We’ve all seen those ridiculous warning labels. We order a hot cup of coffee, and it warns “Caution! Contents are hot!” Icons on the package instruct us that children should not hide in the refrigerator and we should not microwave the cat. The fine print warns us what is not fit for human consumption: markers, laundry detergent, an iPod. These all seem obvious to us, but the fact that these warnings exist means that someone somewhere tried it and sued the company. No matter how honest of a businessperson you are, no one is immune from the occasional disgruntled customer. Even if you are not directly at fault, you could be included in a lawsuit.
This topic of legal issues in internet marketing in general is rarely discussed, and even less so for affiliate marketing specifically. On January 6, I attended the SMX Israel Conference, which featured some really great speakers, including Marty Weintraub from AimClear, John Mueller from Google Switzerland, Julia Logan a.k.a. IrishWonder, and many more. One of the affiliates attending the conference asked a particularly good question: “If a dishonest merchant is sued by the customer coming from an affiliate website, would this affiliate be liable as well?” The answer was affirmative: Affiliates—who are not responsible for the creation of a product or service—can still be held liable and need to protect themselves. This inspired me to research deeper potential legal issues and provide tips on how to avoid liability in Affiliate Marketing.
Know Who You are Getting into Bed With
Do your due diligence when choosing marketing partners—this advice applies to both merchants and affiliates. There’s no excuse for the merchant or program manager not to investigate a potential partner’s promotional methods. Merchants, make sure your product or service will be promoted by ethical and legal methods. From the other side, a thorough research prior to applying to a program will help affiliates avoid promoting poor products or dishonest merchants.
Provide a Disclaimer
While there’s abundant information on legal issues for merchants, affiliates are often overlooked. So how can an affiliate avoid a potential lawsuit alongside the merchant? A simple and clear Affiliate Disclaimer placed on the affiliate website can be all it takes to provide adequate protection. This disclaimer, which includes a Compensation Disclosure and Limitation of Liability, is a MUST for every affiliate website to keep them out of trouble with the FTC and unhappy customers. Unfortunately, very few affiliates take advantage of this opportunity to protect themselves against potential liability claims.
Here’s a smart example of such a disclosure from one of our partners, Dealmoon.com:
In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.
Through this website you are able to link to other websites which are not under the control of dealmoon.com. We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.
Dealmoon.com has financial relationships with some of the Credit cards shown on the website, and Dealmoon.com may be compensated if consumers choose to apply for these links in the content, and ultimately sign up for them.
As you can see, it’s short, simple, and includes both a compensation disclosure and liability of limitations. Of course, there’s no 100% guarantee that some customer will not try to sue you, but this can greatly increase your chances being vindicated should legal action ensue..
Awareness of the potential risks and expert contract-drafting are absolutely essential for moving forward in the affiliate industry, not only for merchants, but for affiliates as well. Creating an affiliate disclosure doesn’t take much work or time, but goes a long way. Keep in mind that if some people need a special warning that their hot coffee is hot or that the cat might not find the microwave as cozy as a sunbeam, there’s no telling what they’ll do or who they’ll blame when things go awry.
Darwin Bell's Photo via Flickr
5 thoughts on “How to Avoid Liability in Affiliate Marketing”
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Great post! I’ve often felt that there’s not enough discussion about potential legal issues that can arise in this industry. There seems to be a prevailing ‘wait and see’ approach.
The EU ePrivacy Directive was the perfect example of this. It was a real struggle to get some straight answers and concise information from any of the large UK networks about the ramifications for our clients.
Considering it had been in the pipeline for two years, it was only in the last month before implementation that we started seeing any real discussion on the topic.
Hopefully that’s a situation that will improve as the channel continues to grow.
Thank you, Dave!
Wish you luck with getting all the answers needed for you clients. Lets hope legal issues in affiliate marketing will get fair attention pretty soon.
Hey! These points are great! I’ve Been reading a lot recently about being an affilaite marketer since I just jumped into becoming one, and I was looking into having a booth at a local festival to promote my website with affiliate marketing. I would have business cards and other informations about my affiliate links as well as order forms for the affiliate products or possibly pay to have internet access so people could order online right there, but a friend has told me that I would need a business license for this. I do not directly sell these products. The orders go to an actual business–not me–and then the products get shipped directly to the customer–from that business. Are affiliate marketers legally “businesses”? Thanks for any info you can give me on this
Hi Liliya, indeed great post! Question is, what happens if, in spite of all disclaimers, the customer decides to sue me anyway? should I be covered by some kind of insurance?