On Saturday my Google Alerts notified me of an article at lexology.com which talked about a merchant agreeing to settle with the Federal Trade Commission (FTC), having “signed a consent agreement and agreed to pay $250,000 for deceptively representing that endorsements … that were posted on blogs or other websites created by Legacy’s affiliates.”

Sad precedent which obviously required a bit of additional digging on my part. And the source wasn’t hard to find. FTC itself has all the details:

A company selling a popular series of guitar-lesson DVDs will pay $250,000 to settle Federal Trade Commission charges that it deceptively advertised its products through online affiliate marketers who falsely posed as ordinary consumers or independent reviewers.

…The Learn and Master Guitar program promoted by Legacy Learning and Smith is sold as a way to learn the guitar at home using DVDs and written materials.  According to the FTC’s complaint, Legacy Learning advertised using an online affiliate program, through which it recruited “Review Ad” affiliates to promote its courses through endorsements in articles, blog posts, and other online editorial material, with the endorsements appearing close to hyperlinks to Legacy’s website.  Affiliates received in exchange for substantial commissions on the sale of each product resulting from referrals.  According to the FTC, such endorsements generated more than $5 million in sales of Legacy’s courses.

The FTC charged that Legacy Learning and Smith disseminated deceptive advertisements by representing that online endorsements written by affiliates reflected the views of ordinary consumers or “independent” reviewers, without clearly disclosing that the affiliates were paid for every sale they generated.

So we’re talking about the Federal Trade Commission’s endorsements/testimonials rules which came into force on December 1, 2009. In essence, these FTC’s rules say that when there is a sponsor-endorser relationship (merchant-affiliate relationships included) between an advertiser and a marketer who publishes a testimonial about the advertiser’s product/service, such a relationship must be clearly disclosed on the marketer’s website. Additionally, the advertiser is responsible for educating and equipping the marketer to comply with these rules, as well as for policing and enforcing such compliance.

The above isn’t the first instance of the FTC bringing action over “deceptive advertisements”. In September of 2010 I blogged about a settlement with Reverb Communications over a very similar issue, with the only difference that there we no affiliates involved (reviews and testimonials were posted by company’s employees instead).

Affiliates, merchants and affiliate program managers must understand that the FTC is very serious about those mandatory disclosures. If you aren’t yet compliant, you want to take care of this a.s.a.p.!

Here are some articles that you may find of help on this subject:

• How to Word Disclosures & Agreements to Meet FTC Rules
• FTC’s Video Response to Questions on Endorsement Guides
• FTC Means To Say That Everyone is Accountable

Yesterday I received an “Advertising Alert” from Gary Kibel, a lawyer at Davis & Gilbert LLP (D&G). This alert brought to my attention a recent action taken by the Federal Trade Commission (FTC) against a public relations agency involving claims of misleading online endorsements. It is the first case of FTC bringing an action against an online marketer over this subject, and therefore it is an extremely important one to analyze. It both emphasizes the importance of making proper disclosures about marketer’s relationships with those whose products/services they decide to endorse/promote online, and shows us that owners may be personally liable, and the liability may actually be tied to marketing performed prior to the FTC’s guidelines regarding mandatory disclosure (of sponsor-endorser relationships) coming out.

D&G ends their report with the following 3-point conclusion:

Why Is The FTC’s Action Against Reverb and Snitker Important?

The FTC’s action … is not only important because it is the first action against bloggers since the effective data of the revised Guides but it is significant because:

1. The FTC brought its first action against a public relations agency — not the agency’s client. By bringing the action against a public relations agency, the FTC makes clear that agency employees have the same duty to disclose their relationship with their clients as the client’s own employees.
2. The FTC brought the action against an individual — Snitker, the agency’s sole owner and only office and director. According to the FTC… Snitker directed, formulated and/or participated in the misleading online endorsements…
3. The FTC brought the action … for posts they made between November 2008 and May 2009, several months before the effective date of the revised Guides (December 1, 2009). By doing so, the FTC puts the industry on notice that it can bring an action against misleading online posts made prior to the effective data of the revised Guides.

