Enforcing FTC Advertising Disclosures for Websites, Social Media

Earlier this season, the U.S. Federal Trade Commission upgraded its disclosure-of-advertising guidelines to add blogs and social media. If you’re paying a monetary or merchandise incentive to market your brand, product, or service on social networking or a site, you must stick to FTC disclosure-of-advertising guidelines — here is the PDF.

The FTC’s advertising disclosure guidelines include social and blog networking posts.

Since the affiliate marketing model is performance– and – commission-based, this implies that in case you operate an affiliate program, all your content affiliates must adhere to these guidelines. Further, if the FTC finds that disclosure guidelines aren’t met, the retailer could be held accountable, not the affiliate. This is precisely what happened in 2011, when Legacy Learning, a company that sells a popular collection of guitar-lesson DVDs, paid $250,000 to settle FTC charges that it deceptively marketed its products through internet affiliate marketers who posed as ordinary consumers or independent reviewers.

Paid Favorable Reviews Costly

“Legacy Learning taught us that retailers could be held responsible for positive reviews done in their behalf when there was a financial link to the reviewer,” explains Tricia Meyer, an affiliate marketer, consultant, and lawyer who has kept close tabs on the development of FTC disclosure guidelines. ” The biggest change since (the Legacy Learning) situation is that the FTC has enlarged the Guidelines to specifically include social media, even where there’s a restricted character count, and also to state that disclosure has to be made prior to any links which would take the reader into the merchant website.”

For instance within the guidelines, the FTC provides a screenshot (below) of a blogger who got the paint she’s reviewing for free.

The example from the FTC is of a blogger who positively reviewed paint that she obtained for free.

While the blogger does disclose her relationship with the advertiser inside the body of this post, she does so in the conclusion of the review. The FTC states that this is inadequate disclosure because the disclosure isn’t”clear and conspicuous.”

“There are plenty of links before that disclosure that could distract readers and cause them to click away before they reach the end of the post,” the guidelines say.

Paid Tweets

As Meyer highlights, disclosure guidelines also apply to social media posts, such as those on Facebook or Twitter, that often have limited character counts. Again, the FTC provides an illustration of appropriate disclosure within its own guidelines. The sample tweet below starts with”Ad:” and also discloses the amount of weight (“Average loss: 1lb/wk.”) That customers using the product can normally expect to lose.

The sample paid Twitter tweet begins with”Ad:” and include the actual amount of anticipated weight loss:”Typical reduction: 1lb/wk.”

The FTC further demonstrates that adding a link to a disclosure page in a post, or disclosure of a monetized connection in a previous or following social networking post, isn’t sufficient action to avoid penalties. Nuances such as these are why retailers will need to know about disclosure criteria when creating online advertisements, and when working with affiliates. Meyer says retailers will need to take a proactive stance in ensuring affiliates follow disclosure guidelines, not merely to protect themselves against possible FTC fines, but to guarantee a level playing field across their affiliate base.

Retailers Must Enforce

“Not only do retailers have a responsibility to their customers to apply blogger disclosure under the FTC Guidelines but they have a responsibility to their own affiliates. When a retailer doesn’t enforce disclosure, it creates an uneven playing field between the bloggers that are doing the right thing in revealing and people that aren’t following the Guidelines,” Meyer says.

Meyer further emphasizes the FTC guidelines do not apply to only affiliates, but to some advertising partner that receives some kind of incentive or reimbursement for boosting the merchant’s product or brand.

“Bloggers will need to disclose any material connection they have to the merchant. This would include getting a free solution, receiving a commission or referral fees through particular links, or even getting a special deal on merchandise by virtue of the connection with the merchant,” explains Meyer.

Perhaps the most difficult guideline to stick to is the one regarding”clear and conspicuous disclosure.” The guidelines clearly state that there is”no set formula for clear and conspicuous disclosure; it is dependent upon the information that has to be given and the nature of the advertising.”

Having said that, to evaluate whether a specific disclosure is clear and conspicuous, the merchant should consider the disclosure’s positioning, prominence, whether there are components in place that could distract the reader from the disclosure, whether the disclosure is present whatever the route by which the consumer came in the claim, whether the disclosure is understandable from the audience, and whether the length of an audio or video disclosure are of a sufficient volume and length.

Conclusion

In summary, it is critically important for retailers to make certain that affiliate adherence to disclosure guidelines is clearly stated within affiliate terms and conditions, and that a procedure is in place to guarantee affiliate compliance.