo.

Show More