(You Failed To Disclose, Or Your Disclosure Wasn\u2019t Conspicuous!)<\/p>\n
Part 1<\/strong> deals with the FTC\u2019s rules regarding the disclosure of \u201cmaterial relationships\u201d between advertisers and testimonialists and endorsers. The idea is that if the person giving the testimonial or endorsement is receiving some kind of benefit, then this should be disclosed to that consumers may be on notice that there is the possibility of bias. These rules first appeared in 2009.<\/p>\n Part 2<\/strong> deals with the FTC rules regarding how these disclosures should be made. These rues first appeared in 2013.<\/p>\n Part 1<\/strong> On October 5, 2009, the FTC issued its revised Guides for the Use of Endorsements and Testimonials in advertising. The revised Guides focus on rules clarifying the use of endorsements in online advertising.<\/p>\n The Guides specify rules for marketers on the Internet, and they apply to two categories of marketers (these are the terms used by the FTC):<\/p>\n * \u201cadvertisers\u201d<\/strong> \u2013 online marketers that recruit affiliates, resellers, and bloggers to promote the advertiser-suppliers\u2019 products and services, and<\/p>\n * \u201cendorsers\u201d<\/strong> \u2013 affiliates, resellers, and bloggers that promote products and services for advertiser-suppliers.<\/p>\n Since the term \u201cadvertiser\u201d alone is not a very descriptive term, this discussion will utilize the term \u201cadvertiser-supplier\u201d to indicate that advertiser-suppliers are marketers who supply products or services.<\/p>\n In a nutshell, the Guides are aimed at protection of online consumers. The FTC wants to regulate online marketers to see if they're trading testimonials and favorable reviews for some kind of financial reward or other benefit.<\/p>\n The Guides clearly establish the principle that both advertiser-suppliers and their endorsers may be held liable for unsubstantiated, false, and deceptive marketing statements.<\/p>\n Advertiser-Suppliers: When Do The FTC Disclosure Rules Apply?<\/p>\n The threshold question for online marketers is “when do the FTC disclosure rules apply to my marketing practices”?<\/p>\n If all you do is market directly from your website with no involvement by intermediaries such as affiliates, resellers, or bloggers, the FTC disclosure rules do not apply.<\/p>\n However, if you recruit intermediaries – such as affiliates, resellers, or bloggers – to pitch your products or services, and this even includes people whom you compensate or provide free promotional materials or benefits for writing testimonials that you post on your site, then the FTC disclosure rules apply, and you\u2019d be classified as an advertiser-supplier.<\/p>\n Intermediaries would also include viral marketing programs with incentives and network marketing programs where endorsers periodically review your products or services, and they receive a free product or service about which they write a review. If you utilize these viral and network marketing programs, you\u2019ll also be classified as an advertiser-supplier.<\/p>\n If the FTC disclosure rules do apply, you may be held liable for the actions of your endorser.<\/p>\n This is the way the FTC put it:<\/strong><\/p>\n “It is foreseeable that an endorser may exaggerate the benefits of a free product or fail to disclose a material relationship where one exists. In employing this means of marketing, the advertiser-supplier has assumed the risk that an endorser may fail to disclose a material connection or misrepresent a product, and the potential liability that accompanies that risk” (emphasis supplied).<\/p>\n If you\u2019re an advertiser-supplier, this potential liability should be a wake-up call.<\/p>\n Endorsers: When Do Disclosure Rules Apply?<\/strong><\/p>\n Again, the threshold question “when do the FTC disclosure rules apply to me\u201d?<\/p>\n If all you do on your website is publish creative content about your areas of interest or your own products or services, you're not regulated by the FTC disclosure rules.<\/p>\n However, if you\u2019re an intermediary (such as an affiliate, reseller, or blogger) for another online marketer, and you pitch someone else\u2019s products or services, in exchange for payment of money, you\u2019re clearly an endorser.<\/p>\n When you normally think of an endorser, you probably think of a celebrity or some other form of endorser, such as the pitch person on late night infomercials.<\/p>\n However, we all act as spokespersons frequently. We talk to our friends, and we post comments on social media, and in many cases these communications are acting as recommending a product or service. As such, we\u2019re also spokespersons.<\/p>\n Organizations can also take the role of a spokesperson. Corporations, colleges and universities, and professional organizations all share information about products or services, and in such cases they are acting as spokespersons.<\/p>\n There\u2019s a grey area in situations where you\u2019re not paid money, but you may receive some sort of benefit. Under certain circumstances, where the applicable facts indicate \u201csponsorship\u201d, you\u2019ll be regulated as an endorser.<\/p>\n The FTC disclosure rules drill down into this grey area by providing 3 scenarios where a consumer reviews a product or service:<\/p>\n * no endorsement – a consumer purchases a product with his\/her own money, and posts a review or opinion on a blog (result: FTC disclosure rules do not apply because there is no relationship at all with the advertiser-supplier; no worries);<\/p>\n * no endorsement<\/strong> – same scenario, except that a coupon for a free trial of the product is generated by the store's computer, based on his\/her purchases (result: FTC disclosure rules do not apply because there is no relationship with the advertiser-supplier indicating “sponsorship”; no worries); and<\/p>\n * endorsement<\/strong> – the consumer is part of a network marketing program where he\/she periodically reviews products and receives a free product for A good example would be a dentist who recommends a particular brand of toothpaste and provides a complimentary sample for you. If the toothpaste manufacturer or its representative provided the samples to the dentist for free, this would put the dentist in the category of an endorser who has received a benefit.<\/p>\n How do you determine whether a statement is a testimonial? According to the FTC, the determination must be made solely from the perspective of the consumer. If the consumer would view the statement as influenced by the advertiser-supplier, it\u2019s covered by the FTC disclosure rules.<\/p>\n Tip: you should always look at the question of whether to disclose through the eyes of the consumer. If the consumer might be influenced by a relationship, then it\u2019s material and it should be disclosed.<\/em><\/span><\/p>\n What Do The FTC Disclosure Rules Require Advertiser-Suppliers And Endorsers To Do?<\/strong><\/p>\n If you\u2019re an advertiser-supplier that sponsors endorsers, the FTC disclosure rules require you to:<\/p>\n * provide guidance and training to your endorsers to help them understand their legal obligations regarding advertising statements about your products or services; primarily, that their claims are truthful, not misleading, and substantiated, and<\/p>\n * monitor your endorsers and take steps to remedy advertising statements, practices, or procedures that are unlawful. In essence, advertiser-suppliers should implement policies and procedures to ensure that their endorsers comply with the FTC disclosure rules.<\/p>\n * Also, you should disclose \u201cmaterial connections\u201d you have with persons who provide endorsements and testimonials for you. \u201cMaterial connections\u201d involve the payment of money or providing free promotional materials or benefits for the endorsements or testimonials.<\/p>\n * If you make a statement that refers to findings by a research organization, any \u201cmaterial connection\u201d with the research organization must be disclosed.<\/p>\n * Remember that testimonials are considered to be ad claims, so the rules discussed in Mistake 1 apply. level of success was significantly greater than typical, provided that a \u201cresults not typical\u201d disclaimer accompanied the endorsement. Beginning in December, 2009, the \u201cresults not typical\u201d disclaimer won\u2019t be effective any more. Now, you need a statement regarding the generally expected results.<\/p>\n If you\u2019re an endorser that is sponsored by an advertiser-supplier, the FTC disclosure rules require you to:<\/p>\n * disclose “material connections” involving the receipt of money or free promotional materials or benefits for promoting your advertiser-suppliers\u2019 products or services,<\/p>\n * if you write an endorsement for a product or service, you must be a bona fide user who is writing based on actual experience at the time the endorsement is given (for example, writing a review of a book you haven\u2019t read or a product that you haven\u2019t tried out is a no-no), and<\/p>\n * disclose typical results that should reasonably be expected from a product or service (“results not typical” disclaimers won't work anymore).<\/p>\n What Do Endorsers Have To Say To Comply?<\/strong><\/p>\n There are no precise rules. The best recommendation is to use common sense, and to clearly and succinctly disclose the relationship and benefit.<\/p>\n Basically, disclose if you got a complimentary product, or that you are an affiliate who may be paid a commission. For example \u2013<\/p>\n * \u201cApple gave me this new iPad to try out.\u201d<\/p>\n * \u201cI received a complimentary flight by Delta Air Lines.\u201d<\/p>\n Another example: for a paid celebrity endorser, a photo of the celebrity with the caption \u201cCompensated Endorser\u201d.<\/p>\n You could even create a simple icon with the caption: \u201cDisclosure \u2013 I get free stuff to review on my blog.\u201d<\/p>\n Use your imagination, be clever. But get the idea across that you\u2019re receiving compensation or other benefit.<\/p>\n The Reverb Communications Case: If You\u2019re Tempted To Use Fake Endorsements, Don\u2019t Do It!<\/p>\n The FTC\u2019s first case enforcing the FTC disclosure rules was against Reverb Communications which was settled in 2010.<\/p>\n At that time, Reverb Communications was a public relations firm representing major clients in the video game industry, including clients such as MTV Games and Harmonix, as well as smaller firms that sell mobile game apps via the iTunes store. According to the FTC, Reverb\u2019s fee often includes a percentage of the sale of its clients\u2019 gaming apps.<\/p>\n The iTunes store provides users the ability to post reviews of gaming applications that are available for purchase. These reviews include a rating system (based on a possible rating of one to fire stars) and written text.<\/p>\n According to the FTC, during a period of approximately one year Reverb employees posted reviews in the iTunes store favorable to games of Reverb\u2019s clients. The reviews were posted in a manner that would convey the impression that disinterested consumers had posted them.<\/p>\n In addition to giving five-star ratings to Reverb\u2019s clients\u2019 games, Reverb\u2019s employees posted written endorsements such as:<\/p>\n The FTC brought suit claiming that Reverb Communications engaged in deceptive advertising by having its employees pose as ordinary consumers posting reviews, while failing to disclose that the reviews were from paid employees working on behalf of their clients. Reverb agreed to settle the case.<\/p>\n The basic lesson of the Reverb Communications case is clear \u2013 don\u2019t use employees or contractors to post fake endorsements under any circumstances.<\/p>\n The FTC stated in its press release announcing the Reverb Communications settlement: \u201cCompanies, including public relations firms involved in online marketing need to abide by long-held principles of truth in advertising. Advertisers should not pass themselves off as ordinary consumers touting a product\u2026\u201d.<\/p>\n The FTC settlement with Reverb requires Reverb to remove the previously posted deceptive endorsements and to refrain from using employees to post fake reviews for its clients in the future.<\/p>\n Part 2<\/strong> The foregoing discussion focused on the general rules for when the FTC disclosure rules apply. The follow-up question is how to make the required disclosures, with confidence. That\u2019s what\u2019s discussed in Part 2.<\/p>\n In 2000, the FTC released the original .com Disclosures. The purpose was to provide guidelines regarding marketing and advertising on the Internet so that consumers could be protected.<\/p>\n In 2013, the FTC issued revised .com Disclosures. It\u2019s purpose was the same, except the FTC attempted to keep up with changes in technology since the original .com Disclosures.<\/p>\n The FTC\u2019s .com Disclosures Apply To Anyone Engaged in Digital Advertising And Marketing<\/p>\n This means that big companies as well as solo entrepreneurs who operate a single ecommerce website are engaged in digital advertising and marketing, and therefore are subject to the guidelines of the .com Disclosures.