FTC Compliance 101 & Resources

We’ve made a lot of predictions about the state of affiliate marketing in 2018, but perhaps the one most deserving of attention is FTC compliance and regulations. For the first time, the FTC reached out to individuals in 2017, reminding them to “clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media.” It will be crucial in the coming year for brands, bloggers, and influencers to properly disclose.

To provide further education and clarification, read through these common FTC compliance questions.

The content and guidance in this post is meant to be an overview of FTC guidelines. This blog post is intended raise up important industry topics, educational information, and resources surrounding compliance. Before making any decisions surrounding The Federal Trade Commission’s (FTC) compliance regulations for your business or website, please consult the FTC website directly or consult a legal professional. This post is not legal advice.

Why do I need to disclose?

Besides for the fear of financial or legal punishment, it is your responsibility to adhere to all federal, state, and local laws. Stay honest, transparent and follow the law.

In short, if there is commercial intent behind a product feature or the promotion of a brand, then the content requires a disclosure. The FTC believes that any time that a person is paid by a company, given free product, or anything of value is exchanged for the individual to promote a product, then the consumer deserves the right to know that information when evaluating their recommendation.

Nowadays, online reviews, blogs, and social media greatly impact one’s purchasing decisions. According to Sprout Social, 74% of shoppers make buying decisions based on social media content. This amount of influence is powerful and the FTC wants to ensure that the paid promotions are fully disclosed, honest, and not misleading. It should be very clear in a post that the individual was paid or will be paid for the endorsement.

When do I have to disclose?

Regardless of which platform is used to promote a product or brand, disclosures are always necessary. Videos, podcasts, webinars, websites, social media, and any other form of online marketing fall under the FTC compliance requirements. Here are a couple guidelines to remember when disclosing:

Placement is Important

Your disclosure should be up front and easy to find. It shouldn’t be buried among hashtags or at the end of your content. It should be noticeable and at the “top of the fold.”

Character Restraints Don’t Matter

Just because a platform restricts the character usage, a marketer’s responsibility to clearly and conspicuously disclose doesn’t not change. Whether it is a lengthy blog post, 20-minute video, or a 280-character Tweet, compliance is required.

Wording is Flexible

While compliance is pretty clear about location, the FTC gives flexibility in the wording that a marketer chooses to use as long as the language is easy to interpret. It could be short and concise or provide context as to why you are posting the links. This flexibility allows the individual to cater the message to their readers.

Disclosure must Match the Medium

With the increase of video marketing, the FTC has provided further guidelines that disclosures in a video must not only be at the beginning, but also be read and heard.

What is a disclosure?

A disclosure is added language to a product promotion that indicates a marketer was paid or will be paid for endorsing a brand’s product. The proper language clearly and directly lets the consumer know the relationship between the marketer and brand so that an accurate purchasing decision can be made.

To help marketers properly disclose, the FTC shared one mnemonic they use called
the 4Ps4:

Prominence. Is the disclosure big enough for consumers to read easily?
Presentation. Is the disclosure worded in a way that consumers can easily understand?
Placement. Geography matters. Is the disclosure where consumers are likely to look?
Proximity. Is the disclosure close to the claim it modifies?

What can happen if I don’t disclose?

To our Affiliates (and Merchants), we recommend always remaining compliant. The FTC states, “Your company is ultimately responsible for what others do on your behalf.” The FTC will hold your company responsible for any failure to disclose. Therefore, it is important for brands to educate their partners on how to properly disclose. It could affect not only your blog and reputation, but also your partnership with brands.

From a financial standpoint, we expect the possible penalties to increase in the next couple years as influencers gain popularity and the FTC cracks down on anyone not following the FTC rules and regulations. In 2016, the civial penalty increased from $16,000 to $40,000 for any violation and an additional $40,000 per day until the violation is resolved.

The FTC clearly is very serious about compliance in online marketing and therefore, you should be too!

Get an insider’s view of the FTC’s regulations and guidelines.

Relevant to both advertisers and publishers, this webinar examines: