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Dogberry2
2009-10-15, 07:21
The FTC (the U.S. Federal Trade Commission) has issued a set of "guidelines" under which they can levy fines upon anyone who receives free merchandise or other compensation from a company and then comments on it on the Internet, whether in a blog, a consumer review site like Amazon, or in a public forum such as this one, unless they make full and adequate disclosure of exactly what they received from the company. The "guidelines" are very vague, and very broad, and only the FTC gets to decide what constitutes an acceptable disclosure statement, but as I read it, this will certainly apply to all beta testers who receive hardware from Logitech and subsequently make any public posts commenting on the product. So if you're a beta tester, you might want to be very careful, and perhaps change your forum sig to state in plain, clear terms exactly what Logitech gave you. I'm not saying they're necessarily going to come after you if you don't; I'm just saying it might be a good idea to be careful about it.

Here is one article about it (http://www.slate.com/id/2231808/pagenum/all/), which includes a link to the FTC document. It's an interesting read, if you're into bizarre bureaucratic bilgewater.

pfarrell
2009-10-15, 11:20
Dogberry2 wrote:
> The FTC (the U.S. Federal Trade Commission) has issued a set of
> "guidelines" under which they can levy fines upon anyone who receives
> free merchandise or other compensation from a company and then comments
> on it on the Internet, whether in a blog, a consumer review site like
> Amazon, or in a public forum such as this one, unless they make full and
> adequate disclosure of exactly what they received from the company.

IANAL, but this will be overthrown in court.

They are doing a good thing in spirit but using a shotgun when a
precision weapon is needed.

I am a beta tester. I do not get hardware for "free", I get it as
compensation to hours of testing, reporting, and posting on the closed
beta forums.

Getting a "free" piece of gear in exchange for tens and in the case of
the Touch, more like 100 hours of effort is not free. In the case of the
Touch, the hourly rate is below minimum wage. For the Radio, the rate
was better, it was closer to release shape when I got mine, but it sure
didn't work perfectly the first weeks.

And by the way, the developers who contribute code, at least the
non-Logitech employees who are committers, are not 'given" the hardware,
they earn it. A professional software engineer typically has a salary
well over $50,000 a year, and in most parts of the country, its more
like $100k. This means between $25 and $50 per hour of work.

How much work needed to make a $200 consumer product stop being excessive?

Pat

--
Pat Farrell
http://www.pfarrell.com/

jdoering
2009-10-15, 18:38
I'm pretty sure you're still getting it for free in the eyes of the law. If it's compensation for services rendered then I guess a whole different category of law (taxes, etc) comes into the picture.

I understand your point on the personal effort involved; but I don't think that has anything to do with the legal issue here.

Phil Leigh
2009-10-16, 05:35
What a ridiculous piece of "legislation"... to which I am fortunately immune ... :-)

cliveb
2009-10-16, 05:51
What a ridiculous piece of "legislation"... to which I am fortunately immune ... :-)
Be careful... we have ridiculous legislation here in the UK, too.

It wouldn't surprise me if HMRC (for our non-UK friends, that stands for "Her Majesty's Revenue & Customs" - our equivalent of the Internal Revenue) defined something like a beta test SB Touch provided in exchange for your testing efforts as a "benefit in kind", and decided to charge tax on its value!

mmca22gr
2009-10-16, 07:16
Interesting.
So what value do you put on a beta SB Touch or radio? Certinaly not the MSRP, else Logitech would have just put them out to market without beta testing.

If HMRC or the IRS really want to spend their time trying to chase people for a benefit in kind tax charge on a barely working product, that - when it does work - is about 150 (SBR) then they really do have far too much time on their hands.

SBR: 150
BIK tax would be based on the cost for Logitech to provide it? 50
taxed @ 20% = 10

pfarrell
2009-10-16, 07:24
mmca22gr wrote:
> SBR: 150
> BIK tax would be based on the cost for Logitech to provide it? 50
> taxed @ 20% = 10

Which is a couple of pints at your local?


