Affiliate Marketing and the FTC
Image by affiliatesummit via Flickr
I am surprised how little the affiliate marketing crowd understands or is aware of the FTC's agenda on deceptive advertising, especially as it relates to business opportunities - buying yourself a job.
People are just not getting it.
Here is Brian Clark, a former attorney, writing at his blog Copyblogger, about testimonials and endorsements for business opportunities.
Brian, who is a smart guy, writes about disclosing your affiliate links:
"Many of my friends in the affiliate marketing industry did not take kindly to my legal observations at the time.
And a lot of people are upset right now, but the FTC will still remove all doubt about the fact that disclosure of compensation and conflicts is required.
Now it becomes clear that even something as small as an Amazon affiliate link to a book or DVD requires disclosure. That represents a big shift in the way things have worked so far."
This is not the big story for affiliate marketers like Brian Clark. Brian, among many others, markets business opportunities, such as Teaching Sells, which I actually joined.
But here is the problem. Testimonials, like this:
I joined Teaching Sells on day one, and after completing the core program I successfully transitioned my flagship SEO Book into an interactive learning environment. The results have been stunning so far." ~ Aaron Wall, SEOBook.com
The "results have been stunning so far" is usually accompanied with a standard disclaimer - "your results may very", or something like that.
This standard disclaimer about earnings potential simply isn't going to work any more. From Hugh Latimer writing about disclaimers.
"At a hearing of the Senate Commerce Committee's consumer protection subcommittee on July 22, 2009, controversy burst forth over the FTC's proposed changes to its advertising guidelines, particularly with respect to consumer endorsements representing a non-typical experience and whether a bare disclaimer of "results not typical" would continue to be permissible.
Current Federal Trade Commission endorsement guidelines provide that a consumer endorsement will be interpreted as representing that the endorser's experience is representative of what consumer's "will generally achieve with the advertised product," for which the advertiser must have adequate substantiation, or "clearly and conspicuously disclose the limited applicability of the endorser's experience to what consumers may generally expect to achieve." § 255.2 (a).
The FTC's pending proposal to significantly curtail, if not eliminate, the use of "results not typical" disclaimers has provoked the controversy.
At the Senate hearing, David Vladeck, Director of the FTC's Bureau of Consumer Protection, testified that § 255.2 (a) of the FTC's current guidelines inadvertently extended an "open-ended invitation" to advertisers to make inflated claims through consumer testimonials that should have been prohibited.
He added that FTC research has shown that the bare "results not typical" disclaimer has not been effective in eliminating consumer deception.
Here is Vladeck's testimony before the Senate about misleading advertising. Read it and as a marketer of business opportunities, you will realize that disclaimers are simply not going to cut it any more.
Comments
The thing that I notice about the new FTC regs is that the rules no longer just require someone to be clear about typical earnings. If I read these new regulations right, a person also has to disclose everything on their website that has any chance at all of generating revenue for the webmaster or website owner.
I sort of have mixed feelings about this. If the true intention of the FTC is to protect consumers from fraud, then that's one thing, but as with a lot of things that often appear to be the govt. looking out for the average Joe, are really just ways for the govt. to wrestle even more control from an individual or corporation.
The true agenda often times becomes quite apparent eventually, but by then, the damage has been done and it's to little, to late, to be able to take back your rights.
Another thing as far as affiliate commissions go, most people already know if a sincere recommendation is being made or if a recommendation is being made in order to generate income.
It's really just a matter of common sense. Just hover your mouse pointer over a link for something that is being recommended. If the URL of the company that sells the product or service shows, then it is most likely a sincere recommendation. If on the other hand, an affiliate links shows, then we pretty much know why a recommendation is being made, don't we?
Their is also the fact that everyone has their own opinion as to whether something is good or bad, so even if an honest recommendation is being made for something, that doesn't mean that someone reading the recommendation is going to like the product or service just because the affiliate marketer does, and so that is where the govt. is just trying to be the 'thought police' rather than having any genuine concern about the buying public.
Just because a recommendation is being made for something that others might not like, does not automatically mean that there was an attempt to cheat or take advantage of anyone.
No. I think there is something more to this new FTC reg other than just trying to protect the average consumer, but that does make a good ruse for hiding the governent's true agenda.
Posted by: Misato Katsuragi | November 13, 2009 12:31 AM
Paul;
The question about disclosure, from the FTC's point of view, is what would the average consumer think about you recommending a product.
The FTC has traditionally accepted that if a "famous" person recommends a product, then everyone ought to know that the person is getting compensated for the recommendation.
The internet has made this harder, what with word of mouth campaigns and affiliate marketing.
However, the psychological research on disclosure of conflict of interest tends to show that if you disclose your potential conflict, then two things happen. One, you become more credible, but two, your own message becomes more biased!
Consumers, after hearing about a potential conflict, think that you ought to be trusted more.
But, when you disclose your potential conflict, you feel that you have to up the wattage on your message.
In the end, the disclosure policy which could be a simple page, is not going to be what gets a lot of affiliates in trouble. It will be the disclaimer about typical earnings that will screw a bunch of people.
Posted by: bizop
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September 16, 2009 11:54 PM
I am looking at implementing an affiliate disclosure policy similar to how Markus Allen does his where when someone clicks on the link they are taken to an intermediate page that puts the disclosure so it's impossible to miss.
You can see an example here:
http://article-marketing-challenge.blogspot.com/2009/08/affiliate-marketing-disclosure-bank.html
What concerns me about Brian's disclosure is that it's at the END of the review and NOT on the first link and my testing has shown a high percentage of people clickthrough on the first link.
Shouldn't we be disclosing EVERY affiliate link?
I think you'd find the conversation at Jerry West's site interesting as well:
http://blog.seorevolution.com/2009/05/30/ftc-change-in-endorsements-and-testimonials-policy/
I'd love to hear your thoughts on what he's posted there.
Posted by: Paul Schlegel | September 11, 2009 7:53 PM