How does a paid endorser avoid conflicts of interest?

Question

Suppose you are a blogger and you write about the products and services of Company X. You are being paid by Company X to do this.

How do you avoid conflicts of interest in the process? I would imagine that the first step is to disclose the relationship so that people can judge the validity of your advice. Perhaps one might refrain from "advocacy," and just describe, rather than tout Company X's products? Or might one limit one's sales pitch to "sophisticated" buyers such as corporations, to avoid charges of misleading individual investors?

Which of these methods, or others, make things acceptable in a potential conflict of interest situation?

Answer 1

The U.S. FTC gave extensive guidance on this subject in March 2013. (You may have noticed shortly thereafter that conspicuous disclosures of free samples and compensation started popping up in reviews and posts around the web.)

The FTC's FAQ covers this question in such detail I would just encourage people to visit it directly. However, as is the custom on Stack Exchange, I will reproduce the most salient content here:

If an endorser is acting on behalf of an advertiser, what she or he is saying is usually going to be commercial speech – and commercial speech violates the FTC Act if it’s deceptive.

The FTC (ironically?) refers to 16 CFR §255 as "the Guides."

The Guides, at their core, reflect the basic truth-in-advertising principle that endorsements must be honest and not misleading. An endorsement must reflect the honest opinion of the endorser and can’t be used to make a claim that the product’s marketer couldn’t legally make.

In addition, the Guides say if there’s a connection between an endorser and the marketer that consumers would not expect and it would affect how consumers evaluate the endorsement, that connection should be disclosed. For example, if an ad features an endorser who’s a relative or employee of the marketer, the ad is misleading unless the connection is made clear. The same is usually true if the endorser has been paid or given something of value to tout the product. The reason is obvious: Knowing about the connection is important information for anyone evaluating the endorsement.