Are You Violating FTC Regulations? Avoid These Common Affiliate Violations

The Internet with all its speed and vastness has made it possible for anyone with a small budget and the desire to make money, to become a full-blown online affiliate marketer within a few days or weeks.

Nowadays anyone with a laptop and enough money to buy the next super-duper $7 “WSO of the Day” can potentially advertise affiliate products to millions of people online within hours of clicking the buy now button.

For some people it’s easy to pick an affiliate offer, set up landing pages, and buy clicks through thousands of different traffic sources online. It is also very easy to make mistakes and break rules…

Due to the ease of starting up a new business online, sometimes it feels like the internet is still the wild west of advertising!

One thing I have noticed in many of the business opportunity training materials showing “affiliate methods” is that there is a lack of real detail when it comes to explaining the “rules” you need to follow in order to comply with federal regulations in both US and Canada.

This topic seems to be non-existent in the majority of materials I have read or seen. I do know that Chad Hamzeh has covered some of this stuff in his own product “Traffic Blackbook” and goes into a bit of detail on some of the rules for blogs and news sites.

So Why Should You Care?

Well I know many affiliates that don’t…and that’s their choice. But in my opinion you should care because this will help you to create better long term campaigns, it will ensure you get payments on time, and will give you piece of mind (if that matters to you). Also whether you care or not, your affiliate network probably does, and if the FTC doesn’t get you but your network finds out your making major violations, you might still face problems with your payments.

So if you are someone who wants to abide by the rules and get paid for it well into the future, then this post will be a great starting point.

Today I wanted to discuss 3 FEDERAL TRADE COMMISSION (FTC) violations I think are very common amongst online affiliates – especially CPA affiliates.

For those of you who don’t know, the Federal Trade Commission Act allows the FTC to act in the interest of all US consumers to prevent deceptive and unfair acts or practices. A similar organization exists in Canada called the Competition Bureau.

These agencies often impose penalties to companies and sometimes even affiliates who violate the rules.

DISCLOSURE – This publication is not a legal document. It contains general information and is provided for convenience and guidance only.

Common Violation #1 – Misleading and Deceptive Violations

The FTC Act prohibits unfair or deceptive advertising in any medium including the internet. So basically your advertising must tell the truth and not mislead or be deceptive to consumers. The common term people may have heard is “False Advertising”.

So how can you as an affiliate avoid this?

First of all you need to understand that you as an affiliate are often working on behalf of an advertiser or company, by promoting their products. So this means even if YOU are following all the rules, but you are promoting an offer that is in violation of the FTC rules, then you are in fact breaking the rules too.

So a good practice is to make sure you choose to promote companies, offers, products, or services that are not misleading or deceptive or violating FTC in any way.  

One classic example of this is the ”Free Trial Offers” that got hit hard a couple years ago. Basically some affiliates and companies were advertising “free” or “risk-free” offers, and the company was charging consumers massive “rebill fees” for products and services they did not want or agree to purchase. There was basically no disclosure to the consumer, so once they received the charge on their credit cards, it was a complete surprise, and it was nearly impossible to have it removed or refunded.

“The defendants allegedly made false claims about the total cost of products, recurring charges, and the availability of refunds. They also buried important terms and conditions in fine print, the FTC alleged.”

Check out the article below for more details on this example.

FTC Charges Online Marketers with Scamming Consumers out of Hundreds of Millions of Dollars with ‘Free’ Trial Offers

This does not mean “free trials” totally got wiped out. In fact several free trial offers still exist but not like they used to. There are very strict rules in place for these types of promotions. In basic terms the company needs to make it easy to cancel, fully disclose the terms and conditions, avoid pre-checked sign-up boxes as the default settings, and make it is easy to stop the deliveries and the billing. Disclosure is very important as you will see in the article below:

FTC Revises Online Advertising Disclosure Guidelines 

 

This brings  us to the next common violation.