--
Pat Farrell
http://www.pfarrell.com/

cliveb
2009-10-16, 08:08
If HMRC or the IRS really want to spend their time trying to chase people for a benefit in kind tax charge on a barely working product, that - when it does work - is about 150 (SBR) then they really do have far too much time on their hands.
Never underestimate the lengths bean counters are prepared to go in order to balance the books. The world is full of credit control departments happy to use $100 worth of their time in order to recover a $5 debt. HMRC & IRS are just bigger versions of the same thing.

Siduhe
2009-10-16, 08:34
What a ridiculous piece of "legislation"... to which I am fortunately immune ... :-)

We've had something similar in the EU (not quite so explicit but the intended effect is the same) for some time, care of the Unfair Commercial Practices Directive. It contains a general ban on unfair or misleading advertising practices including falsely or misleading representing that your only connection to a company is as a consumer.

In the UK the Directive is enacted by the Consumer Protection from Unfair Trading Regulations and includes a specific prohibition on "misleading conduct" which is theoretically wide enough to include failing to mention that you have received a free piece of hardware from a company.

However, there is also de minimis requirement i.e. the behaviour must be likely materially to distort or be likely to materially distort the average consumer's economic behaviour.

A more sensible way to approach things IMHO.

toby10
2009-10-16, 09:02
I'd guess the IRS $600 rule would apply, no?
Gifts, monies, etc... valued under $600 need not be declared by the recipient nor does the giver need to notify the IRS via 1099.
Unless they changed that or I don't understand it (which is quite possible). :(

Phil Leigh
2009-10-16, 09:03
Be careful... we have ridiculous legislation here in the UK, too.

It wouldn't surprise me if HMRC (for our non-UK friends, that stands for "Her Majesty's Revenue & Customs" - our equivalent of the Internal Revenue) defined something like a beta test SB Touch provided in exchange for your testing efforts as a "benefit in kind", and decided to charge tax on its value!

A "benefit in kind" can only be provided by your employer with whom you are bound into a contract of employment. Otherwise, it is merely a gift. I've checked.

Phil Leigh
2009-10-16, 09:06
We've had something similar in the EU (not quite so explicit but the intended effect is the same) for some time, care of the Unfair Commercial Practices Directive. It contains a general ban on unfair or misleading advertising practices including falsely or misleading representing that your only connection to a company is as a consumer.

In the UK the Directive is enacted by the Consumer Protection from Unfair Trading Regulations and includes a specific prohibition on "misleading conduct" which is theoretically wide enough to include failing to mention that you have received a free piece of hardware from a company.

However, there is also de minimis requirement i.e. the behaviour must be likely materially to distort or be likely to materially distort the average consumer's economic behaviour.

A more sensible way to approach things IMHO.

Yes I'm familiar with that legislation and provided I continue to post on this forum alone it has no relevance, because by definition I cannot "distort or be likely to materially distort the average consumer's economic behaviour"

Goodsounds
2009-10-16, 09:48
The FTC rules seems reasonable in intent to me. A reader should be able to expect that reviews and comments are independent and without bias. If something of value has been conveyed, all this requires is disclosure. Then come to your own conclusion. Even newspapers often indicate for restaurant reviews, for example, that they pay for the meals being reviewed.

Goodsounds
2009-10-16, 09:51
I'd guess the IRS $600 rule would apply, no?
Gifts, monies, etc... valued under $600 need not be declared by the recipient nor does the giver need to notify the IRS via 1099.
Unless they changed that or I don't understand it (which is quite possible). :(

The $600 rule is for payers to report payments to the IRS. Recipients are taxable on any amounts received (in cash or property) for services, they just receive no report on amounts below $600 from any one payer.

toby10
2009-10-16, 10:17
The $600 rule is for payers to report payments to the IRS. Recipients are taxable on any amounts received (in cash or property) for services, they just receive no report on amounts below $600 from any one payer.