<\/p>\n It\u2019s important to note that the .com Disclosures are not definitive law, meaning that they are guidelines. So, compliance is voluntary; however, if you engage in practices contrary to the .com Disclosures, particularly if consumers have sent complaints to the FTC or if there is a pattern of noncompliance, you may very well get the dreaded knock on your door from the FTC.<\/p>\n The .com Disclosures address many issues regarding disclosure placement that reflect the current Internet landscape \u2013<\/p>\n The bottom line is that the responsibility of the advertiser to ensure that \u2013<\/p>\n * all providers, including their own website, social media platforms, blogs, or video platforms, are capable of including the appropriate disclosures, and<\/p>\n * in fact, do provide the appropriate disclosures.<\/p>\n .com Disclosures General Rules And Principles<\/p>\n The .com Disclosures provide the following general rules<\/p>\n stating that all disclosures should be \u2013<\/p>\n * Proximate to the information so the consumer does not have to hunt for it;<\/p>\n * Of at least the same size as the message;<\/p>\n * In the same format as the message;<\/p>\n * Accessible on all platforms used; and<\/p>\n * Understandable by the consumer.<\/p>\n The .com Disclosures provide the following 5 general rules.<\/p>\n 1. The same consumer protection laws that apply to commercial activities in other media apply online, including activities in the mobile marketplace. The FTC Act\u2019s prohibition on \u201cunfair or deceptive acts or practices\u201d encompasses online advertising, marketing, and sales.<\/p>\n In addition, many Commission rules and guides are \u2013<\/p>\n * not limited to any particular medium used to disseminate claims or advertising, and<\/p>\n * therefore, apply to the wide spectrum of online activities.<\/p>\n 2. When practical, advertisers should incorporate relevant limitations and qualifying information \u2013<\/p>\n * into the underlying claim,<\/p>\n * rather than having a separate disclosure qualifying the claim.<\/p>\n 3. Required disclosures must be clear and conspicuous.\u201d<\/p>\n In evaluating whether a disclosure is likely to be clear and conspicuous, advertisers should consider \u2013<\/p>\n * its placement in the ad, and<\/p>\n * its proximity to the relevant claim.\u201d<\/p>\n The closer the disclosure is to the claim to which it relates, the better.\u201d<\/p>\n Additional considerations include:<\/p>\n * the prominence of the disclosure;<\/p>\n * whether it is unavoidable;<\/p>\n * whether other parts of the ad distract attention from the disclosure;<\/p>\n * whether the disclosure needs to be repeated at different places on a website;<\/p>\n * whether disclosures in audio messages are presented in an adequate volume and cadence; whether visual disclosures appear for a sufficient duration; and<\/p>\n * whether the language of the disclosure is understandable to the intended audience.<\/p>\n 4. To make a disclosure clear and conspicuous, advertisers should:<\/p>\n * Place the disclosure as close as possible to the triggering claim.<\/p>\n * Take account of the various devices and platforms consumers may use to view advertising and any corresponding disclosure. If an ad is viewable on a particular device or platform, any necessary disclosures should be sufficient to prevent the ad from being misleading when viewed on that device or platform.<\/p>\n * When a space-constrained ad requires a disclosure, incorporate the disclosure into the ad whenever possible. However, when it is not possible to make a disclosure in a space-constrained ad, it may, under some circumstances, be acceptable to make the disclosure clearly and conspicuously on the page to which the ad links the disclosure clearly and conspicuously on the page to which the ad links.<\/p>\n * When using a hyperlink to lead to a disclosure –<\/p>\n o make the link obvious;<\/p>\n o label the hyperlink appropriately to convey the importance, nature, and relevance of the information it leads to;<\/p>\n o use hyperlink styles consistently, so consumers know when a link is available;<\/p>\n o place the hyperlink as close as possible to the relevant information it qualifies o take consumers directly to the disclosure on the click-through page;<\/p>\n o assess the effectiveness of the hyperlink by monitoring click-through rates and other information about consumer use and make changes accordingly.