Common Violation #2 – Free Must Mean Free

A claim can be misleading if relevant information is left out or if the claim implies something that’s not true. For example, a “free trial” for a skin care product may be misleading if significant and undisclosed charges are due when ordering. Another example are free email submits. These are often offers that offer something like a free computer or gift card, but iff they do not disclose the terms and conditions prior to enterning an email then they are probably in violation.

Disclosure of conditions. When making `Free” or similar offers all the terms, conditions and obligations upon which receipt and retention of the “Free” item are contingent should be set forth clearly and conspicuously at the outset of the offer so as to leave no reasonable probability that the terms of the offer might be misunderstood.

Stated differently, all of the terms, conditions and obligations should appear in close conjunction with the offer of  `Free” merchandise or service. For example, disclosure of the terms of the offer set forth in a footnote of an advertisement to which reference is made by an asterisk or other symbol placed next to the offer, is not regarded as making disclosure at the outset.

Here is more detail on using the word “free”: http://www.ftc.gov/bcp/guides/free.htm

For a better understanding about the online marketing rules click below:

http://business.ftc.gov/documents/bus28-advertising-and-marketing-internet-rules-road

Common Violation #3 – Fake Testimonials / Fake Endorsements

 

So basically what this is saying is watch out for fake endorsements because you can get sued. Don’t think just because you are an affiliate that you are protected because some of these people will come after affiliates too.

So here are some things to remember about putting endorsements in your campaigns:

1. Endorsements must be based on the honest opinions and experiences of the endorsers. Paid actors must be disclosed if they are used.

Reviews and endorsements must reflect true opinions and any money being exchanged must be disclosed.

2. Endorsements may not contain any representations which would be deceptive, or could not be substantiated, if made directly by the advertiser.

If you are an affiliate of a certain product, you should not say that a weight loss product helps people lose 20 pounds in a week, unless it can be proven by the advertising company you are promoting for. A lot of affiliate marketers write fake reviews of products with outlandish claims, in attempts to make more commissions. This sort of practice is very deceptive and sometimes if caught you are not paid or you may be subject to other penalties if the company or complainant decide to sue for damages.

3. Endorsements must be representative of what most consumers can reasonably expect to achieve. Any claim made by the endorser must reflect the opinion or experience of a significant proportion of consumers. Disclaimers like ‘results not typical’ are no longer sufficient.

A common marketing tactics is to display testimonials or case studies, where amazing results were achieved. Examples include how a certain diet pill helped someone lose 50 pounds in 6 months. Or  how an online training course helped someone else make $10 million. Advertisers frequently used these types of stories to lure people in, without having to clearly specify that those results are actually very difficult to do. Under the new guidelines, any claim made by endorsers must be indicative of results for the majority of people, not just a select few.

4. All material connections between the advertiser and the endorser including research or medical organizations that consumers would not expect must be disclosed, including free products or monetary compensation.

All payment for reviews or endorsements must be disclosed, including monetary compensation and free products or services.

More Things to Look Out For

In addition to the above noted violations a few other things you might want to avoid include:

Performance representations that are not based on adequate and proper tests

For example don’t tell people they will make $1000 a day if you cannot prove it is possible.

Misleading warranties and guarantees

For example don’t tell people there is a 100% no questions asked money back guarantee if there are certain conditions that must be met for a refund.

 Bait and switch selling

For example, don’t have an ad for someone to lose 20 pounds a month, then link to a site that offers a program that can only help them lose 5 pounds a month.

Promotional contests

If you are going to run a contest for a prize then make sure you understand all provisions that prohibit certain contests and understand what you must disclose for required information.

Well that is all for today on some of the common things to consider before advertising online, I have a couple more posts coming on this topic that will be more specific to CPA offers, Fake News Sites and CPA networks. Stay tuned…

Source

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27 thoughts on “Are You Violating FTC Regulations? Avoid These Common Affiliate Violations

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