You must of heard about it, the FTC poking into your internet business. The Federal Trade Commission, in September 2009, has recently created some new regulations that will eventually affect all online marketers. And this means everyone, even if you do not live in the United States or North America.
If you have not read the full report on the new regulations yet, it’s advised that you do so here:
So basically, what the new guidelines is saying is that, any results that are used on your site, that’s based on a testimonial, For Example:(I personally used Product A and got this result), must now be accompanied by a disclaimer on the website that states the “results are not typical.” Typical results while using the product must now be shared, as well as the qualification of the testimonial itself must be given as well.
What needs to be understood is what the FTC now defines as a ‘Testimonial’ or ‘Endorsement’.
The FTC’s Guidelines On Endorsements
An example is given in their document.
Example 8: A consumer who regularly purchases a particular brand of dog
food decides one day to purchase a new, more expensive brand made by the same
manufacturer. She writes in her personal blog that the change in diet has made
her dog’s fur noticeably softer and shinier, and that in her opinion, the new
food definitely is worth the extra money.
This posting would not be deemed an endorsement under the Guides.
Assume that rather than purchase the dog food with her own money, the
consumer gets it for free because the store routinely tracks her purchases and its computer has generated a coupon for a free trial bag of this new brand.
Again, her posting would not be deemed an endorsement under the Guides.
Assume now that the consumer joins a network marketing program under
which she periodically receives various products about which she can write
reviews if she wants to do so. If she receives a free bag of the new dog food
through this program…
her positive review would be considered an endorsement under the Guides.
The guide also states itself clearly on false misleading endorsements. Which they deem is a big problem in the Internet Marketing industry. While this may not be nothing that new, it’s something that you need to be aware of.
The following example explains the guidelines:
A skin care products advertiser participates in a blog advertising service. The service matches up advertisers with bloggers who will promote the advertiser’s products on their personal blogs. The advertiser requests that a
blogger try a new body lotion and write a review of the product on her blog.
Although the advertiser does not make any specific claims about the lotion’s
ability to cure skin conditions and the blogger does not ask the advertiser
whether there is substantiation for the claim, in her review the blogger writes that the lotion cures eczema and recommends the product to her blog readers who suffer from this condition.
The advertiser in this case is subject to liability for misleading or unsubstantiated claims.
The FTC’s Guidelines On Testimonials
So what about those fine folks who have actually bought your product or service and gives a testimonial. Here is what the guide has to say:
(a) An advertisement employing endorsements by one or more consumers
about the performance of an advertised product or service will be interpreted as representing that the product or service is effective for the purpose depicted in the advertisement.
Therefore, the advertiser must possess and rely upon adequate substantiation, including, when appropriate, competent and reliable scientific evidence, to support such claims made through endorsements in the same manner the advertiser would be required to do if it had made the representation directly, i.e., without using endorsements. Consumer endorsements themselves are not competent and reliable scientific evidence.
(b) An advertisement containing an endorsement relating the experience of one
or more consumers on a central or key attribute of the product or service also will likely be interpreted as representing that the endorser’s experience is representative of what consumers will generally achieve with the advertised product or service in actual, albeit variable, conditions of use.
Therefore, an advertiser should possess and rely upon adequate substantiation for this representation. If the advertiser does not have substantiation that the endorser’s experience is representative of what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.
So now, if you as either a marketer or a consumer of a product gives an endorsement or testimonial of the product, you must also now show all scientific evidence as well, that backs up that claim.
Working The Two Major Changes
As discussed, the FTC has made 2 major guidelines. The first deals with ‘endorsements’ and ‘disclosure’. This according to John Reese is entirely going to change the Affiliate Marketing industry as we know it. When promoting affiliate products, (even if you’ve received a free product and is not getting paid for it), you as an affiliate marketer must now fully disclose that, or it can be deemed by the FTC as misleading advertising.
So you as an affiliate marketer cannot just mask or cloak affiliate links and not bother telling your website visitor that you get paid for it. If the visitor clicks on the link, and buy the affiliate product, you must now disclose it on your website.
The second guideline, testimonials’ is probably more important. This will also completely alter internet marketing as online marketers know it. You can no longer use testimonials along with the old “results are not typical” disclaimer. Marketers are now required to state what the results are… of what the end buyer will actually achieve!
In a lot of markets, this will be almost nearly impossible to state. Online companies will now have to get around this new guideline. The best advice would probably be to remove all testimonials from your site altogether. If you happen to be selling info-products for example, you will still be able to sell your product without providing testimonials.
Are these latest FTC changes important?
Yes, so much so that it can potentially put your online business, out of business! So it’s recommended that you stay on top of these new developments and take advantage of the new opportunities that will invariably be created from it. One obvious one is that your business may grow while your competitors may be forced out of the market because they do not comply to the new regulations.