Do the New FTC Guidelines Affect You?

On December 1, 2009, the new FTC guidelines concerning product endorsements and testimonials goes into effect. For bloggers and social media users, it means that if you are promoting a product, you have to make it clear if you are receiving any financial gain (or “material connections”) for said promotion.

As I understand it, this includes if a advertiser pays you writing a review, gives you a free product to try in exchange for the review, or gives you commission when someone purchases the product after clicking on a link to it from your website.

It also affects the types of testimonials you can have about products. No more “results are not typical” testimonials that include how someone made millions just by following a strategy or lost a boatload of pounds in just months by taking a diet pill. The testimonials have to be about the average results.

Fines for violating these guidelines can go up to $11,000. That’s a hefty punishment for a blog review that may only garner a $50 payout if someone were to heed the words of a glorious review of a not so great product.

A more thorough article about the new rules can be found on the FTC website, along with the actual 81 page guide.

Do I agree with the new guidelines? Yes and no. I think that testimonials should include a mixture of average and above average results. I think that it will be difficult to include a full disclosure in one 140 character status update. I think it would be nice to know when people are doing reviews simply because they are being paid for it, but what is wrong with that if they have purchased the product themselves and have achieved great results (like my promotion of the 31 Days to Building a Better Blog workbook?

I also have some questions that have not been answered in the many posts I have read about the new guidelines…

  • Does there need to be fine print disclosures under every affiliate link on a website if someone is going to be paid commission on a purchase originating at that website, or does this only apply to written testimonials and reviews?
  • If I’m being paid to write blog articles for a company, and the articles are promoting the company’s product but from the point of view of the company and not the writer personally, does it fall under these guidelines? Like if a sunglasses company pays me to write articles on their blog promoting their shades? What about writing about products in general, and not about a specific product?

Other great unanswered questions can be found in an article CBS did back in October about the new regulations.

Your Thoughts

What are your thoughts about the new FTC regulations? Do they affect how you make money online with affiliate marketing or other programs?





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Comments

  1. says

    I have just moved to the United States, and have tones of bills to pay now, my blogging earnings are not that high to be included in Taxes, but I had to update all my accounts with my information to avoid any problem. after reading your post I am wondering how they will deal with contest prizes!

    Anyways, I know that I should read about this more often and try to understand, the first year here in the States will educated me for sure :) Thanks Kristi for sharing this great and useful post!
    .-= Hesham´s last blog ..$1000 for The Best of the Best Famous Bloggers Contest =-.

  2. says

    While I have some objections to the FTC guidelines, they’re probably more necessary than they’ve ever been. If every blogger agreed and acted as Jeff Jarvis, with this list of principles, I’d have no problem with opposing the FTC guidelines outright:

    “But I’ll just speak for myself with my advertising policy in greater detail:

    1. My voice is not for sale. No one can pay me to say what they want me to say.

    2. My editorial space is not for sale. I accept advertising and it must be clearly labeled.

    3. When I am paid to write (as in a freelance article) or to speak, I will still determine what I say and I will disclose that relationship.

    4. I will attempt to disclose relevant financial relationships so you are free to judge me and my words accordingly.

    5. In some cases, such a relationship will prevent me from speaking on a subject (as in talking in detail about an employer). However, I will not be compelled to speak because of such a relationship.

    6. If I say something openly and freely here, it may be quoted by a commercial entity (the blurb) but I will not be compensated for that.

    7. My acceptance of advertising here does not constitute an endorsement of the advertiser. However, I will at times turn down advertising I find unacceptable.

    8. I recognize that many blog, vlogs, etc. do not pretend to live by editorial standards and that is their right and freedom. But when they say some things, I will need to take when they say with appropriate salt.

    9. I have financial relationships with others who do not follow these rules and in many cases I do not believe these rules apply to them (e.g., entertainment). I enjoy and respect many sites and products that do not follow these rules, but I expect to be able to find out what rules they operate by. I believe one’s rules and relationships should be disclosed.

    10. I do not believe I have a price at which I would sell out. But if I did, I can say I certainly haven’t seen it yet.”

    That’s from http://www.buzzmachine.com/2007/06/23/buying-their-voices/ – note the rest of that story: there were a number of name bloggers, tech bloggers, that couldn’t see what was wrong with giving a favorable review for money only – one of the people involved was Mike Arrington:

    “Fred Wilson has not thought better of it and called Nick so old school for sticking to these rules (Fred, some rules are worth keeping). Ditto Michael Arrington, who tells critics to “pound sand” and argues that it’s clearly an ad. Absolutely right, but it’s still an ad with your words in it. Except then Mike reveals these aren’t necessarily their words: “…generally FM suggests some language and we approve or tweak it to make it less lame. The ads go up, we get paid.”

