New FTC Endorsement Rules
November 25th, 2009
The U.S. Federal Trade Commission continues to make internet commerce a top priority. The FTC recent issued new regulations that govern the use of “endorsements” to promote products. Those regulations can be found at 16 C.F.R. § 255 or here. Note, the new regulations are effective December 1, 2009.
The new regulations cover all sorts of third party testimonials and endorsements—by consumers, experts and celebrities. If your promotions use customer or consumer endorsements, the FTC requires that the results described must be typical or, if not, you should “clearly and conspicuously” disclose that the results presented are not typical. Also, such customers should be “bona fide” buyers of your product, and not, for example, a fictitious person or your cousin who is doing you a favor. For expert endorsements, the person involved should have special knowledge that qualifies him or her to make the endorsement, e.g., if you use a doctor to sell a diet plan, that doctor shouldn’t be an eye doctor, but have special knowledge in the area of nutrition.
Also, the FTC requires all endorsements to disclose any “material connection” between the vendor and the advertiser. For example, if an affiliate runs a website offering an “independent review” of two products and gives a favorable review of one, they should disclose the fact that they are receiving a commission from the sale of that product. These rules also apply to third parties, such as bloggers, who receive a free product and are asked to do a review. Under the new FTC rules, not only should the blogger disclose he got the product for free but the vendor who gave him the product should make some effort to make sure that the blogger makes that disclosure.
Please review these new rules yourself and if you have questions, please ask your own legal counsel. ClickBank cannot and does not give legal advice to our vendors or affiliates, and our approval of your product does not constitute an approval of any specific marketing, promotion or endorsement used to sell the product.
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I found one of the most revealing statements in the above referenced CFR link,in paragraph 6; “The Guides are administrative interpretations…” Which then goes on to say that ultimately the burden of proof lies with the FTC. I am no lawyer, but applying some common sense toward this issue would be in order. I have no problem with informing people I am getting a piece of the action for soliciting affiliate materials or if I choose to endorse a product, “one I actually use and trust”; in the context mentioned in these discussions. It is just sound practice. As for testimonials, they should be real and credible. I do not take kindly to misleading people and I despise those who pray on the desperation of others. Disclaimers should be elaborated on, but all that is needed here, in my opinion, is a simple rewording. Many disclaimers I have read, and I have read many, exclude the infamous “results are not typical” clause with more intricate wording geared toward someones personal experience, discipline or general learning skills.
One thing I would keep a watch for is people who will make false complaints to the FTC regarding their experience using a product or system for the sole purpose of monetary gain. Not trying to scare anyone, but just trying to give a broader perspective. There are practices that should and need to be cleaned up, but the abusive side of new laws must also be curtailed.
@lois
You’re welcome. I try to stay on top of things as they develop. Last thing I want is the FTC breathing down my back !
@Steve1776
Go right ahead, I don’t mind.
Ya know is there anything the feds don’t regulate to the point of insanity?
Talk about being a beast of burden lol
I agree with PoppiD….
I have no problems letting people know that I am getting a pc of the pie from a product. I do however have a problem with the government hand in my cookie jar again!! I mean if a person can not figure out that I am selling a product with a “buy button” on my page we have bigger problems than that!! The copy that I provide on my landing pages is taken from the mfg with permission. I make no claims of outcome merely just what the product can possibly do for you. Isnt that the case in anything you buy? So what is next?
Yet again the good have to suffer for the bad….I have NEVER mislead or cheated a customer out of anything. If you try a product and dont like it return it….that is why clickbank offers a 60 day money back guarantee. I have not had one client state that they were unable to get a refund. This is just a ridiculous law. We have way more important things to tackle in the world. I mean doesnt some of the common sense have to fall back on the buyer? But yet our wonderful govt now again is hurting business people yet again.
Very sobering, especially when you consider the Presidents appointment of a new Internet Czar. I’m not getting into a political debate on Obama’s merits or appointments. I have my private thoughts. I’m very interested to see what his agenda is.
But the reason I commented is to ask where I could find a suitable disclaimer on ” the infamous “results are not typical” clause with more intricate wording geared toward someones personal experience, discipline or general learning skills.”
Any thoughts? I’m in the process of a new site on weight loss and the timing is perfect. I do plan to write a number of articles based on my background and personal experience.
Thanks,
Suave Dog
What a pain to have to go through all my sites and remove recommendations that came with the sales pages! I understand it but it sure is difficult!
The real problem really does not get addressed… and probably because the big pharm and other lobby interest. (what about the advertisements with drug companies when the disclaimers of health problems take up more time than selling the benefits)?
Gary
I agree with Gary, the FTC has not regulated drug pharmaceutical advertisements especially those with celebrities on national TV networks and on the internet. The advertisements are allowed freely to “market” these products even though the claims from the drug makers are not proven, not safe, have no safety standards, and just listing numerous side effects is not cutting it. The FTC should be concentrating on TV drug ads -those that are blasting on news networks every day -with repetitive ads. This is fraudulent and without substantial proof that these drugs work-most of them make consumers very sick. Instead they are deterring small businesses on the internet and these new FTC regulations do not represent positive change. It seems the FTC favors large corporations while making small business more difficult.
Whatever happened to “Caveat Emptor”. I understand the idea behind the legislation, but interpretation into law is proving to be heavy handed.
Here’s another example of Big Brother sticking his nose in the affairs of business. If those in government is wondering why the economy is going down the toilet, well this why.
