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New FTC Marketing Guidelines — The Five Things You Must Know

If you are an affiliate, a publisher, or a marketer of anything online, you need to read this important article. Really. I’m not kidding. Because unless you’ve been hiding under a rock for the last two months, you have already heard about the new FTC guidelines that go into effect starting tomorrow, December 1, 2009. […]

If you are an affiliate, a publisher, or a marketer of anything online, you need to read this important article. Really. I’m not kidding.

Because unless you’ve been hiding under a rock for the last two months, you have already heard about the new FTC guidelines that go into effect starting tomorrow, December 1, 2009.

But you may not know exactly what those new rules mean to you, if they matter at all, or what you need to change in your marketing in order to comply.

So today, I’m going to run down what I believe are the Five Most Important Parts of the new FTC rules. Please note that I am not a lawyer — I’m just summarizing the ruling as I understand them, and relating what I believe is important to you and me as online marketers.

You can (and should) consult your own attorney for a legal interpretation of the regulations as they relate specifically to your business. You should also read the actual FTC guidelines on their website, which you’ll find here:

http://www.ftc.gov/os/2009/10/091005revisedendorsementguides.pdf

The rules mostly apply to claims, testimonials, endorsements, and the revealing of any compensation paid as a result of these.

By the way: whenever I mention a "product" I am also including services. So here we go:

FTC Guidelines Regarding Claims

Just about every advertisement makes claims about the product it represents. It used to be okay to mention claims that were out of the ordinary. For example, if you had a weight loss product and of the 10,000 customers you had, a few had achieved extraordinary weight loss of 100 pounds or more, if you claimed in your ad that "You can lose 100 pounds or more," your ad would now be considered "deceptive" by the FTC.

That’s because claims must now be representative of the typical results that someone would achieve. So, if those few people lost 100 pounds, but most people lost 10-15 pounds, then you can claim that 10-15 pound number, but not the 100 pound number.

One other thing to keep in mind: all your claims must be supported by actual evidence.

FTC Guidelines Regarding Testimonials

A testimonial is the story or account of a consumer of a product, including the results achieved. The problem with most testimonials is that the story they usually tell is one that is intended to be motivating or inspirational regarding the product. Usually, they are not indicative of the results that most users will achieve.

The FTC wants to guard against testimonials that relate fantastic results as "typical" results.

According to the FTC’s older rules, which were revised back in 1980, it was okay to use testimonials about above-average results, so long as you indicated that the results were not typical.

That’s no longer good enough.

Now, you need to be clear what the typical results actually are, and you need to make sure that the published results are thoroughly documented. You also need to be sure that the testimonials that you are using are current, meaning that the person who made the testimonial continues to use the product, and still believes in the text of his testimonial.

FTC Guidlines Regarding Endorsements

Endorsements are similar to testimonials except that the consumer is usually well known as a celebrity or expert. The way endorsements work is that the endorser is paid or otherwise compensated, and then he makes his endorsement.

The problem is that the celebrity may not have actually used the product, or have personal experience with the product, or may even (unknowingly) be making false or unsubstantiated claims about the product.

The FTC says that such endorsements are a deceptive practice, unless the relationship between the endorser and the company is disclosed. Also, if the endorser is an expert in a field related to the product, the endorser must have scientific evidence of the claims he is making.

FTC Guidelines Regarding Affiliate Compensation

If you’re an affiliate, this is a big one for you, so pay close attention.

The FTC is very aware that thousands of bloggers, as part of their core business, regularly endorse products on their blog, and make personal recommendations about products and services, and then get paid as affiliate for those recommendations.

The FTC understands that the affiliate business is a multi-billion dollar business. What they also understand is that the average reader does not know that the endorsements that they read are paid endorsements.

And that’s a problem, according to the FTC. In fact, they call this practice "deceptive."

In other words, you’ve got to clearly disclose that you are a paid affiliate for the product you are recommending within your ‘editorial’ content. I don’t believe you need to make such disclosures in content that is clearly advertising.

FTC Guidelines Regarding Advertiser’s Responsibility

I’ll finish up this summary with one more point that I think is also critical. It’s about your responsibility as a merchant.

If you sell something online, the FTC believes that it’s your responsibility to make sure that your affiliates do not violate these guidelines. In other words, if your affiliates are making claims that are not in line with the claims that you can support for your product, then you are both acting in violation of the guidelines. The FTC says that both you and the affiliate are liable for misleading representations.

Uh oh. That really increases your responsibility as a merchant (or affiliate manager), doesn’t it?

So what does this mean to you?

Well, like I said, I recommend you read the actual text of the guidelines. It’s only 12 pages long, and is filled with examples of what the FTC considers deceptive, and what they consider permissible.

And basically, what they’re saying is this:

All us marketers need to do a better job of becoming transparent in our marketing. That means promoting typical results, not our best results. That means being clear about our relationships with our endorsers, and the people we endorse. And it means having a better, closer relationship with our customers.

After all, if they don’t trust us, they won’t be buying from us.

The standard is being raised, starting tomorrow.

I invite your thoughts, questions, and feedback. Please leave a comment below.