    The mercenary attitude should disturb everyone on the web. That it doesn’t – that people would sell their own mothers for a dollar – reveals to me that the law has to step in here and make clear there are consequences if lines are crossed. Disclosure is the essence of the web. Without it, we’re less than strangers to each other.
    .-= ashok´s last blog ..Emily Dickinson, “How well I knew Her not” (837) =-.

  3. says

    This policy is really not that big a deal, if people will be honest. A simple disclosure statement will satisfy the requirement.

    I don’t write a ton of affiliate post but when I do a statement like “affiliate links included in this post, if you would prefer to buy direct click (product direct link)”. Most of your readers who trust you will want you to get the play anyhow.
    .-= Jimi Jones´s last blog ..Just Mozying Along – Mozy Backup Review =-.

  4. says

    Great site, kikolani. Love the look.

    Mostly I find the ruling annoying.

    First, it only acknowledges a narrow range of rewards, though we all know that people COULD write dishonest reviews for lots of other benefits.

    Second, I guess, I have always thought it was up to ME to make a sound decision. When actors are hired to promote a product, I have never thought that kids REALLY drinks Ovaltine all day long. In fact, the only time I take a recommendation at face value is if it’s a close friend or a group like Consumer Reports that EXPLICITLY says it isn’t compensated.

    That said, I review all sorts of stuff. Some things that are affiliate-based and some not. But I’m not at all hesitant to give a stinky review. I am an affiliate of GoDaddy, for example, but I don’t recommend them and I don’t USE them. I used to, but switched all 100-ish of my domains to a different registrar when GoDaddy decided they were more about skank marketing than serving their customers. I have said that repeatedly, but I’ll still link to them even in my scathing remarks and I might also use them as an example. (I like their interface, for instance, better than my current registrar, 1&1, so I might link to show the difference.)

    How would I “disclose” that? “Even though I can’t stand GoDaddy, I’ll still get a couple of bucks if you follow my link and decide to use them against my advice.” Weird and awkward.

    Anyway, good article. Thanks for letting me rant.
    .-= Alison Moore Smith´s last blog ..Create a New WordPress Post =-.

  5. says

    I scare myself when I think ah screw em, but I guess I should pay attention to this. I hardly think it’s worth their time and will only end up creating this vacuum where they can just insert their money, and ours.

    Enforcement is the key. Are they expecting everyone to turn into a rat?

    Alison, btw, I completely agree with you about GoDaddy. I still buy all my domains there, but then point them to a different host. I’m far from being completely removed from them, but it’s happening slowly.
    .-= Wayne´s last blog ..Make Money Online Status Report for November 2009 =-.

  6. says

    Hi Kristi, many people have been surprised when I tell them that most review sites are affiliate marketing sites. They thought they were reading unbiased reviews. I think people should know that these reviewers have a motive, this new ruling may do that. There seems to be a lot of gray areas that could bring fines against many unsuspecting folks. More clarity would be nice, but we are talking about bureaucracy here. I didn’t even know about this and appreciate the heads up.

    Notice – to the FTC: I have not been compensated in any way for writing this comment.
    .-= Jonathan – Advanced Life Skills´s last blog ..28 Things You Probably Never Knew About Me =-.

  7. says

    Your second question is: Do they [the FTC regulations] affect how you make money online?
    Answer: I do not make any income at all from my blogging.

    Your first question is: What are your thoughts about the new FTC regulations?

    Answer: As a paralegal I was on top of the proposed changes and I blogged on them some time ago now. The new rules are designed to bring greater truth and disclosure to blogs, TV ads relying on testimonials and social media. The main concern is “transparency” ie. bloggers and others clearly declaring their relationship with their sponsors, and disclosing to their readers that they were compensated for a review when they are in receipt of a free product in exchange for their testimonial, or received some other kind of benefit.

    I believe in transparency and I support the FTA’s action to revise the guidelines, so that bloggers and others who promote or review products and services follow the laws governing truth in advertising. Without doubt, I want to know when a blogger reviewing anything (product or service) has been paid to do so in cash or in kind, or has received some other kind of benefit in return for the review. I have not heard any valid grounds for any blogger to protest these regulations.
    .-= timethief´s last blog ..Content is King, Marketing is Queen =-.

  8. says

    I’m not worried for many reasons. One, because the FTC backed off on it already and said they wouldn’t be going after bloggers.

    Two, because when I write about a product, I’ve usually either used it or seen it in action.

    Three, the few freebies I’ve received, I’ve owned up to it because I was pretty surprised I got a freebie. That’s always nice, so anyone else who wants to send me free stuff, I’ll gladly accept it. :-)

    And four, I think the only way the FTC would actually go after someone is if there was a disgruntled consumer who noticed the same ad on multiple pages, which is actually what the FTC says it wants to crack down on. In that case, it’s not all that much different from the SEC trying to track down people who post false stock market advice to pump up little penny ante companies just enough so they can make a quick profit and sell off the stock days later. And I have no real problem with that.
    .-= Mitch´s last blog ..Holiday Special From Li’l Specs =-.