Ah, IC. Thanks. :)
Kinda like "voluntarily" paying sales tax on items purchased with no sales tax?

Dogberry2
2009-10-16, 12:07
Yes I'm familiar with that legislation and provided I continue to post on this forum alone it has no relevance, because by definition I cannot "distort or be likely to materially distort the average consumer's economic behaviour"Perhaps, perhaps not. But a beta tester who subsequently posted a great review on a site like Amazon, without making it clear that he'd been provided the hardware by Logitech without paying for it, would be leaving himself open to the FTC fine.

The two disturbing things I see in this are:

1) The wording in the FTC policy document makes frequent use of phrases like "will be determined on a case-by-case basis", leaving the door wide open. In effect they're saying "we aren't going to set any clearly-defined rules or tell you exactly what is and isn't allowed, but if you break the rules, we'll nail you."

2) This isn't "legislation" as the term is understood in the U.S. It isn't a law passed by Congress. It's just a bureaucratic policy, with the bureaucrats setting the rules very vaguely, and then making themselves the arbiters of what those rules are and who is guilty of breaking them.

Pat may be right that a particular case, if it were challenged and taken to court, might be overturned, and perhaps the FTC would be forced to make the rules more definite and precise, and be forbidden from deciding on fines "on a case-by-case basis." But the poor schmuck who had to go to the trouble of taking it to court would be in for a whole lot of hassle, and legal costs, probably amounting to more than the fine itself. Which is how bureaucrats get away with this kind of thing: they make it cost more to fight it than to just give in and pay it.

jdoering
2009-10-16, 14:19
The $600 rule is for payers to report payments to the IRS. Recipients are taxable on any amounts received (in cash or property) for services, they just receive no report on amounts below $600 from any one payer.

Interesting. A while back MSFT quoted the $600 rule when providing "free" software as a benefit for particapting in one of their usability studies. They neglected to explain the nuances of the rule.

I was actually wondering if hardware to beta testers and such fell into the same classification or if it was somehow different since they're providing it for you to do something on their behalf (versus the MSFT software which was purely an after-the-fact perk).

Suffice to say; I won't be calling the IRS to check up on any of this...

Goodsounds
2009-10-16, 16:11
Interesting. A while back MSFT quoted the $600 rule when providing "free" software as a benefit for particapting in one of their usability studies. They neglected to explain the nuances of the rule.

If participants got software to keep for no payment, then that is free, isn't it? Did they also say it was non-taxable?


I was actually wondering if hardware to beta testers and such fell into the same classification or if it was somehow different since they're providing it for you to do something on their behalf (versus the MSFT software which was purely an after-the-fact perk).

If I understand you, are you thinking about the fact that hardware can't be tested unless it is provided? That's right. What would make it taxable is that the tester can keep it.

If the testers sign paperwork beyond a non-disclosure agreement, it might mention that they receive the unit in return for testing. Or maybe no mention is made.

Perhaps one of the Radio or Touch program participants could comment?

jdoering
2009-10-16, 17:10
If participants got software to keep for no payment, then that is free, isn't it? Did they also say it was non-taxable?

If I understand you, are you thinking about the fact that hardware can't be tested unless it is provided? That's right. What would make it taxable is that the tester can keep it.

If the testers sign paperwork beyond a non-disclosure agreement, it might mention that they receive the unit in return for testing. Or maybe no mention is made.

Perhaps one of the Radio or Touch program participants could comment?

Yes it was definitely free; I'm not sure why I quoted it. I don't recall exactly what they said; I think it was along the lines that if it was below $600 for the year it didn't need to be reported for taxes. I suspect they weren't clear on that meaning that THEY didn't need to report it versus what I was suppose to do. They were definitely tracking the value of the software and whether or not my total for the year had exceeded $600.