You may read the full alert in PDF here.

If you haven’t done so yet, make sure you comply with the Federal Trade Commission’s requirements regarding the disclosures. Samples (both for merchants and affiliates) may be found here. FTC’s answers to questions regarding the guidelines may be found here and here.

Earlier this week I have found out that the Federal Trade Commission has recently created a section within their website, devoting it fully to frequently asked questions on the revised Endorsement Guides (about which I blogged extensively as soon as they got announced).

This is a great addition to the FTC’s video responses released back in November of 2009. Obviously, many people are still confused, and to respond to numerous concerns the Federal Trade Commission compiled the FAQs.

At the time of this post The FTC’s Revised Endorsement Guides: What People are Asking webpage contains answers to 30 questions, with a brief section dedicated specifically to affiliate marketing.

Here are just a few of the questions and answers from the FTC’s new FAQs page:

Why did the FTC revise its Endorsement Guides to include social media?

The FTC revised the Guides because truth in advertising is important in all media – including blogs and social networking sites. The FTC regularly reviews its guides and rules to see if they need to be updated. Because the Endorsement Guides were written in1980, they didn’t address social media. The legal principles haven’t changed. The FTC revised the examples to show how these standards apply in today’s marketing world.

Are you monitoring bloggers?

We’re not monitoring bloggers and we have no plans to. If concerns about possible violations of the FTC Act come to our attention, we’ll evaluate them case by case. If law enforcement becomes necessary, our focus will be advertisers, not endorsers — just as it’s always been.

I’ve heard that every time I mention a product on my blog, I have to say whether I got it for free or paid for it myself. Is that true?

No. If you mention a product you paid for yourself, the Guides aren’t an issue. Nor is it an issue if you get the product for free because a store is giving out free samples to all its customers. The Guides cover only endorsements that are made on behalf of a sponsoring advertiser. For example, an endorsement would be covered by the Guides if an advertiser — or someone working for an advertiser — pays a blogger or gives a blogger something of value to mention a product, including a commission on the sale of a product. Bloggers receiving free products or other perks with the understanding that they’ll promote the advertiser’s products in their blogs would be covered, as would bloggers who are part of network marketing programs where they sign up to receive free product samples in exchange for writing about them or working for network advertising agencies.

Is there special language I have to use to make the disclosure?

No. The point is to give readers the information. Your disclosure could be as simple as “Company X gave me this product to try …”

Do I have to hire a lawyer to help me write a disclosure?

No. What matters is effective communication, not legalese. A disclosure like “Company X sent me [name of product] to try, and I think it’s great” gives your readers the information they need…

I’m an affiliate marketer with links to an online retailer on my website. When people click on those links and buy something from the retailer, I earn a commission. What do I have to disclose? Where should the disclosure be?

Let’s assume that you’re endorsing a product or service on your site and you have links to a company that pays you commissions on sales. If you disclose the relationship clearly and conspicuously on your site, readers can decide how much weight to give your endorsement. In some instances, where the link is embedded in the product review, a single disclosure may be adequate. When the product review has a clear and conspicuous disclosure of your relationship — and the reader can see both the product review and the link at the same time — readers have the information they need. If the product review and the link are separated, the reader may lose the connection.

As for where to place a disclosure, the guiding principle is that it has to be clear and conspicuous. Putting disclosures in obscure places — for example, buried on an ABOUT US or GENERAL INFO page, behind a poorly labeled hyperlink or in a terms of service agreement — isn’t good enough. The average person who visits your site must be able to notice your disclosure, read it and understand it.

Once again, you may find the full list of questions and answers on the Federal Trade Commission’s website here. It’s a must-read for everyone who is doing business online.

Related posts:

• FTC Disclosure Rules & Affiliate Marketing Implications
• FTC Means To Say That Everyone is Accountable
• How to Word Disclosures & Agreements to Meet FTC Rules

The new Federal Trade Commission disclosure Guides are coming into force tomorrow (December 1, 2009).

I have just finished listening to a webinar where Jim Edwards is interviewing Mr. Richard Cleland of the FTC, and it does shed some light on both the FTC’s overall stand on the issue, and the peculiarities many affiliate marketers have been wondering about. The full interview/webinar may be found here.