They make more and more complicated for the little guy to make a buck. GUess what, with fewer and fewer people making money, that means fewer tax dollars going into big brothers coffers. Some Law makers need to get a life.
Re: Teddybear:
I get that it seems so difficult for the little guy to make a buck and that the big bad government wants to control everything, however, if you have ever been scammed online out of any money at all, you would know that something needs to be done. Its incredibly easy for scammers to get away with ripping you off online and incredibly difficult for the consumer to have any sort of recourse. I recently had $200 stolen from me from an automotive transportation company that seemed completely legit, spoke to them on the phone even, but they were a total sham. It has been hell attempting to get it resolved. Only after months of other people getting ripped off has anything even begun to happen.
So, if you have a legitimate business online, you should be very happy that some efforts are being taken to HELP THE HONEST PEOPLE out there trying to make a buck by getting rid of the losers that are ruining it for the good guys.
RE Jess to TeddyBear,
Honest People are always the ones going to be hurt by big government regulation in my opinion. Regarding the new FTC rulings and the little guy business. I find it similar to the gun laws it wont stop the real criminals from having weapons just your everyday citizen that wants to protect his or her family. The government is never going to have the resources to stop those who don’t give a sh..and don’t play by their rules.
Oh by the way i know this from personal experience I was in the Military Intel filed personally for over a decade. So maybe your results haven’t been typical ;0)
As to the FTC regulating affiliate marketing, will this extend to multi-level marketing as well? Sounds like honesty is the best policy. I understand that each “vendor” should take the responsibility for validating the a product and be transparent about their role as a salesperson. Does that sound accurate?
If I am selling a product online, I must tell the consumer that I am getting a commission or If I endorse a product I must tell the consumer I am making a product?
My family owns a retail store and If I had to tell every customer I was making a profit, instead of this idea being implied, we’d be out of business.
The consumer has to take chances, esp. on the internet. I have never purchased anything over the internet that I have not checked and researched indepth before purchasing. Both Product and Vendor.
I guess I would say — Its fine with me, if endorsements have to be real, if testimonials have to be real, but If I have to tell every customer I am making a profit on my sales, thats just going to far.
Looks like Big Brother has their hand in my cookie jar again, “as kellib says”, looks like I have to start putting nails in my cookie jar to keep them out.
What the government is saying is “reasonable”, but they don’t have to throw it our face.
Is the FTC making these rules for drug company’s, McDonald’s, Apple, Microsoft, and even Google. Does the FTC make Google disclose that if you:
click on an Ad or a Link that Google makes Money, or a profit?
Click on an Ad on a computer, that Apple makes money or a profit?
Click on an Ad, on a piece of software that Microsoft makes money or a profit?
What about Google Adwords, does Google disclose it is making a profit if you click on their sponsored Links? Do they disclose this on every link that Google gets paid for on the internet?
Gets a big ridiculous doesn’t it?
Does the same disclosure apply to television ads, radio ads, newspaper ads or are they just targeting internet businesses?
This is totally unfair, unwarranted and will stop small businesses besides being totally an asinine idea. ( that means coming from a idiot).
Whomever thought of these new rules and regulations should decide to target those who “are” making the millions like the big guru’s, and those who are not disclosing recurring charges -not the little mom and pop businesses where people are just trying to etch out a living.
The more people try to stop you – the harder you should try to succeed.
George
PS. The stuff that is on Television every night is disgraceful promotion of products with no substantial regulation, every day we are bombarded with commercials that have no disclosures- and that is far more an influence on the public than ads on the internet where people have a choice. Television ads are largely unregulated today – anything goes, booze, drugs….and are far more harmful to society.
Just stay white hat and you will never have an issue. That is basically what you need to do in a nut shell.
I agree with George. Those FTC regulations are taking away our hard earned money. They are practically shutting all small internet business online, as stating that you get a commission really turns your customers off. Why don’t they tackle the “big fish” those that are harming others- TV, radio, pharmacies etc…. It’s as if they want us to live on the streets, and they are doing every bit they can to make it happen. I say all of us stand together and make a petition or something- stand against this bull****
I don’t really think that it will change much. It might actually give the industry more credibility.
OK, can someone give an example or what other affiliate marketers are writing on their blogs, websites etc to keep FTC happy and us above board?
hi i’m from New Zealand and the FTC is an American orgastion do people from other countrys have to go by this? it all sounds over the top i always carefully check out a website when buying.thanks
from scott
Scott,
While the FTC is a US-based organization, it is possible that they could work with New Zealand-based government entities to enforce these rules, or find other ways to enforce them. It’s a good idea to be in compliance now, as ClickBank will comply with any FTC requests that relate to our clients.
Scott, Its best just to comply no matter what country you are in. Especially if you are affiliated with any US based companies within your business or selling to anyone in the US. By the way… I was just in New Zealand and loved everything about it! You are lucky to live there!
Jess,yes it’s very pretty down here and sheltered from the rest of the world,just the way we like it!i’d love to one travel overseas too one day.
To my view geneune vendors and affiliates of any product catagory need not have to worry too much about the new regulaory requirement. As the days go by it will become a routine affair. Afterall every participant has to go through this process. However, foulplayers will come out sooner than later with their own scheme of things to keep FTC happy and themselves above board.
Basically, this will help because there are a lot of review website portals i have come across that are just BS and have a few half assed reviews of different products but these websites are used to redirect the viewer to the intended product the affiliate is promoting.