Tricia Meyer

Affiliate Marketer, Blogger, and Consultant

FTC Updates Disclosure Guidelines for Affiliates and Influencers

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FTC Guidelines

We have been waiting for this update for a LONG time and it is finally here! The FTC has updated its Endorsement Guides, which are the source of the disclosure rules that affiliate marketers and influencers (among others) must follow. I think my favorite part of this new update is the reference to “dog influencers.” Most of this is what we expected when we saw the proposed guidelines changes back in May of 2022.

I’m breaking this down into two sections– what I think is most important for affiliate marketers and all of the other interesting stuff. It’s 80 pages of Guidelines talk plus another whole site of FAQs, so there is a lot to cover!

First, the tl;dr for Short Attention Spans

  • Affiliate marketing and influencer marketing were heavily targeted
  • Everyone can now be liable–bloggers, influencers, affiliates, agencies, advertisers (no mention of tracking platforms/networks unless they are also acting in the capacity as agency)
  • “Clear and Conspicuous” means “Unavoidable”
  • Advertiser and intermediary responsibilities include 1) provide guidance on the rules, 2) monitor compliance, 3) take  action in the event of non-compliance
  • Reliance on disclosure tools built into social media platforms may not be adequate
  • Review sites cannot accept payment for rankings
  • Effective disclosure is based on who is being targeted as the audience (children, elderly, etc.)

FTC Guidelines Updates Most Important to Affiliate Marketers

  • Saying this loud for the people in the back because I see this wrong on so many “expert” sites. “Affiliate link” is not an adequate disclosure. Which means “Affiliate” also would not be adequate. Other related terms that are not adequate include “Buy Now” and “Commissionable Link.” However, “Paid Link” is adequate.
  • Endorsers can be held liable for a review when they represent falsely that they personally used the product.
  • Tags in social media posts can be considered endorsements that have to be disclosed if the influencer has a material connection to the brand. For example, if you post a picture of your outfit and tag the brands you are wearing but you are also getting paid by them or sent free products. Simply tagging the brand is also not a sufficient disclosure.
  • An influencer cannot simply disclose connections to a brand on their profile page. The disclosure has to be done on the post and be unavoidable when viewing it.
  • Endorsers cannot rely on the built-in disclosure tools of a social media platform if anything in those tools would make the disclosure not satisfy the “unavoidable” and “clear and conspicuous rules.” Use them but add to them if what they have isn’t sufficient.
  • Whether a disclosure is effective will be evaluated from the perspective of the TARGET audience (e.g. kids or elderly or people who speak a foreign language).
  • So what about affiliate managers and agencies? We sort of got an answer. “Advertising agencies, public relations firms, review brokers… and other similar intermediaries” can be liable when they “create or disseminate endorsements” that they either knew or should have known were deceptive. But they can also be held liable when they “hire and direct” endorsers who do not properly disclose. Your company must have “reasonable programs in place to train and monitor the influencers you pay and direct.”
  • What is the standard for monitoring endorsers? They won’t give specifics. They say “reasonable efforts” and if you can’t periodically search for what the endorsers are saying, you should consider having to pre-approve all posts.
  • Affiliate review websites that rank brands higher based on the site accepting money from the brand are deceptive and both the website owner and the brand can be held liable. The site can use affiliate links in general and disclose them as long as payments are not taken for higher rankings. Any “methodology that results in higher rankings for products whose sellers have a relationship to the operator because of those relationships” is misleading.

FTC Guidelines Additions and Clarifications That Are Interesting

  • For disclosures to be effective, they must be “unavoidable.” 
  • Some examples given for adequate disclosure for videos are “This video is paid for by brand” or “brand paid me to tell you about it.” Also “Company X gave me” the product or “The products I’m going to use in this video were given to me by their manufacturers.”
  • Some examples given for social media are “Ad:” “Paid ad” “#ad” “Advertising:” “Advertisement” “Sponsored” “Promotion” “Sponsored by X” or “Promotion by X”. Adding “ad” to the end of the brand name to create a hashtag is NOT enough. (#BrandAd) Saying “thanks” to the brand is not enough but saying “Thanks Brand for the free product” would be. The hashtag #endorsement is NOT sufficient. The hashtags #ambassador and #partner work only if you include the brand name in the hashtag (#BrandAmbassador). The hashtags #comped and #hosted are not sufficient for free travel.
  • Podcasters do not need to disclose content that is “obviously a commercial” and is fine as long as the podcaster upholds any views expressed.
  • A little more information was given about free products. If a brand sends a coupon to an influencer for free product and asks the consumer to feature the brand in their feed, any resulting posts would need to be disclosed. (this is where the “dog influencer” came in)
  • Advertisers are required to 1) provide guidance to endorsers on the rules, 2) monitor compliance, 3) take  action “sufficient to remedy non-compliance and prevent future non-compliance.”
  • Advertisers need to not only instruct endorsers about the need to disclose their connection, they also need to give guidance that any statements made by the endorser are truthful and substantiated. 
  • If the endorser is an “expert” in the field, there are a lot of clarifications about how that should be handled.
  • There is an example about a woodworking influencer who is sent a lathe and for free by a brand and ends up using it in several videos and “comments favorably.” The FTC says that if a “significant minority of viewers” is “likely unaware” that he got it for free, it needs to be disclosed. There isn’t any type of exception made in the example for videos that may be made using that same lathe for years in the future. The Q&A page indicates “each new endorsement made without a disclosure could be deceptive because viewers might not have seen the prior posts.”

Important Links

FTC Proposes Changes to Disclosure Guidelines

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FTC Disclosure Changes

The FTC came out with two documents this week that are significant for affiliate marketers, influencers, and merchants. For all of the background information on where the FTC currently stands, check out my post Affiliates Take Note: New FTC Disclosure Guidelines. It includes 7 years worth of statements, settlements, and updates from the FTC in one place.

Right now the FTC is talking a lot about “influencers” and doesn’t distinguish how they are paid. In affiliate marketing, we might want to know if they are being paid when people click on their links or use their exclusive coupon codes or whether they are flat fees (or maybe a combination of both). But for purposes of this discussion, the FTC does not seem to care about payment details and is more concerned in general about the practice of influencer marketing and how brands are using the influencers to get away with advertising that doesn’t look like advertising (they actually call it “launder advertising” and “illegal payola” which makes it sound even more sketchy!)

Statement of Commissioner Rohit Chopra

Let’s start with the Statement released on February 12, 2020. Regarding the Endorsement Guides Review.

The Commissioner cites that influencer marketing will reach $15 billion for 2022 and that it is getting harder for families and small businesses looking for truthful information. It also believes the tech companies are part of the problem and not the solution right now.

In an interesting statement and a change from the website that was fined last week, the Commissioner says that they want to “focus on advertisers, not small influencers.” Specifically “When individual influencers are able to post about their interests to earn extra money on the side, this is not a cause for major concern.” Chopra seems most frustrated that past enforcement (like the Lord & Taylor settlement) isn’t “deterring misconduct in the marketplace” and wants to be able to pursue larger sanctions against companies in violation.

Chopra wants to review the Endorsement Guides and would like the FTC to:

  1. Develop specific requirements for any technology platform that facilitates or in any way profits from influencer marketing.
  2. Turn the “guides” into codified rules that will allow for both civil penalties and damages.
  3. Give specific contractual requirements that all influencers will have to follow in their campaigns.

So after a long time of wondering if the FTC was going to actually take the disclosure guidelines seriously, I think we have our answer. There’s just too much money being made not to.

FTC Looking for Public Comment

As mentioned in Chopra’s statement, the Commission wants to review the current Endorsement Guidelines and is now seeking public comment: FTC Seeks Public Comment on Its Endorsement Guidelines

This is an opportunity for our industry to officially tell the FTC what we like and don’t like about the Guidelines. What is possible for us to do and what isn’t.

A proposed Federal Register Notice gives a lot more detail about what the FTC is going to be considering. The questions are just a starting point and not a limitation on comments. Further, the FTC would like commenters to submit any available evidence and data that they have, including consumer complaints. You can read all of the proposed questions yourself but these are the ones that stuck out to me with my comments in the parentheticals:

  • Do the Endorsement Guides describe any practices that are not deceptive or unfair? (maybe for us, we think we should be able to use the word “affiliate”?)
  • What is the degree of compliance with the Endorsement Guides? Do covered businesses and others following the Guides’ suggestions self regulate…such as through trade associations? (We know that many, many affiliates do not comply. If most are not complying, what incentive is there for the ones that are?)
  • What burdens or costs have the Guides imposed on small businesses in particular (OPMs, I think this could include you)
  • There are a few questions regarding the reviews of free and discounted products as well as incentivized consumer reviews.
  • This is a big and important one so I am just going to copy it all in!! “Some endorsers (including the authors of some product reviews) include affiliate links that can be used to purchase the products they are endorsing. Should the Guides address such links, and if so, how? To what extent do consumers expect that these endorsers are compensated for purchases through those links? If so, what compensation arrangements do consumers ordinarily expect? To what extent would knowing of such compensation affect the weight or credibility given to those endorsements? Is there a distinction in terms of either consumer expectations or the weight ascribed to an endorsement between affiliate links to a product’s marketer and affiliate links to one or more retailers? If so, how, why, and how should that be addressed? “
  • What disclosures, if any, do advertisers or the operators of review websites or review platforms need to make about the creation, collection, processing, or publication of reviews or ratings in order to prevent those reviews or ratings from being deceptive or unfair? (This one seems to come out of that settlement from last week that I mentioned above. Does it mean they ARE focused still on the publishers when it comes to affiliate links versus the advertisers when it is social media influencer marketing?)

