New FTC Guidelines for Bloggers & Internet Marketers – The Good, The Bad, and Everything Else You Need to Know
December 14, 2009 - Written by Gyutae Park
If you haven’t heard about the new FTC guidelines regarding the use of endorsements and testimonials in advertising by now, you better get up to speed fast. On December 1, 2009, the new regulations went into effect and they have big implications for bloggers and Internet marketers.
You can see the full text of the FTC’s final guides governing endorsements and testimonials (link to PDF on the right sidebar). It’s an 80 page document, but it may be worth going through if you’re doing any kind of advertising or endorsing online through your blogs, sales pages, marketing campaigns, etc.
The new guidelines state the following:
1. Endorsements must be based on the honest opinions and experiences of the endorsers. Paid actors must be disclosed if they are used.
If you’re a blogger offering paid reviews, you can’t write glowing recommendations (against what you really think) just because you were paid for it. Reviews and endorsements must reflect true opinions and any money being exchanged must be disclosed (described in #4).
2. Endorsements may not contain any representations which would be deceptive, or could not be substantiated, if made directly by the advertiser.
If you’re an affiliate of a certain product, you can’t claim any benefit or result unless it’s something that the advertiser can say directly. For example, you can’t say that a weight loss product helps people lose 20 pounds in a week unless it can be proven by the advertising company.
Believe it or not, a lot of shady affiliate marketers used to write fake reviews of products with outlandish claims, just so that they could make more commissions. This sort of practice is very deceptive and wrong, but there’s no denying that it works in terms of making money. Thankfully, under these new guidelines, this sort of thing is now banned.
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 tactic 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 $1 million. Advertisers frequently used these types of stories to lure people in – without having to clearly specify that similar results are actually very difficult to obtain (other than a tiny “results not typical” disclaimer).
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/services. This is especially relevant for bloggers and celebrities who write paid reviews/tweets/whatever.
Who Does This Apply to?
If you make money online, chances are pretty high that these new regulations affect you in some shape or form. Bloggers must be transparent and honest, advertisers can only claim “typical results”, and affiliate marketers must stay within the confines of those advertiser claims. And in case you were wondering, these new regulations apply to all areas of the web – including blogs, social media, sales pages, emails, PPC and banner advertisements, etc – but only in the US.
Apparently you need disclaimers on tweets and Facebook status messages too. But paid links (for SEO purposes) and affiliate links by themselves are likely okay.
The penalty? Fines for violating the new rules could be up to $11,000 per instance. However, keep in mind that the FTC guidelines do not have the force of law (although the FTC can still sue for violations) and are mainly for advertisers (not individual bloggers). In fact, back in October, Mary Engle, associate director for advertising practices at the FTC stated that they will not be patrolling the blogosphere or investigating bloggers. Responsibility falls on the advertisers and that’s who the FTC will be targeting with the guidelines.
My Thoughts on the Guidelines
I’m definitely all for the FTC cleaning up spam and protecting consumers from shady marketing scams online. I’ve seen this sort of stuff first hand, and it really isn’t pretty. It’s easy for people to be tricked by the deceptive ploys online – which could negatively affect their health or finances. If anything, the regulations will instill confidence in the minds of online shoppers and further legitimize the real businesses out there doing it right.
Bloggers especially stand to gain. Being transparent is never a bad thing, and I think the disclosure will make bloggers more trustworthy overall. After all, it’s okay to write paid reviews – but readers deserve to know the motivations of why a certain product or service is being featured (sponsored or not).
That being said, marketing online will become much more difficult with these regulations in place. For example, effective marketing tools like hype, case studies, and testimonials will take a major hit. How do you get people excited about something if your claim is something unspectacular like “lose 0.5 pounds in 3 months” or “make $10 working from home on the Internet”?
It’s the extraordinary claims and possibilities (even though they represent uncommon results) that sell people on an idea – and these claims don’t necessarily have to be deceptive or misleading. The new rules essentially take this option away and advertisers will need to find new ways to play on people’s emotions. Product Launch Formula guru Jeff Walker recently had to take down all of his students’ case studies.
I understand that the FTC’s intentions are good, but the steps for implementation and enforcement of the new guidelines are vague at best.
For example, what exactly is a “typical result” and how is it defined? How will the FTC police all of the marketing and advertising activity that goes on online? What about the offenders who operate outside of the US? Furthermore, can a review or endorsement truly be “honest” if money changes hands?
The FTC has stated that they will only go after advertisers in cases that are black and white and that they are “not interested in playing gotcha in gray areas”. But really, with such vague guidelines, what’s black and white?
Alright so now that you’ve spent some time learning about the new FTC guidelines and how it applies to your business as a blogger, affiliate marketer, or advertiser, what are some things you should be doing now?
If you’re a blogger who accepts compensation for posts, create a disclosure policy page. For ideas, John Chow has a humorous one here and Jim Kukral has a more serious one here. You can generate your own at DisclosurePolicy.org. Also, be sure to disclose your affiliations with the product or company at the end of reviews or endorsements – whether you were paid up front, paid affiliate commissions, or even scored free review products. Michael Gray recently listed one out at the end of a review post.
Disclosure: This was not a sponsored post; however, I was comped a subscription to easytweets. A positive review was not required or incentivized in any way.
Again, the FTC will not be going after any individual bloggers, but this is all good practice so that advertisers will be willing to work with you under the new guidelines.
As for the “typical results” claim (#3), be sure to frequently survey your customers so that you have a better understanding of what you can realistically offer. Of course, you never want to stretch the truth, but you can always present the data in a way that is favorable for your marketing (e.g. amount of money made by users who finished an entire Internet marketing training program AND started an online business).
What do you think about the new FTC guidelines? Do they significantly affect the way you run your online business? Leave your thoughts in a comment here below.If you like this post, subscribe to the RSS feed. Get the latest updates delivered straight to your email or news reader.