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FTC REGULATIONS AFFECT INTERNET AFFILIATE RELATIONSHIPS, ENDORSEMENTS AND TESTIMONIALS
© Cheryl Hodgson 2009 | Posted on November 19, 2009
Are Internet marketers affected by the new FTC regulations? The answer is yes! Recent changes taking effect December 1, 2009 have been made to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising. These regulations will likely require disclosure of affiliate relationships, as well as paid endorsements and testimonials by many Internet marketers. Once relegated to truth in advertising in traditional television, radio and print media, the new regulations expand coverage into the Internet arena. Internet marketers commonly pay a commission for sales made by so called “affiliates.” Also at issue are tighter rules requiring disclosure of paid endorsements and testimonials.
The rules will apply to bloggers as well as social media such as tweeters and Facebook users.
We are sending you the most important things you need to know about the FTC rules:
1. Do not have a consumer describe his product experience as typical if you can’t prove it! Otherwise, you will also have to disclose the results that consumers can generally expect. Under the 1980 Guides, advertisers were able to include unusual results in a testimonial so long as there was a disclaimer. That is no longer the case, as illustrated in an FTC example:
A brochure for a baldness treatment consists entirely of testimonials from satisfied customers who say that after using the product, they had amazing hair growth and their hair is as thick and strong as it was when they were teenagers. The ad will also likely communicate that the endorsers’ experiences are representative of what new users of the product can generally expect. Therefore, even if the advertiser includes a disclaimer such as, “Notice: These testimonials do not prove our product works. You should not expect to have similar results,” the ad is likely to be deceptive unless the advertiser has adequate substantiation that new users typically will experience results similar to those experienced by the testimonialists.
2. You must disclose payments or free products between you and endorsers. The FTC likes to call these material connections that consumers would not expect. This even applies to bloggers. If you are paid to review a product and post a blog about it, it is an endorsement and must be disclosed. The FTC illustrates below:
An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product. Knowledge of this poster’s employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.
3. If you mention research company data and you sponsored that research, you must disclose that connection in your advertisement.
4. Do not make false or misleading claims. Any paid endorsement or advertisement with false or misleading claims is deceptive and not allowed under the FTC Act. Under the new Guides, advertisers as well as the celebrity endorsers can be held liable for making false claims or failing to disclose material connections. “Celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.”
Basically, the new Guide covers endorsements by celebrities, consumers, experts and organizations, as well as disclosure of material connections. There are more great examples at www.ftc.gov
Technorati Tags: Advertising, business management, Marketing
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November 20th, 2009 at 10:03 am
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