FTC Means To Say That Everyone is Accountable

Posted onLeave a commentCategoriesAffiliate Program Management, Online Marketing, Thoughts for Affiliates

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.

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