–Mark Widawer

 

 

 

33 replies on “New FTC Marketing Guidelines — The Five Things You Must Know”

does that work for TV as well, becaus i think TV is bullshit its all bullshit. and i hope the FTC can fix it. well have a nice day, Darwin Enge Richmond B.C.

Hi Mark,

Great post. Yes, I believe most IMs know that the clock is ticking. As for enforcing the new guidelines, I suppose that the FTC has already targeted possible offenders (acaiberry and flogs?) and the news of prosecution will spread to get everyone compliant. Look what happened with the Music Industry and MP3/P2P… Same type of enforcement I feel.

With Clickbank implementing a new TERMS OF SERVICE for affiliate, I guess we all should Update our affiliate links and sales letters.

Cheers,
Anthony

Hello and thank you for an enlightening read. I’m in the process of creating content for an information marketing site about tai chi chuan or taijiquan. My intention is to provide a large amount of high quality content free of charge, and gradually to develop products and services to suit my site visitors. I would be making comparisons between the subject I know very well (30 years tai chi experience including 15 years teaching) and other, related subjects which I believe my visitors might find interesting or beneficial. On these pages I would promote the products or services of third parties as an affiliate and I’m working on some copy that includes all the legally required disclaimers and disclosure policy details. This copy would be prominent on the home page and a link to it would be placed adjacent to all affiliate links.

My theory is that if I make a point of being completely transparent I can not only avoid violating any rules but also win the trust of my visitors. In the consumer democracy, if consumers understand that the price is the same whether they buy a product through my affiliate link or go direct to the source, they may be inclined to use my link as a way of saying “thank you” for all the great free stuff I’ll be giving away. I think this may be more likely to work with products that attract “like minds” than with consumer products that have no associated “philosophy” or world-view.

Doesnt this FTC thing (plus previous State taxation issues) give overseas affiliates/companies a huge advantage now?

Anyone in Europe, Asia etc will be rubbing their hands together ; they won’t need to worry about disclosure, “average results” etc so can compete better with their US counterparts.

Of course, both the company & the affiliate would need to be based outside the US to escape FTC control – perhaps will see a big rise in affilaites going “offshore”??!!

Mark,

Thanks for the great overview. Don’t you wish we could get the same level of oversight for U.S. consumers in the credit card industry? Last time I checked, the banks were raising their rates to usurious levels, unimpeded by congress or any other federal agency.

Never-the-less I am a little confused about this phrase “actual evidence.” If your product claims are drawn from a large amount empirical evidence known in the industry, might this be flagged? There is no “typical” evidence per say. In these cases, they are commonly known facts shared by people who follow the industry or could be validated by a standard internet search.

Also in my testimonials, I draw pretty heavily from former students sharing their experiences. How “transparent” do I have to be with those former students? Is it enough to share only their name and their affiliation?

I just want opinions, not asking for legal advice.

John Romano

Hi Mark

A big, big thanks for simplyfying these FTC guidelines into 5 steps. There’s a lot of paranoia out there in the jungle but you’ve done an awesome job of A,B,Cing it. Will definitely print out the 12 pages and review the testimonials I have.
Thanks for sharing

The problem for us as information marketers is that we have no relationship with many of our customers except for the purchase. The only people we tend to hear from are those that really liked the product. We also know from experience that many people do nothing with the products. I got a return for a refund on a product, unopened, after a year! So how do we determine “typical results” when we don’t have contact with the buyers? They may be on our lists, but if they don’t contact us, we’re in the dark.

Hello Mark,

I’d usually complain about too much government involvement at this point in time. However, I feel this is way over due.

I’ve been concerned about the direction of advertising for quite a while now. But things went to a new level after I went to work for a major – and I mean major – direct response company as a copywriter last summer.

Being on the inside was a very interesting experience.

But having them change my headline from stretching the believability of the product to being an outright lie about what the product could do … was as deceptive as anything I’ve ever seen.

And I voiced my concerns to my copy chief, but to no avail.

Then, when it came to me looking into the testimonies, product facts, and the results of the product, and the author of a new product … I told my copy chief that I was digging deep to find all the credibility elements to make the product, well, credible.

My copy chief stopped me right there and said, “Believability is more important than credibility. Forget trying to make the author credible, Instead, make him believable.”

On the surface, I’m sure he was trying to be helpful to me as a copywriter. But for me it reeked of deception.

Deception is the greatest lie there is because of the power of the lie is in deception. If someone knows you are lying, they can brush you off as a lier.

Ah … but if you deceive them, now you’ve got them line hook and sinker.

My interpretation of my copy chief’s advice to me was, “Say anything at any cost to get the reader to believe our claims.”

The new FTC rules would’ve helped me to bring back the credibility of the author and the product instead of making false claims.

Needless to say, I didn’t hang around long as a copywriter at the mega DR company.

And I say “Welcome” to the new FTC rules.

– Aaron

P.S. We need to catch up soon. Hope you are doing great and that you have a wonderful holiday season.

Thanks Mark. I have been looking for something like this which simplifies things. Common sense ethical marketing. That is all that I really need to know. Again, thanks.

