The New York Department of Labor initially told her that her Google AdSense revenue was residual, and that it would not affect her unemployment. However, the NYDOL later launched an investigation into her “business” to determine if she is still eligible for benefits, and decided to withhold her checks in the meantime. She has since yanked AdSense from her site in an effort to regain them.

Forbes called the NYDOL several times, but never received a coherent reply, and was told that her case was “uncharted territory.”

“It’s frustrating that nobody seems to have a straightforward answer,” Karin told Forbes. “It’s even more frustrating that trying to work and generate additional income, while being straightforward and honest about that income, is treated with suspicion and punished.”

Karin received her law degree in 2008 from the University of Virginia. She soon accepted a position at a New York City law firm, but was laid off six months later. She moved to St. Louis, Mo. for cheaper rent, meanwhile retaining her New York benefits, which is allowed under law.

In the meantime, Karin began searching for jobs and preparing for the Missouri bar exam. Along the way, she began her blog and decided to try and make a little money from it.

Other than unemployment, Karin only had her blog, STL Meal Deals, to support her, a blog that has earned her a measly $238.75 since April.

This whole situation is ridiculous for a couple of reasons. First, unemployment isn’t welfare, it’s a form of public insurance that employees pay into. I think some online commenters are unaware of that fact.

Second, Forbes describes New York’s regulations thusly:

According to state regulations, anyone receiving unemployment benefits who works one day and earns less than $405 will have his check for the week reduced by 25%. Someone who earns more than $405 in a single week becomes ineligible for any payments for that week.

So a reduction in payment makes some sense. But having all her rightful benefits taken away for $238.75, earned over the span of months? Absolutely absurd. Maybe she should blog about it?

"We do not have authority to impose a fine for violation of the (FTC) Act," Cleland told Kang.

Cleland explained that enforcement will mostly be through warning letters, and if things get bad enough, it could be taken to court.

"I have to tell you that there is no realistic scenario that we get from here to there," Cleland said.

Meanwhile, the Electronic Freedom Foundation has predictably come out against the new, useless rules. In particular, the EFF takes exception to the fact that newspaper reporters are not covered under edict.

Cleland explained the FTC’s reasoning to blogger Edward Champion, “Most of the newspapers have very strict rules about that and on what happens to those products.”

Yeah, because newspaper reporters never violate their paper’s ethical standards. Neither do video game journalists for that matter. You truly have a dizzying intellect there, Dick.

However, the commission has a broad definition of what constitutes an endorsement.

“The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement,” said a release by the FTC.

This could be a legal nightmare for reviewers, who often rely on manufacturers to lend the products for review. In fact, most reviewers depend on this system, with a few rare exceptions such as This Week in Tech’s Leo Laporte. Even then, he doesn’t buy every single product he reviews.

This is the first time the guidelines have been updated since 1980. Under those rules, endorsements were considered perfectly fine, as long as the paid endorsers included the line, “results not typical,” but the new mandate removes that safe harbor.

Since this only applies to bloggers residing within the United States, it’s hard to imagine this will do much to curtail astroturfing. And it’s uncertain if this will apply to traditional reporters, however celebrity endorsements are specifically mentioned.

The FTC says that it will enforce the new rules on a “case-by-case basis.” I can’t help but wonder if this will create a chilling effect for American bloggers.

Read a PDF of the new regulations.

Update 20:25 CST: Leo Laporte commented about this on Twitter: “…Fantastic news! I’m clean. Are you?” [In response to @wa4hrk]