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Affiliate Marketers – Will the FTC Shut You Down?

When the FTC announced that it was revising its 1980 Guides Concerning the Use of Endorsements and Testimonials in Advertising, I fully expected an outcry from the online marketing community, but I was wrong. There were a few “the sky is falling” comments, but all in all it would seem the change in the rules is being ignored or viewed as not having much of an impact.

I’m getting the feeling, at least from the newsletters I’m subscribed to, that marketers aren’t taking these changes seriously. I’m thinking that there a lots of small marketers who think that only the big guys need to pay attention, that the FTC certainly won’t go after the small business promoting just a few products.

That’s wrong, and not paying attention could cost you big time.

If you sell anything – even just one affiliate product – on the internet, you need to pay attention to these changes. And you probably need to do some reworking of your website or blog.
At the very least, you need to make full disclosure that you may make some money if your visitors buy the product through your link.

The Final Guides Governing Endorsements, Testimonials were announced by the Federal Trade Commission on October 5, 2009, with an effective date of December 1, 2009. Since the guidelines were last updated in 1980, a specific purpose in the updates is to include online consumer concerns. Perhaps the biggest change is that the previous “results not typical” disclaimer will no longer cover you. It will now be necessary to explain what “typical” results might be when you’re claiming a benefit from the product.

Apparently it is not clear to the average consumer that someone reviewing a product may have a “material connection,” meaning payments for the endorsement/review or a free product in exchange for that review – or I suppose even offered as a review copy. Because of that, affiliate marketers must be very clear that they may or will make money from a sale, or that their review has been paid for, either with actual cash or a free copy of the item being sold.

It is important that affiliate marketers understand that the new guidelines don’t just speak to testimonials and endorsements that are labeled as such on a web page. The FTC’s press release specifically points to bloggers who might be reviewing and promoting a product. It must be made clear in that post that there is that “material connection” between the blogger and the seller, i.e., that if the consumer buys, the blogger might make some money out of the transaction.

An online lawyer also recommends that marketers revisit any ebooks they’ve published and have for sale that include recommendations for affiliate products. He believes those books should be re-edited to include the “I might make some money from this” disclosure.

The thoughtful marketer will likely only have to make a few changes to their way of doing business. You’ll want to be sure you have stated somewhere on your web site, blog, and digital product that you’re going make money if your customer buys the product you’re talking about. The thoughtful marketer will already know they only endorse products that truly have a benefit, and it is a benefit that can be explained. This won’t be the marketer who claims the consumer can make a million dollars by next week simply by buying the product.

The point here is that there is a new world of affiliate marketing now. You can read the FTC’s press release at http://www.ftc.gov/opa/2009/10/endortest.shtm. You will also be able to download a pdf file with the actual rules and comments. Or you may want to consult a lawyer. Just be sure it’s a lawyer who understands FTC law.