Thanks for the summary, Mark. As a creator of info products, it is a bit worrisome to me re: if affiliates misbehave, but the rules IMO do basically make sense. The internet marketing space is laden with people kicking the line and I find it refreshing that the Feds are stepping in. I am busy updating my text today to be sure to include verbiage that keeps me in line with the new requirements. Long live transparency!

Vicki Flaugher, @SmartWoman

This whole internet marketing gig is one huge deception in many aspects. All the coaching clubs “we’re with you every step of the way” are really sucking a lot of people dry. I don’t know but I’m willing to bet their success stories are NOT typical and few (if this game is so lucrative then what are these guys doing trying to be educators all of a sudden?). A small few make a dime and most have to flip more hamburgers to pay off their credit cards. This whole internet riches and success thing in completely out of control and maybe the new FTC is a way to make it more accountable. As you can probably tell I’m at a point where I’m completely distrusting of the majority of internet marketing programs. Of course, as hard as I’ve tried, I haven’t made a dime! And I bet my results are more “typical” than not.

Mark, you have done a great job of summarizing these issues. I appreciate the hard work that you have done in an effort to keep your fellow internet marketers out of trouble and in-line with the new guidelines. Thank you. JGB

Mark, you’ve provided timely insight to your customer list. I probably would not have read the new FTC guidelines without this prompt from you. Thanks a lot and I will pay more attention to your business offerings from here on out.
Donna Patterson,@dmpatt41@sbcglobal.net

thanks Mark for your email . i just want to say mark its going to be moor difficult to hern any money if this is what there doing. i see this as coming from the top as in the likes of the big advertisers. To me this is a scam in initself as this paves the way again for the big companies to move in and the little guys to move out .yes its alll or nothing for them. this is the way its always been thanks so much . steve

Hi Mark, Thank you. Like many, I wasn´t paying attention. Do these rules apply to Canadian companies or is this a US thing only?

The crying shame is that similar “truth in advertising” requirements are not imposed on the politicians and bureaucrats who legislate and write the “rules” that apply the the rest of us.

Just think of the impact of having to substantiate the claims of what this-or-that “reform” will achieve!

I’m not in the US, so obviously none of this affects me – I can assure you that internet marketers outside of US laws think this is fantastic news. It makes the playing field favorably unlevel – so will consumers really be the winners, or will it be those publishers and affiliates in other countries smart enough to take advantage of their ability to continue to make outrageous claims with which their US counterparts can no longer compete? Time to think about off-shore tax havens, guys.

Mark…I was just finishing off my post when it seemed to submit itself. I must have touched a wrong key. Please remove the unfinished post and put the following in its place:

Hello Mark,

In his earlier post, Alberto seems to think that being physically outside U.S. jurisdiction places a safety barrier around him and those like him (myself included).

I beg to differ. The U.S. authorities regard electronic signals directed through telephone cables and in the airwaves over U.S. territory, and detectable by American citizens, as being on American soil.

Under present arrangements, a marketer here in the U.K., if deemed to have committed fraudulent transactions against American citizens over the web might be extradited to the U.S. to face criminal charges. Of course, an individual or business entity would first have to be identified.

What Alberto also seems to be saying is that it should be legitimate for everyone to make any outrageous (i.e. false) claim because some.

He and others like him (myself excluded) might well argue that the vast majority of people aren’t fooled by outrageous claims anyway, and that the new regulations are draconian.

But if people really aren’t fooled, then they will buy from merchants trading transparently in the first place, namely, U.S. and foreign citizens buying from American vendors, thereby boosting the flagging American economy and increasing equally flagging tax revenues.

I’m not trying to imply that dishonest online markerting wasn’t a serious concern… merely that the underlying economic conditions have made their introduction easier.

To some extent, therefore, compliance by foreign internet marketers is a side issue. But those of us outside the U.S. must comply with the new FTC regulations if we wish to retain the trust of what is after all, our largest market.

Over the past few years, many governments have sought ways of preventing online fraud (in the hope also of controlling the internet). If we all went down the offshore company route, as Alberto recommends, we would be endangering a valuable resource purely for the purpose of marketing dishonestly.

But, as I have been at pains to demonstrate above, such an exercise would be pointless. So my rebuilt internet marketing and video tutorial website at http://www.netprofitsinsight.com/ will be going live in mid-January, 2010. Compliance assured!

So Mark, I hope you and all of your readers in the U.S. have enjoyed the Thanksgiving holiday, and I wish you all a very merry Christmas and a happy and prosperous New Year.

Anthony Harris

As a new entrepreneurial student to the wonderful world of the internet and internet marketing, I want to TY for this VERY important piece of info. There would have been nothing worse to business than to build largely and be in violation only to receive cease and desist order from the gvrmt! I want to do it right the first time breaking no laws and rules.

Hi, Mark !
When the FTC (or a similar gov’t agency) has to legislate decency and “do unto others” common sense in order to quell fraud and abuse … we’re in deep dog do! Big Business, unbridled bureaucracy, hordes of petty bureaucrats have ruined so much of society. When one needs a permit in order to dig a flowerbed on one’s property, where doe$ it $top?

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