Important New FTC Regulations Start Tomorrow

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 four 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:

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.

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.

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.

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.

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

P. S. In the Coaching Club for the month of December, we’ll be focusing on Article Marketing. If you’re looking to improve your Search Engine rankings, get more traffic to your website, and improve your business, Article Marketing is the 15-minute-at-a-time method for doing all of that.

If you’re not yet a member of the coaching club, sign up today. You can start for only a dollar.
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