LEGAL INSIGHTS AND NEW DEVELOPMENTS IN INTERNET LAW & ONLINE BUSINESS

FTC Guidelines concerning Internet Marketing

Lately there have been many questions from our clients in the internet marketing law and blogging industry about the new Federal Trade Commission Guidelines.  Specifically, whether an affiliate marketer or blogger must disclose certain information on their web page, and if so how the disclaimer must be presented. This article will highlight several portions of the new guidelines and offer a framework for clients in how to disclose certain information on their websites.

In a nutshell, these questions revolve around the new FTC Guidelines that are geared at stopping false and misleading advertising, for example the Acai Berry “New Diet Pill Helps you Lose 50 pounds in 4 weeks” ads . Armed with the new guidelines, the FTC came down hard on the makers and affiliates of Acai Berry, in addition to other weight loss supplements for questionable advertising practices such as:

“WARNING! AcaiPure Is Fast Weight Loss That Works. It Was Not Created For Those People Who Only Want To Lose A Few Measly Pounds. AcaiPure was created to help you achieve the incredible body you have always wanted …USE WITH CAUTION! Major weight loss in short periods of time may occur.”

In addition to the false advertising, the FTC was concerned with the “rebills” that were occurring on customers’ accounts. The advertisement not only led customers to believe that they would lose an incredible amount of weight, but they could also try the product risk free. In fact, customers were unknowingly billed thousands of dollars for the “Risk Free” trial. There is no question that the FTC will come down hard on these types of advertisements in an attempt to discourage others from following the same model.

FTC Guidelines concerning Blogging

Not only was the FTC concerned with blatantly false advertising, but the FTC guidelines also say it is just as misleading when a person endorses a product and is silent about having been paid for the endorsement. Although the FTC is currently going after the large scale operations, bloggers that are being paid either through affiliate income or through advertisements on their site should be aware (and follow) the guidelines. According to the FTC Guidelines regarding Blogging, a disclaimer or disclosure must be made if there is a “sponsored communication”. The examples of what is considered to be a “sponsored communication” is lengthy and cannot be summarized in one article. The FTC Guidelines did, however, provide for a few key points to remember:

- Only “material connections” must be disclosed.

- Connections are material if the reviewer received some consideration for the review (e.g., cash, merchandise, etc.).

- Guidelines impose liability on: (1) advertisers, (2) advertising agencies, and (3) endorsers (including celebrity endorsers).

- The “results may vary” safe harbor is gone – advertisers are responsible for the claims made by endorsers.

Do I need a disclaimer or disclosure on my Blog?

For those that are affiliate marketers, paid bloggers, or receiving compensation for advertising then you should place a disclaimer on your website. The question then becomes what type of disclaimer do you need to have on your blog or web site? The answer is not simple. Some may be able to get away with a disclaimer on the page regarding the advertisements, i.e. that you are getting paid. The guidelines merely say the disclaimer must be placed “clearly and conspicuously”, which is really a common sense approach. A link at the bottom in small font that is the same color as the page background will not do. Nor do you want to go overboard and have an entire page dedicated to the disclaimer, following by a small link at the bottom to your product. There is no checklist of “approved” ways to disclose, and the guidelines simply require “clear and conspicuous” disclosure of material relations between sellers and endorsers, specifically when those relationships would not otherwise be clear to the consumer.

For the bloggers, it is important that the disclaimer follow the blog post as sometimes the blog post can be opened separately from the main site or even placed on a secondary page away from the main disclosure. Thus, each post should have a disclaimer regarding the material relationship. Even more surprising to some is the fact that the FTC Guidelines apply to advertisements on twitter. So those of you who are advertising on twitter must disclose the material connection in each “tweet”.

How to comply with the FTC Guidelines

In a nutshell, under the revised guidelines and advertisements that features a product or service must not be false or misleading. If the results of the product or service being advertised in the advertisement are not typical, it must say so in the advertisement. In addition, bloggers and other word of mouth marketers must reveal any material connections between themselves and advertisers so as to not mislead consumers. When looking at a violation of these guidelines the FTC will view each case with a “totality of the circumstances” approach, meaning they will look at the product being advertised, the claim being made, and the disclaimer provided and whether a “reasonable consumer” would be able to know that there is a connection between the affiliate and the advertiser. In other words, be careful and remember the truth hurts…but not as bad as the FTC knocking at your door.