Here are some of the key things have been mentioned in it:

General Points

“The FTC Act is very general. It prohibits deceptive and unfair acts or practices in commerce and misleading advertising… And that’s about all it says.”

The Guidelines that are coming into force tomorrow are “really intended to provide additional guidance on how these prohibitions apply to online marketers, bloggers, and in some cases, affiliates.” The businesses are expected to “voluntarily comply with the FTC Act.”

The guides are not regulations, but rather interpretations of the FTC Act.

The purpose of the Guides is to clearly mark the line, so that people do not step over it.

Overseas Affiliates

Jim asked a question that many overseas affiliates have been wondering: does all of this apply non-US companies? The answer was that it applies to entities “doing business in the US.” In scenrios when the FTC has no jurisdiction over the marketer who is located outside the US, they may/will go after the US-based company that is paying him/her, as any situation where a “part of the business or part of the transaction” takes place in the US, the FTC has jurisdiction over it.

Affiliate Disclosure

Speaking of the wording for the affiliate disclosure, it was made clear that it may be as short as “Disclosure: Compensated Affiliate” or as long as you want. What matters is that any advertisement that the marketer is being compensated for is marked as such. The disclosure must be clear, conspicuous and aiming to “alert the reader” that there is a “connection between the endorser and the seller.”

“The issue of affiliate marketing is broader than endorsements… There is a lot of affiliate marketing that is pure straight advertising,” and the FTC’s disclosure guidelines will not apply unless there is an endorsement/recommendation.

Monitoring, Policing & Enforcement

“Distributors who have reasonable training and monitoring programs are unlikely to be held accountable for rogue affiliates. The reasonableness of the program will be determined by the risk [of product misrepresentation for the affiliate's benefit]. At a minimum, sellers should have a program to monitor what affiliates are saying about the products and take action against affiliates who are violating policy. This doesn’t necessarily require weekly checks or even monthly checks, but to say we never look at what our affiliates are doing is not an acceptable answer.” However broad this answer is, it is a good reply.

So, (i) inform/educate your affiliates (in the affiliate program agreement as I blogged here), (ii) monitor it to the best of your ability (solutions suggested: mandating affiliates to run “previously approved” ads only, or run ads on previously approved URLs only – ones that you will know to monitor, or by using tools like Google Alerts), and (iii) do provide them with “some kind of training” on how exactly they can stay compliant.

From the interview, it sounded like the FTC is (or will be) open to a dialogue with both merchants and affiliates if/when they have nothing to hide, and have proven that they have done everything to stay transparent and/or compliant.

An excellent question was posed by Eric Alexander earlier this morning:

Does it [the passing of the new Federal Trade Commission's disclosure rules for "endorsements and testimonials"] only affect product or service endorsements or even all affiliate links, banners, etc that a website may publish?

I’ve just given the Guides a second (or really third or fourth) look. They state that the Federal Trade Commission was specifically looking to address issues connected with “the messages conveyed by consumer endorsements” and particularly with “the use of so-called “disclaimers of typicality” accompanying testimonials that do not represent experiences that consumers generally achieve with the advertised product of service” (p. 2). Upon receiving feedback on the 1980 version of the Guides, some of which argued that “the proposed revisions to the Guides could have a negative affect on emerging media channels and impede the ability of businesses to communicate with consumers through legitimate testimonials and endorsements”, the Commission has still decided to proceed with the new Guides. The purpose of the newly introduced rules was not to interfere with legitimate reviews and testimonials, but rather: to address the so-called “non-typical testimonials” (pp. 3-4). What exactly is the FTC trying to address, and who exactly is affected? Reading on, we see the following paragraph:

The Commission does not believe that all uses of new consumer-generated media to discuss product attributes or consumer experiences should be deemed “endorsements” within the meaning of the Guides. Rather, in analyzing statements made via these new media, the fundamental question is whether, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and therefore an “advertising message.” In other words, in disseminating positive statements about a product or service, is the speaker: (1) acting solely independently, in which case there is no endorsement, or (2) acting on behalf of the advertiser or its agent, such that the speaker’s statement is an “endorsement” that is part of an overall marketing campaign? The facts and circumstances that will determine the answer to this question are extremely varied and cannot be enumerated here, but would include: whether the speaker is compensated by the advertiser or its agent; whether the product or service in question was provided for free by the advertiser; the terms of any agreement; the length of the relationship; the previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and the value of the items or services received. An advertiser’s lack of control over the specific statement made via these new forms of consumer-generated media would not automatically disqualify that statement from being deemed an “endorsement” within the meaning of the Guides. Again, the issue is whether the consumer-generated statement can be considered “sponsored”. (pp 8-9)

The FTC’s concern is clear: are the “positive statements” (note the adjective here!) influenced by the prospect of earning money, or are they posted without any monetary motivation attached?

So:

• The FTC is concerned with consumer-generated media — specifically with product/service endorsements/reviews/testimonials.
• The main question is whether there is a sponsorship relationship present between the website owner (or producer of the content), and the advertiser, or not.
• The goal is to provide a transparent environment where if a sponsor-endorser relationship exists the end-user/consumer/reader must be notified of it through a proper disclosure of the relationship

Additionally, since the above text talks specifically about “positive” reviews and endorsements, the question of whether a negative review with a merchant’s ad on the site be deemed an “advertising message” remains open. Knowing that negative reviews also increase sales, it would only be just to presuppose so. However, this (just as anything that is written in this post) remains to be my personal presupposition.

Another question related to the consumer-generated media would be this: what if someone starts a forum which offers its readers a platform for their reviews (non-biased, subjective yet not sponsored in any way), and decides to monetize it by adding ads to it (be they text links from within the people’s reviews, or rotating banners, or even a directory of the services that are being reviewed where every link is being compensated in some form)? Would the obvious monetary interest of the forum’s owner affect the trustworthiness of the reviews posted by independent reviewers? Unlikely. Can the FTC get concerned? Most probably so.

And finally, let’s briefly look at other websites that have an obvious monetary interest in promoting merchants, but are not producing reviews/endorsements as such.

Example 1

Comparison shopping engine (with or without a “review product” function) which provides consumers with an option of searching products across different advertisers, sorting them by price, popularity (either based on a review rating, or on the “most frequently viewed” stats), alphabetically, etc. Would it be necessary for such a website to disclose the monetary connections with the “sponsors”? Obviously, this includes not only affiliate websites with a comparison shopping function, but also such giants of the comparison shopping vertical as Shopping.com and Epinions.com, Shop.com, NexTag.com, PriceGrabber.com, mySimon.com, Shopzilla.com, and multiple others.

Example 2

A fishing (or any other topic) blog where the author is post his fishing tips and pictures, and has either banners, widgets, or other types of affiliate links “on the side”, but offers no reviews as such? Would this website be required to disclosure the blogger’s financial interest in his readers purchasing from the advertisers he/she promotes?

Example 3

A cashback affiliate (e.g.: FatWallet.com), or a coupon affiliate (e.g.: CouponCabin.com).

Example 4

A paid search affiliate (whether they link their PPC ads directly to the merchant, or route them via a website of their own, but provide no merchant reviews on the latter).

The list of examples could go on and on. The primary question is what we started this post with or Does a publisher that is not explicitly involved in reviewing their advertisers’ products or services have to provide disclosures of monetary connections? I don’t see anything that would imply this in the FTC’s guides. The Commission’s concern seems to be specifically with the objectivity of the “speaker’s statement” when endorsing a product/service. It is being stated that all “endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser” (p. 60) and when there is a material connection between the endorser and the vendor, it must be clearly disclosed. If there is no such connection, there seems to be nothing to disclose. If there is no sponsored endorsement, there seems to be nothing to disclose either.

Don’t treat any of the above as a legal advice. These are just my personal speculations based what I’m reading in the Guides.

As always, feel free to chime in with your thoughts on the subject by posting them in the “Comments” area below.