<\/p>\n * Preferably, design advertisements so that \u201cscrolling\u201d is not necessary in order to find a disclosure. When scrolling is necessary, use text or visual cues to encourage consumers to scroll to view the disclosure.<\/p>\n * Keep abreast of empirical research about where consumers do and do not look on a screen.<\/p>\n * Recognize and respond to any technological limitations or unique characteristics of a communication method when making disclosures.<\/p>\n * Display disclosures before consumers make a decision to buy \u2013 e.g. before they \u201cAdd To Cart\u201d. Also, recognize that disclosures may have to be repeated before purchase to ensure that they are adequately presented to consumers.<\/p>\n * Repeat disclosures, as needed, on lengthy websites and in connection with repeated claims. Disclosures may also have to be repeated if consumers have multiple routes through a website.<\/p>\n * If a product or service promoted online is intended to be (or can be) purchased from \u201cbrick and mortar\u201d stores or from online retailers other than the advertiser itself, then any disclosure necessary to prevent deception or unfair injury should be presented in the ad itself \u2013 that is, before consumers head to a store or some other online retailer.<\/p>\n * Necessary disclosures should not be relegated to \u201cterms of use\u201d and similar contractual agreements.<\/p>\n * Prominently display disclosures so they are noticeable to consumers, and evaluate the size, color and graphic treatment of the disclosure in relation to other parts of the webpage.<\/p>\n * Review the entire ad to assess whether the disclosure is effective in light of other elements \u2013 text, graphics, hyperlinks, or sound \u2013 that might distract consumers\u2019 attention from the disclosure.<\/p>\n * Use audio disclosures when making audio claims, and present them in a volume and cadence so that consumers can hear and understand them.<\/p>\n * Display visual disclosures for a duration sufficient for consumers to notice, read and understand them.<\/p>\n * Use plain language and syntax so that consumers understand the disclosures.<\/p>\n 5. If a disclosure is necessary to prevent an advertisement from being deceptive, unfair, or otherwise violative of a Commission rule,<\/p>\n * and it is not possible to make the disclosure clearly and conspicuously,<\/p>\n * then that ad should not be disseminated.<\/p>\n * This means that if a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.<\/p>\n Download the .com Disclosures<\/p>\n Probably the most informative aspect of the .com Disclosures are the examples provided.<\/p>\n The only way to review these examples is to download the .com Disclosures for yourself. To download, search on any search engine for \u201cFTC .com Disclosures 2013\u201d. The file is in .pdf format.<\/p>\n Conclusion<\/strong><\/p>\n The disclosure rules appear to be complex.<\/p>\n However, they\u2019re not as complex as they may seem if you \u2013<\/p>\n A basic understanding and awareness is really they key.<\/p>\n You can always look at the rules and guidelines as you develop your approach to compliance.<\/strong><\/p>\n <\/p>\n By now it should be clear how important it is for you to be FTC compliant. But how can you do that without spending $7,500-$8,000 or more on Internet Attorneys?<\/p>\n Smart business owners around the world are doing it with the help of FTC Guardian.<\/p>\n FTC Guardian is a service that is 100% focused on helping to keep you get and stay FTC compliant and fully protected.\u00a0And right now, we are offering a free training to give you the knowledge, information, and guidance that you need to stay out of trouble with the Federal Trade Commission.<\/a><\/p>\n
\nFTC Guides For Testimonials\u00a0And Endorsements (2009)<\/p>\n![](\"https:\/\/s3.amazonaws.com\/ftcguardian\/images\/728x90-Un-vjy-FTC-GUARDIAN-banner-2.gif\")
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\nwhich he\/she writes reviews (result: FTC disclosure rules do apply because there is a relationship with the advertiser-supplier based on the stream of free products indicating “sponsorship”; there are legitimate worries about how to comply with the FTC disclosure rules).<\/p>\n\n
\nHow to Provide The\u00a0Required FTC Disclosures (2013)<\/p>\n\n
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\nand make it noticeable;<\/p>\n\n
Here\u2019s How To Make Sure You,\u00a0Your Business & Website Is FTC Compliant<\/h2>\n