Affiliates - New FTC Rules and $11,000 Fines for Non-Disclosure

[Linda Buquet]

I reported back in June that the FTC was planning to revise their "Guides Concerning the Use of Endorsements and Testimonials in Advertising" which address testimonials by consumers or celebrities, as well as the disclosure of material connections between advertisers and endorsers or reviewers.

Today the FTC released the revised guidelines which were approved 4-0. There are two primary areas covered and both affect affiliates who use testimonials or review and/or recommend products.

I'm especially concerned with the reviews and endorsements issue. The FTC does not state HOW disclosure needs to take place. Much of the wording focuses on bloggers, but they also mention "other word of mouth marketers" which certainly would include affiliates.

The new FTC Rules do not state when they go into effect, but some news reports I read say the guidelines go into effect December 1st.

TESTIMONIALS "Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect."

REVIEWS & ENDORSEMENTS "These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. 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. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service."

News Coverage:
FTC: Bloggers must disclose payments for reviews
FTC to Fine Bloggers up to $11,000 for Not Disclosing Payments
FTC Clamps Down On Ad Testimonials
FTC Toughens Endorsement Rules For Celebrities, Bloggers

[minstrel]

Affiliate Marketing in the Regulators’ Cross-Hairs
By Thomas A. Cohn, FeedFront
October 6, 2009

Advertising claims by merchants have long attracted the attention of state Attorneys General (AG) and the Federal Trade Commission (FTC), but recently these regulators have signaled a willingness to pursue advertising cases against a new target: online affiliate marketers.

Until recently, affiliates have operated anonymously and attracted little scrutiny, because they do not sell the goods/services featured in their published content. But affiliate-published pages have always been vulnerable: if they contain misleading claims about a product, or fail to disclose connections with sellers, the affiliate may face liability for deceptively driving online sales.

Recently, the FTC and AGs have stepped up scrutiny of online claims. Regulators have attacked a variety of questionable practices, from misleading product claims, to deceptive trial offers with unauthorized charges, to falsely implied celebrity/expert endorsements and fake consumer blogs.

...more

[Linda Buquet]

In the original post I neglected to link out to the OFFICIAL full doc.
The links I posted in the 1st post were just to the overview.

Affiliates, Merchants and Networks need to read the full PDF here
and make any adjustments accordingly.

[Linda Buquet]

Some IMPORTANT updates about the FTC guidelines issue.

NEW INFO - THEY RETRACT THE FACT THEY'LL BE FINING $11,000

FTC Responds to Blogger Fears: "That $11,000 Fine Is Not True"

"That $11,000 fine is not true. Worst-case scenario, someone receives a warning, refuses to comply, followed by a serious product defect; we would institute a proceeding with a cease-and-desist order and mandate compliance with the law. To the extent that I have seen and heard, people are not objecting to the disclosure requirements but to the fear of penalty if they inadvertently make a mistake." Read the rest of the FastCompany Interview here.

They also respond to the question HOW do bloggers need to disclose by saying it's up to us.

"There is some vagueness....The bloggers have to look at how they do their blogging, their business practice, and figure out the way that consumers will best get the message that this is a sponsored post. In terms of clear and conspicuous, the criteria there is that the consumers will notice the disclosure. Disclosures can be made in different ways, whether you make it outside of the text but in proximity to blog, or incorporate it into the blog discussion itself--those are the issues that bloggers will have discretion about." More...

They also touch on how enforcement will be handled.

So... do you think they are back peddling or do you think all the initial news reports about the fines were wrong?

At any rate, you still need to be careful and disclose, but things are a little more clear now, after reading the FastCompany article.

FYI - Here is a NIFTY little Disclosure Policy Generator you can use.

[Julia]

Hi Everyone,

Came across on an interesting news piece - the FTC (Federal Trade Commission) has recently set new guidelines for bloggers, concerning "disclosures made in social media and on blogs where compensation has been given for an endorsement or testimonial." It's saying that bloggers who write reviews and promote products should clearly disclose when they are being compensated for doing so.

The IAB (Interactive Ad Bureau) is trying to get the new guidelines withdrawn, you can read all about it here: Interactive Ad Bureau Decries New FTC Blogger Guidelines | Digital Media Wire

Makes me think about how much I trust the authors of blogs I read, and whether their endorsement of a product convinces me to buy it or not.

[Linda Buquet]

Thanks Julia,

I have a big thread about the issue here, with other links to important resources.

Affiliates - New FTC Rules and $11,000 Fines for Non-Disclosure

[Julia]

Thanks, sorry didn't see that one. Please feel free to remove mine then, I'll checkout the other thread.

[Linda Buquet]

No your info is good too, Julia and thanks for posting it. I can just merge the threads to keep everything in one place.

[AdCanadian-Dave]

Whatever the case ends up being, I feel this is a good thing. The Internet is full of garbage and very few people trust what they are reading, which makes our jobs much more difficult. So, if there is a crackdown, the evolution over the next few years will be in the favor of legitimate marketers across the world.