On October 27, 2009 LinkShare launched a Twitter tool for affiliates to use. Almost simultaneously with the LinkShare’s announcement, Amazitter (an iPhone app for tweeting Amazon affiliate links) came out. The wave continued, and yesterday Amazon has changed its policy from no affiliate links on Twitter to let’s “Share on Twitter” and provided a tool for it as well [more in Eric Nagel's and Tim Jones' posts].

The new FTC’s guides, which prescribe mandatory disclosure of affiliate links, come into full force in just 25 days, but it seems that regardless of the size of the company that launches a Twitter tool, an important point is being continuously missed — that of helping affiliates stay compliant with the new rules. Additionally, there is also a growing concern among merchants/advertisers that do not specifically offer any tools for promoting their brands on Twitter, but wonder how exactly they are can be policing/monitoring affiliates that promote them via social media. It is these two questions that I would like to address in my today’s blog post.

1. Helping Affiliates Stay Compliant

If I am reading and hearing the Federal Trade Commission right, the burden that’s being placed on the merchants’/advertisers’ shoulders is actually considerably greater than that which is being placed on the backs of the affiliates. On October 7, 2009 Richard Cleland, the FTC’s assistant director of advertising practices, stated that in case with “bloggers” the “approach is going to be educational”, and no one should fear a “penalty if they inadvertently make a mistake.” He also added:

We’re focusing on the advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they’re saying is true?”

Is including a relevant clause in the affiliate program’s TOS going to be enough? Not really. There are two components that the FTC will be looking at: (i) education, and (ii) monitoring. The clause in the TOS will take care of the former, and I will address the latter below (see point #2). What I think every merchant/vendor who is putting a Twitter tool ought to also do is ensure that the disclosure is in place: be it with a use of an #ad hashtag or something similar to what cmp.ly is doing, but the disclosure of the monetary connection between the “endorser” and the “sponsor” must be in place.

2. Monitoring Affiliate Compliance

This is another thing that is expected of advertisers. How do you do this on Twitter? Coincidentally, Nathan Hangen of of Making It Social has just published a directly relevant post at TwiTip.com. In it he talks about the three tools that companies can use to monitor their brand on Twitter. These three are: TweetDeck, Hootsuite and Tweetizen. All three can be successfully used for monitoring what your affiliates tweet about your brand. Hangen writes:

TweetDeck panes: …TweetDeck is robust and easy to use. The simple way to set up monitoring in Tweetdeck is to add a few search panes for the keywords and hashtags that represent your brand. For instance, I have a search going for #twitterrockstar and Twitter Rockstar to see what people are saying about my Twitter course.

Hootsuite tabs: …a fabulous web client that has all of the features of TweetDeck without having to download an application, which is perfect places where you can’t download (like at work). You can handle multiple accounts here as well, but the best feature of Hootsuite in my opinion is being able to set up a tab for each brand. I set up tabs for Twitter Rockstar, Beyond Blogging, Nathan Hangen, and any other product or name that I want to track. Since everything is saved to my account, it’s always ready and waiting for me when I log in.

Tweetizen: …a great way to not only track your brand, but to show it off to others. Tweetizen allows you to create a “group,” which you can use to track keywords or hashtags, but the difference here is that you can embed the results in any web page. This is great for product pages or launch pages so that you can build hype for your brand without having to force it on your own.

Great lineup, and affiliate program managers can certainly use the above-quoted tools for monitoring what their affiliates say about them (and their products) on Twitter, and whether their tweets are compliant with the FTC’s rules.

I have just found out that the Federal Trade Commission has published video responses to the following 6 questions:

1. What’s new about the Endorsement Guides?
2. Why did the FTC update the Endorsement Guides?
3. What do the Endorsement Guides mean for bloggers?
4. How do bloggers follow the Endorsement Guides?
5. Is the FTC planning to sue bloggers?
6. Where to go for more information.