  9. says

    There are some definite positive aspects to this along with a fair amount of “gray area.” My biggest question would be how in the world the FTC is going to actually enforce these guidelines? Perhaps if someone complains to them about a web site? With the shear number of blogs and web sites it would seem like a very steep uphill battle. So perhaps these regualtions are a non-issue unless a site is doing something particularly egregious. Which would mean that a site probably deserves to be slapped.
    .-= Mike´s last blog ..Buying New Computers – A Better Computer for 8 Cents an Hour =-.

  10. says

    @Sire
    You might be safe, but if you would be a real big offender (just hypothetically, don’t get me wrong!) FTC might get after you in two cases:
    You want to travel to the states and need a visa, the visa might be denied or you might be questioned at the border etc.
    If you operate inside the US-American market, they still might hold you liable if you target customers in the US.
    Now I know that your blog is very good and not likely to damage anybody and also that there are a lot of “might” in my previous statements. But let me turn the question around and ask:
    What would actually happen if you adhere to the FTC guidelines and post the appropriate disclaimers / explain your relationship to your advertisers etc. We already have to do something when we run Adsense on a site, what is the problem of adding a few sentences more and be on the super-safe site? Just my 2cents, SY
    .-= oes tsetnoc´s last blog ..Thanks again! =-.

  11. says

    @Sire
    Exactly to this kind of “couldn’t care less” people I was referring to. Your original question, the one I wanted to add my 2 cents to, was “Can these rules be enforced on bloggers who blog outside the US?” And I said there “might” be some scenarios where that could be possible ;-) SY
    .-= oes tsetnoc´s last blog ..Update image captcha =-.

  12. says

    I hope Mitch is right about the FCC backing down on it, as in the end, I think this is not only too hard to enforce, but as it would only affect people who live in the US, it doesn’t really do anything to address the issue.

    To be honest, I am more concerned about the super secret Anti-Counterfeiting Trade Agreement(ACTA) treaty that is being worked on. Under the guise of protecting intellectual property, the Government is planning on giving the ISPs permission to spy on our Internet usage. Of course, as is usually the case here in the US, it is always when the government is trying to protect us(terrorism, communism, socialism) that they end up stripping away our constitutional rights.

    To make it even worse, the talks are going on in secret and will not be revealed until made into law, by which point it is too late. Obama and others have actually alluded that this lack of transparency is for our own good though, as otherwise if we knew the details we would revolt.

    I know it sounds like a conspiracy theory, but the ACTA plans that were leaked to WikiLeaks are very very scary. I see the Anti-Counterfeiting Trade Agreement as the single biggest threat to our freedom and the Internet in general!
    .-= Steve´s last blog ..Treating Rheumatoid Arthritis: Monitoring the Effects of the Disease =-.

  13. says

    I’m not sure about the comment that the FTC has backed off regarding blogs, but even if they have, transparency is the best policy. I don’t think they are going to be trolling the net for the little guy. If you don’t get a complaint (and/or handle complaints effectively with a refund etc) you are probably never going to hear from them.

    There will always be those running under the radar, within the FTC grasp or not. The overall point of the new guideliness can be good for all of us. Did you see the interview with an FTC rep? http://jimedwards.s3.amazonaws.com/ftc-advertising-interview/index.html (not my site).

    Its long but answered a lot of questions. Except will it be required viewing for all FTC employees? :-)

    JEDs
    .-= Steve Warriner´s last blog ..FTC Guidelines – One More Day =-.

  14. says

    First Google came down on those offering paid links now this with the FTC. It appears everyone has a hand in the pocket book. I don’t think that it is fair that this is only effecting those in the US.
    .-= Rose´s last blog ..USB-powered boob warmer =-.

  15. says

    I’ve been getting free gadgets from big vendors for reviews. Since I’ve heard of the new FTC rule, I’ve started putting a note that the unit is provided by the vendor. Don’t think it’ll affect anything since I really write both the good and the bad things.

    But I guess there are unanswered questions whether it is enough or what else should I do to follow the guidelines..sigh.. no one has the time to read 80-ish pages
    .-= Michael Aulia´s last blog ..Razer Imperator Unboxing =-.

  16. says

    “Ten privacy groups have filed a complaint with the Federal Trade Commission over recent changes to Facebook’s privacy policy.Led by the Electronic Privacy Information Center (EPIC), the groups criticize Facebook for changes that made previously private information public. ” -– Facebook Target of FTC Privacy Complaint

    More information on the 8 different scenarios that require disclosure are found in Blog World Expo 2009 Session Notes from Deb Schroeder at ChattyGal.com
    .-= timethief´s last blog ..TypeKit Comes to WordPress.com =-.