Affiliate Disclosure Requirements

 

As I discussed in the previous post, being paid to review, promote or sell a product or service establishes a material connection with the seller/provider, which must be disclosed. But, sometimes understanding whether a material connection exists if you’re an affiliate or a blogger is not obvious. What if you blog about products and don’t get paid cash but you receive free products you get to keep? When exactly does a material connection exist for bloggers or affiliates that review and/or endorse products?

If you are a blogger and regularly receive gift certificates, free products, cash or other consideration in exchange for product reviews, you are required to disclose the connection. If you send a free product to be independently reviewed and don’t pay any compensation to a blogger, then it depends. The course of dealing with that advertiser (or others) becomes important at that point and would suggest sponsorship with the advertiser. In that situation, the value of that product and whether the endorser routinely receives such requests would be evaluated. Again, if you send products to a blogger/reviewer because he or she has a wide readership within your target market or demographic group, the statements are likely sponsored endorsements. Finally, if you frequently send free products to a particular blogger or affiliate for review, those reviews will probably be considered endorsements.

If you are affiliate, being paid when someone clicks on your affiliate link is a clear material connection. If you operate a website that offers a tool for shoppers to compare products from different merchants or other websites and you receive a commission of every sale, you are an affiliate. If you have a “store,” and not just an affiliate landing page, there is also clearly a material connection between the affiliate and the direct seller. Payments or other benefits provided by a third-party on behalf of your business must also be disclosed.

As another example, e-book authors who promote products and services in their e-Books using affiliate links should disclose they receive compensation as an affiliate. Affiliates who rebrand an eBook with their own affiliate links also can face legal liability unless they properly disclose to readers their affiliate status. E-book disclosures should be placed on the first page of the e-book, preferably in capital letters. The font does not have to be overly large, but do not try to minimize it or force your readers to have to squint.

Affiliates or bloggers must directly make a positive statement or positive review to invoke the disclosure requirement. FTC requirements don’t apply to any direct advertising or general editorial content on an affiliate/marketer’s website. If a positive statement won’t be viewed as an opinion, belief, experience, etc. of the affiliate/marketer, it is not an endorsement.

 

How to use Compensation Disclosures on your Blog or Affiliate Site

Understanding where to place your compensation disclosure if you’re an affiliate or blogger is obviously important. The way to think about using disclosures really is a matter of meeting a single standard: will the viewer be able to make an informed decision before clicking on an affiliate link or after reading your product review? Would a reasonable reader understand that the review or positive statement is not a neutral review/statement? In other words, the FTC wants you to be transparent with your disclosures. No matter what you say or where you say it, if the customer would understand the material connection before or during the endorsement, the disclosure will be effective.

 

Blog Compensation Disclosures

If you are a blogger you need to be careful when you receive free gifts or other consideration from a seller where you positively endorse or review seller’s product(s). In this case, the best thing to do is to disclose the connection on your blog before the review. A prominent notice stating your connection to the product’s seller could be made at the top of the review. Alternatively, you could place it naturally within the content if it’s practical. For instance, in a review for a video game just released you could say “after I was sent a complimentary copy from the seller to review, I played and completed every level and I can tell you it lives up to all the hype!”

As another example, if you receive free products and you regularly review a product on your blog, you could say “seller sends me complimentary video games regularly to review. I like their latest mafia wars game quite a bit. Here is a link where you can buy a copy yourself. By the way, I get paid a commission each time someone purchases through this link so I can continue provide these great reviews to you!”

The FTC wants all of your disclosures to be clear and conspicuous. You can use a prominent link to a separate disclosure page on each webpage any product review appears. This is a good idea especially if you endorse products you receive for free frequently. However, you may want to do both. You can provide an expanded disclosure on a separate page and provide a more abbreviated notice before or naturally during the product review. There is no correct language. Just tell them exactly what the connection is in simple terms….”I regularly receive free products from Acme Sports to review.”

 

Affiliate Compensation Disclosures

If you get paid each time someone clicks on your affiliate link and buys something you positively review, the reader needs to know. I have reviewed the FTC guidelines along with direct interviews and statements from FTC staff. The bottom line: In order to satisfy FTC laws, the consumer must understand the material connection exists when they are viewing the endorsement and at the point of the link to the Seller’s website. Understanding how to meet this standard is what separates legal vs. illegal endorsements.

If the reasonable consumer would know at the point he or she views the endorsement that the endorser would receive an affiliate commission, there is no further need to qualify the endorsement. However, if at any point during any endorsement or repeated endorsement this may not be the case, a disclosure must be made.

Generally, affiliates are not expected to include the disclosure on every page of their website. Whether you make the disclosure outside of the text or incorporate it into the review discussion itself are issues that you have discretion over. So, a properly drafted Affiliate Disclosure Policy page visible from every page of the website might be adequate. But, the reader must always be able to make an informed decision. The safer practice is to use disclosures within or next to the review or endorsement.

Blanket type website affiliate compensation (material connection) disclosures placed on a separate page on your website or blog is a good start and a recommended practice. However, depending on how and where you use your endorsements, this is not the only step you need to take. Again, if the consumer would not be able to make an informed decision at any point during the time it decides to click on any affiliate link, wherever that link may be, the disclosure is ineffective. It’s that simple. Work from this principle at all times.

 

Some General Compensation Disclosure Guidelines for Affiliates & Bloggers:

  • Place a compensation disclosure before or during each product review or before any affiliate link. Many affiliates have started putting affiliate link disclosures after every single link on their blog or website in light of the revised guidelines. However, provided the viewer sees the disclosure before clicking on the affiliate link and is “informed” you don’t need to clog up the review with multiple disclosures;
  • You can use simple language such as “Disclosure: Affiliate Receives Compensation” and place it directly below the affiliate link. Better language might be as follows: “Disclosure: Affiliate will receive a commission for purchasing the product by clicking on this link.” But, so long as is it clear and conspicuous and informs the customer properly, your disclosure can be simple;
  • But, any disclosure should not come at the END of the review after other non-disclosed affiliate links within the text. Many click-throughs happen in links before the end of product reviews, not after the customer has read the entire review. So a person clicking on one of those links may have no idea about the affiliate relationship if you introduce your disclaimer after the review;
  • Affiliates are also advised to use a link prominently on your website (i.e. “Compensation Disclosure”) to a separate page containing an affiliate compensation policy. The policy can repeat the disclosure, but can expand upon the nature of the connection, mention the potential for bias but also that reviews are based on good faith recommendations by affiliate along with other broad disclosures. This is not legally required and should not be used by itself. However, it is an added layer of protection you should add to your website;
  • Bloggers who regularly receive a product or other consideration for reviewing the product should consider using a separate blanket type disclosure on a separate webpage. The language should be simple and straightforward and describe what products or consideration you receive;
  • Be careful with pop up ads appearing on the right hand side that are related to an endorsement or review. Is there a connection with any seller(s) in the ads? This is a problem unless you have a disclosure in the side bar content. Again, the reasonable viewer must understand the review is not neutral. A clear and conspicuous disclosure should be used.