This is just a sample of the included questions. The FTC clearly knows that their Guidelines are not really useful, not being followed, and don’t have as much teeth as they want them to. Now is our opportunity to help set the course going forward. The Federal Register notice gives more information on how to submit your comments (including online or paper). While the date isn’t set yet, it will be around April 13, 2020.

How do you think the Guidelines should be changed? Should they be enforced more or less?

 

Key Takeaways from New FTC Disclosure Settlement

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Just when it seemed like things were getting quiet with the FTC regarding disclosure and I was thinking that the new administration didn’t care so much about it, a new settlement was announced today regarding commercial endorsements. (If you want to see all of my research and updates on FTC disclosure, this post tracks them: Affiliates Take Note: New FTC Disclosure Guidelines)

The basic facts are that PR firm Creaxion Corporation paid two gold medal Olympians (Carly Patterson Caldwell and Jake Dalton) to promote a mosquito repellent on their social media during the 2016 Olympics (back during the Zika virus outbreak). They also partnered with Inside Gymnastics magazine to get endorsers and promote the product. The PR firm “drafted, reviewed and monitored” social media posts and advertorials made by the endorsers, and the magazine often reposted the endorsements on its own social media.

The allegations that apply to us most as influencers or affiliate marketers were that 1) the endorsements were not “independent experiences or opinions of impartial users” because they were part of an ad campaign, and 2) the endorsers “failed to disclose, or disclose adequately” that they were being paid for their endorsements.

Here is an example from the appendices that is particularly interesting to me:

It says “Made it back to the US! Thanks fitorganicusa for protecting me during my trip in Rio!!” The FTC is reiterating that “thanking” the company isn’t enough of a disclosure because it doesn’t indicate clearly that you are being paid. Recall that they did tell us this in a press release back in 2017 “Some of the letters addressed particular disclosures that are not sufficiently clear, pointing out that many consumers will not understand a disclosure like “#sp,” “Thanks [Brand],” or “#partner” in an Instagram post to mean that the post is sponsored.” I bet I see 100 “thank you” type “disclosures” a week on Instagram. Not sufficient!

Click here to see all of the examples used in the complaint. 

Agency Responsibility

The results of the settlement were in line with what we have seen from the FTC thus far. It focused on the agency responsibilities.

  1. The agency has to provide the endorser with a clear statement of their disclosure responsibilities.
  2. The agency needs a system to monitor and review the disclosures.
  3. The agency must “immediately” terminate or cease payment if disclosure is not adequate. However, they can give an endorser time to remedy it they think it was inadvertent.
  4. The agency must keep reports of the monitoring.

We are seeing this same basic results in almost every disclosure/endorsement case.

Key Takeaways for Affiliate Marketers and Influencers

After diving into all of the documents, here are my key takeaways from the settlement:

  • The FTC is still pursuing disclosure cases, but it can take years for them to come to an end (this is from 2016 and is just now at the settlement phase). Does that mean we will be seeing more and more as influencer marketing gets bigger?
  • The influencers were not a party to this settlement but rather the PR Firm and the magazine. Did the influencers get out early or is the FTC still focused primarily on the brands? We did see them target the influencers with letters last year but no settlements yet.
  • Agencies are clearly bearing most of the responsibility (and sometimes the brands) in failure to endorse cases.
  • Instagram is a big target of the FTC.
  • This is the second time that the FTC has told us that “thanking” a brand is not a sufficient disclosure.
  • The FTC is establishing a very systematic approach to the education, monitoring, and tracking of endorsement relationships.

Although I don’t think that anything new came out of this settlement, I think that it gives the FTC more teeth to continue to go after others for actual money and not just cessation of activities in the future. The more that the FTC continues to lay this foundation, the better chance they have in future cases.

Are you still seeing affiliate marketers and influencers who fail to properly disclose? Do you think this type of action by the FTC will create changes?

It’s Time for Affiliate Marketers to Embrace a New Conference

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Updated! Use my code TRICIA2019 to take $10 off of any pass!

Most people wouldn’t believe it, but I am TERRIBLE at stepping outside my comfort zones. I like having plans and routines and predictability. I like safety nets and knowing what I am getting into. That’s a big reason why I go to the same events year after year and have been reluctant to try out others.

I think a lot of you are like me. We like what we like…why try something else? Especially when as self-employed entrepreneurs, money from our own pockets goes into funding every trip.

This is the year I try something new!! And I have some very good reasons for it that may also apply to you whether you are a blogger, a merchant, or an agency. [Read more…]

FTC Settles with Warner Bros. Over Influencer Campaign

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ftc-warner-bro

The FTC has once again invoked the .com Disclosures, this time in a lawsuit against Warner Bros. (WB) over an influencer campaign for video games. The FTC announced today that it has settled the lawsuit in which it alleged that WB “failed[ed] to adequately disclose that it paid online influencers” to post positive game reviews on YouTube and social media. An advertising agency named “Plaid Social Labs” was hired to create the campaign.

What’s really interesting about this case is that WB did require the influencers to “disclose” and gave specific instructions. Read on to find out why the disclosure requirements were still not adequate. [Read more…]