The FTC investigation into retailer Ann Taylor’s blogger payola flap sent a jolting wake-up call to businesses looking to drum up some positive word-of-mouth buzz via the blogosphere. Ann Taylor may have gotten off lightly, but there are still some hard lessons for businesses to come out of this. Here’s five lessons we draw from this matter:

1) The FTC takes company engagement of social media seriously and is watching.

Don’t presume that because this is such new territory, that there are no rules.
To the contrary, there are tough customer protection rules in place in both Europe and America, and they will be enforced.  The FTC made this law late last year to make sure business were letting bloggers keep to the spirit of blogging: unbiased and grassroots reporting. So, now anytime a business gets involved with blogging correspondents the blogger needs to disclose that information with his readers.

2) Social Media regulations are still in their early days. Brace yourself for more confusion.

Ann Taylor only got a slap on the wrist for the incident, but they probably won’t be so lucky next time around. FTC attorney Douglas Wood commented:

“I’m speculating, but what the FTC is doing is not being aggressive intentionally, so they can set up a standard they think is appropriate. Maybe they’ll do this a few more times. It’s not an unusual way to begin the educational process. In a way, it’s always good to be the first one looked at. The second one might not fare so well.”

3) Blogger Payola tactics is a questionable practice anyway.

This Gawker post sums up the failed buzz-generation attempt quite well:

“Good coverage in exchange for chance to win gift cards? Are bloggers that pathetic? Apparently not: While the Feds, like Ann Taylor, thought the promotion might produce a tidal wave of glowing coverage, it turned out ‘only a small number of bloggers posted content about the [collection] and several of those disclosed the gifts.’”

Apparently bloggers aren’t easily bought.

4) The long arm of the law has a wide reach.

If you’re a respectable business in the Western world you are going to be under the watchful eye of both the US and the EU governments. In fact, the EU passed similar regulation in 2007 to protect consumers from un-virtuous blogging.

5) Get your lawyer to catch up on the latest do’s and don’ts of social media consumer engagement.

There is new red tape all the time surrounding the use of SM for business purposes. If you’re going to get into using it (wait, you haven’t already?!) you should get to know the rules.

Editor’s Note: Learn more how major brands are going beyond campaigns to have a more fruitful dialogue with consumers at the Social Media Influence conference. Register before May 1 to get the early bird rate for the Social Media Influence conference.