These questions have truly been the most burning ones that affiliates have had ever since the day the FTC’s new Endorsement Guides were announced. Mary Engle, the Associate Director at the FTC’s Bureau of Consumer Protection, has once again calmed “bloggers” that there is nothing to worry about if you are being transparent and “upfront about the connections you have.” Addressing the how to question she said:

If a blogger does have a relationship with an advertiser that needs to be mentioned, it’s pretty simple… [just say that you've been given a sample or are being compensated for the sales put through after clicking on your link] …not too complicated, and it just should be straightforward and upfront.

You may view the videos one by one at FTC.gov or all six videos combined into one (only 2 min 22 sec long) on YouTube.com.

Now FTC needs to create a series of responses to the questions that thousands of advertisers still have. To mention but a few, they are:

1. How do advertisers follow the Endorsement Guides?
2. Is the FTC really expecting advertisers to monitor all affiliates/bloggers for proper disclosures? Any practical advice on the how to part?
3. If the FTC catches a blogger/affiliate without a disclosure, will it sue the advertiser?
4. What about bloggers/affiliates located outside the U.S.?
5. Can you provide samples of the legal wording that meets the FTC’s standards/expectations for the advertiser’s advice to its affiliates?

Have I missed any?

Earlier today Janet Meiners Thaeler (aka NewspaperGirl) tweeted:

CMP.ly is said to have been born “in response to a continued push for transparency and honesty in blogging and within social media and digital communications”. This solution seeks to address the problem of “no established structure or format for disclosures to follow”, and provide “a series of simple and transparent disclosures that are identifiable at a quick glance, even within the tight constraints of 140 character twitter messages” [more here]. I especially like (a) the option of eloquently disclosing on Twitter via their short URL (e.g.: disclosure of a sponsor-endorser relationship – www.cmp.ly/3), and (b) the idea of a WordPress plugin mentioned in the above-quoted tweet.

CMP.ly has categorized all disclosures into 6 types: (i) unpaid personal opinion, (ii) feedback on a review copy, (iii) one in response to a sample receipt, (iv) paid/sponsored post, (v) one where an employee/shareholder/business relationship is present, and (vi) custom disclosure:

They are now in Beta and open to suggestions. The service will be offered free of charge. So if you have ideas on how to develop/improve it, I am sure they will embrace them with open arms.

Good to see this development. Between CMP.ly, its WP plugin (whenever it launches) and the DisclosurePolicy.org Generator affiliates will have some good options to choose from while wording their disclosure policies to comply with the new FTC’s disclosure rules.

Yesterday evening the team at #SocialMedia has published a good blog post on the FTC’s new rules. They have referred to my earlier statement that the new guidelines imply a shift in responsibility: from the advertiser (who, back in the years when “such traditional media as television, commercials and print advertisements” mattered most, had to “disclose material connections between the advertiser and the endorser”) to the publisher (who is now distributing his/her own endorsement via Social media, and is believed to be “the party primarily responsible for disclosing material connections with the advertiser”).

#SocialMedia wrote:

While some may say this officially shifts the responsibility of disclosure from the advertisers to the publishers, what it really does is says that everyone is accountable — the advertisers and the publishers.  No longer can we stand around like school-children and point fingers at each other saying “she did it”!  We are all responsible and accountable.

And I agree 100%.

While initially FTC did sound like they are going to chase bloggers, two days after the announcement of the new rules, an FTC’s representative stated that bloggers should not be afraid of any penalty fines as they would first receive a warning, and then, if they refuse to comply, FTC “would institute a proceeding with a cease-and-desist order and mandate compliance with the law”. We were also told that it is in reality advertisers that the FTC is going to focus on — on the education that they provide their publishers with, and on the monitoring and policing mechanisms that they put into place [more here].

While the initial focus of the Guides Concerning the Use of Endorsements and Testimonials in Advertising did seem to be on the publishers, the latter comments by FTC sought to calm them, and put much of the responsibility on the advertisers’ shoulders. Regardless of whether some of the expectations (like effective policing of publishers’ compliance with the new rules) are realistic or not, I think approaching the subject as one effecting both affiliates/publishers and merchants/advertisers — where both parties are responsible and accountable — is a good strategy.

