Disclosure

Introduction

As of July 1st 2009, the FTC (Federal Trade Commission) announced new guidelines for Internet advertising in an effort to increase consumer protection. In particular, the FTC has filed several cases against operators of deceptive and illegal job and money-making scams. These regulations are nothing that common business integrity would not entail. It should be noted, that, as with most government regulation, there is a substantial amount of interpretation. Globally, more individuals day after day are turning to the Internet as a means of commerce, income, and alternative careers. Thus the silver lining of this situation is a benefit to entrepreneurs. Below you will find a synthesis of the new FTC guidelines, specifically income claims, endorsements, and testimonials.

Endorsements

What the regulation says:

With regards to new media, the FTC has defined “endorsement” as any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, or other identifying personal characteristics of the primary organisation), that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed are identical to those of the sponsoring advertiser. The question then turns on whether the speaker is acting independently, or on behalf of the advertiser or agent ( i.e. the statement would be an endorsement of an overall marketing campaign).

It should be noted that postings by participants in network marketing programs are deemed to be “endorsements” for the purpose of FTC regulations. Hence, lack of control over the dissemination of such endorsements does not relieve reliability of the advertiser.

What does this mean for you:

• All advertisements must be truthful and non-deceptive
• All advertisers must have evidence to back up their claims
• Advertisements cannot be unfair (i.e. a material representation or omission that is likely to mislead a consumer acting reasonably under the circumstances, such as an ad that lacks a reasonable basis).
• Relationship between the endorser and advertiser must be disclosed (i.e. you as the internet marketer must disclose your relationship with the principal seller).

Testimonials

What the regulation says:

If the advertiser does not have substantiation that the endorser’s experience is representative of what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.

This new regulation eliminates the “safe harbor” rule previously enforced, meaning that non-typical results accompanied by “results not typical” disclaimers, are no longer sufficient to defend against deception. This rule applies to both testimonials and direct claims by advertisers.

As noted previously EVEN IF the primary message depicted in an advertisement/testimonial is accurate and true, it could still be considered deceptive if:

• The testimonial conveys to consumers that the results are representative of what consumers will generally achieve with the advertised product or service in actually, variable, conditions of use; AND
• The advertiser does not have adequate substantiation for that claim.

Why this is not allowed:

Showing someone your bank statement or proof of payment is called inducement and taken very seriously by the FTC. As long as your testimonial is honest, not intended to mislead, and does not include any income claims, you will be compliant with FTC regulations.

Affiliate Income

The FTC Blogging Disclosures require that we advise you that we may make money from affiliate programmes that we write about or recommend in our blog.  However that being said we do not recommend products or services that we have not tried and tested ourselves or come from a reputable source that we trust.  We will never recommend rubbish no matter how good the commission!