FTC Compliance for Affiliates: Recent Developments – By Katy Atlas

by Alana Jones on April 17, 2018

 

The Federal Trade Commission creates and enforces regulations on internet advertising. Under Section 5 of the FTC Act, businesses cannot run any unfair or deceptive advertising. Affiliates, advertisers, and agencies may all be held liable for unfair or deceptive online advertising.

Background

In 2013, the FTC released its .com disclosure guidelines, the seminal piece of regulatory guidance for online marketers. The broad take-away from these guidelines is that disclosures must be clear and conspicuous and explain any material connection between an advertiser and an endorser.

Recent Developments

In September 2017, the FTC released an additional Q&A titled “The FTC’s Endorsement Guides: What People Are Asking.”  There is specific new guidance on product placements, social media contests, online review programs, and affiliate marketing.

When is a Disclosure Required?

Bloggers should query whether knowing about that gift or incentive would affect the weight or credibility your readers give to your recommendation. Even if you don’t feel that a small gift would affect your review, the key question is how the reader of your site views your endorsement knowing that it was given to you.

Additionally, material connections encompass more than just monetary payments. The connection could be friendship, family relationships, or an informal deal. Even a small, free item or gift may affect credibility if repeated or given in expectation of a larger future relationship.

As a general guideline, the FTC says: “It’s always safer to disclose.”

What Goes Into a Disclosure?

No special wording is required for advertising disclosures. The goal is to give readers the essential information through an effective communication. The Q&A includes several sample disclosures, each of which would presumably be sufficient:

  • “Company X gave me [name of product], and I think it’s great.”
  • “The products I’m going to use in this video were given to me by their manufacturers.”
  • “Sponsored by XYZ.”

The FTC also provided some guidance on disclosures that are unlikely to be considered sufficient. A “thank you” to a sponsor does not necessarily communicate that the endorser received something for free or was given something in exchange for the endorsement. Additionally, combining the hashtag #ad with other words (such as #coolstylead) is unlikely to convey the significance of the word “ad” in the disclosure.

Placement on Site

 The FTC also reiterated that consumers must be able to notice the disclosure easily. Disclosures should be close to the claims they relate to, in a font that is easy to read, and stand out against the site’s background. For video ads, they must be on the screen long enough to be read and understood. For audio, they must be read in a cadence that is easy to follow using language consumers will understand.

Conclusion

This is only a small summary of the most recent guidance from the FTC. For the full version, the Q&A is available on FTC.gov. This article is meant to be helpful and informative, but is not a substitute for reviewing regulatory guidance yourself or with counsel.

 

 

 

Katy Atlas is the Chief Strategy Officer and General Counsel of Wickfire.

This article appeared in issue 42 of FeedFront Magazine, which was published in April 2018. https://issuu.com/affiliatesummit/docs/feedfront-42

 

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