Fall 2009 issue of the Online Strategies magazine had an interesting article by two lawyers, Jeffrey Knowles and Thomas Cohen. It is believed that “they were given advanced notice of impending changes”, and devoted this article to educating both affiliates and merchants on how to stay compliant with the FTC’s rules. Their advise was:

Affiliates

1. Ensure that your marketing in a “truthful, substantiated and not decepting or unfair” manner (looks like they meant “deceptive” here)
2. Stay away from publishing false content, or offering “incentives to consumers in return for their response to any ad, unless the offer’s terms and conditions of the offer are clearly and conspicuously disclosed”
3. Stay away from “fake news articles” and always clearly disclose when “the content is an advertisement”
4. Do not post “false or unsubstantiated endorsements, and be sure” that you always “disclose any material connections with the merchant”
5. Do not infringe trademarks, copyrights, patent rights, “or any other intellectual property right”

Merchants:

1. When entering into an agreement with an affiliate marketer, make it mandatory for the affiliate to agree that all content used to drive traffic to your site will “abide by all state and federal consumer protection laws and regulations including the FTC Act and the CAN-SPAM Act”
2. Make it explicit that affiliates are also agreeing “to comply with the FTC’s Endorsement Guides”
3. Ensure that affiliates are also agreeing to stay away from intellectual property rights infringements
4. Ensure that your affiliate program agreement requires “that affiliates clearly and conspicuously disclose the terms and conditions of any incentives, points, rewards, cash or prizes promised to consumers in return for their response to any advertisement”
5. Finally, the agreement “must provide that any affiliates who violate these laws, regulations and guides shall be terminated by the merchant or network, and shall forfeit any commissions earned in the course of committing such violations”

The full text of the Knowles and Cohn’s article may be found here. The advice sounds easy to follow, and unless advertisers are held rigidly accountable for the monitoring and policing, there should be no problem complying. Much will be clarified further with time (I am closely monitoring what is happening on this front and will keep my readers posted). At this stage, it is important for both merchants, and affiliate to understand that everyone will be held responsible, and ensure that their strategies, policies and disclosures are intact.

——–
See also:

• “How to Word Disclosures & Agreements to Meet FTC Rules” post

Over the past four days I have been receiving numerous emails from merchants and affiliates, asking how to word their texts to meet the new Federal Trade Commission rules for testimonials, reviews and endorsements.

Affiliates wonder how to put together disclosures:

As a publisher, is there generic type of blurb that I could add to my website that would cover me for the FTC guidelines you were talking about.

…while merchants want to know how to phrase their affiliate program agreements:

What do we need to do?  Your help and guidance is appreciated.

Affiliates, several good examples of disclosure policies have been posted over the past few days. Below I am listing the ones that I have found to be especially well-put-together. They may provide a good starting point for crafting your own policy:

• Scott Jangro’s disclosure
• Tim Carter’s disclosure
• Sarah Mae’s disclosure
• KitchenStewardship.com’s disclosure
• Matt Cutts’ disclosure
• …and see also DisclosurePolicy.org for help

Per FTC’s recent interview, affiliates are not expected to include the disclosure on every page of their website. “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” [source]. So a dedicated Disclosure Policy page visible from every page of the website should suffice.

Affiliate program managers and advertisers/merchants, on the other hand, may use the following text I have put together, making it a sub-clause of an Affiliate Obligations clause in their programs’ Terms of Service:

We strongly advise affiliates to stay compliant with the Federal Trade Commission (FTC) guidelines on testimonials and endorsements. All endorsements, reviews, testimonials on CompanyName.com’s products and services, as well as relationships between other types of content websites (forums, blogs, microblogs and other  Social Media channels) and CompanyName must be clearly disclosed in a separate policy on the affiliate sites. FTC points out that “when there exists a connection between the endorser and the seller of the advertised product” it is imperative that such connection is “fully disclosed”. FTC deems the relationship in an endorser-sponsor light, and believes that the end user has the right to understand that one exists [full text here]. We share the undergirding idea of this approach, and strongly encourage our affiliates to adhere to the FTC’s rules. We also reserve the right to terminate relationship with any non-compliant affiliates.

As always, I am open to comments and criticisms.