The FTC is gonna tan our hides.
I sat in on a session at Affiliate Convention with Stephen Richter discussing new aspects of compliance we’re all going to have to think about.
You’ve probably heard some talk about the FTC cracking down on bloggers. Well it doesn’t stop there. They are getting all geared up to outline new regulations by the end of the summer.
Here are the current regulations which are being applied to affiliates:
http://www.ftc.gov/os/2008/11/P034520endorsementguides.pdf
Who will be affected?
Bloggers who have affiliate links or take any form of compensation as payment for a blog post including free samples to be reviewed.
Floggers (fake bloggers) are doomed.
Almost all affiliate marketers of any sort are going to be impacted.
You think you’re compliant but your not:
You’ve got some fine print tucked away somewhere in a privacy policy, or terms of service, or even a ‘disclosure’ page. Right?
Well that’s not gonna cut the mustard buddy. The FTC is looking at the ‘whole picture’ of a website including. Ads, landing pages, testimonials, etc. If one word on your website is a lie, you are not fully compliant with the intent of the law.
In addition to that, if you are reviewing or even (god forbid) giving a genuine and honest review of a product, you have to disclose the fact that you are being or will be compensated. We are talking about sweeping changes to the way online marketing is allowed to continue.
Disclaimer: I am hoping that you will read my article and then sign up through referral links to affiliate networks or hosting providers. All the ads you see and practically any link you see on this site is fully intended to make me rich. Maybe you should just give me half the money in your wallet right now and we’ll call it even.
On a final note, it’s a good idea to think about getting an LLC. And if you’re doing some serious business, or doing some seriously risky business, maybe you should be setting up offshore entities to make coming after you more difficult.
In addition, you might want to talk to a few lawyers about setting up your business structures in a way that will really protect your personal wealth.
Lastly, please note that I’m not an attorney and following any advice I give you may result in dire consequences up to and including loss of limb, life, money, property, or your freedom.
Want more? Read a Washington Post article about it here.
Nauticus
June 26th, 2009 at 11:49 pm #
This will truly change the way all advertisers work on the internet. I can see your frustration here DB. It’s like you have to write in your blog posts what the ads are for. Also on your landing pages you should explain that when people buy the product your’re offering, you are going to get a commission from that.
These are serious stuff, but on the bright side it will rule out all those copycats and lifeless websites that promise mostly hype.
rishabverma
June 27th, 2009 at 9:30 pm #
Ahh I hope the FTC doesnt damage the industry. It seems like they are gonna have quite an impact
hanji
June 29th, 2009 at 3:43 pm #
Yes, this FTC deal is going to suck. It seems like it’ll be impossible to control though??
Also, on the LLC, I’ve read/heard that LLC doesn’t protect your liability position as much as you think. In fact I heard it’s about the same as Individual or Sole Proprietor. I think the only real way to limit liability is to go S-Corp (Inc). That’s a pain in the ass, but it has other financial benefits. Same as you.. I’m not a lawyer or accountant.
h
Markus
June 29th, 2009 at 6:57 pm #
A quick note to add regarding incorporating as an LLC or S-Corp, or any other method for that matter. No form of incorporation protects you from liability due to criminal acts. This includes breaking “white collar” laws as well. So if you are incorporated and then decide not to comply with what ever laws are imposed by the FTC you are still not protected. It offers very little protection from the big government agencies.
I am not saying you shouldn’t incorporate because I agree with Danger that forming an LLC is probably the best way to setup your blogging/domaining/affiliate business. It does offer minimal protection in certain instances and from an accounting stand point has it’s benefits.
We need to hope the actual bill that gets passed is “toned down” quite a bit from its current form. If it is not, then companies like Amazon, CJ, Ebay, etc who have affiliates selling for them will have to find a way to police each individuals business. And plausible deniability will not be a good enough excuse for them.
The trickle down of this is that the costs incurred by the big companies (and small) to police the new affiliate networks will be passed along to us, the little guys in the form of smaller commissions.
The good news is those looking to make a quick dishonest buck will have to watch their backs. It will make the business we are in more legitimate. Let’s just hope they find a good balance in this new bill.
dangerbrown
June 29th, 2009 at 7:18 pm #
Agreed. LLC’s are only partially helpful. Living in a non-extradition country would probably be more effective, lol. Being fully compliant of course is the best route. My intention is to try to wake a few people up to the imminent changes around the corner. Thanks Markus!
Affiliate Marketing montly earnings | Danger Brown
June 30th, 2009 at 1:18 pm #
[...] The FTC is gonna tan our hides. [...]
Wes (MasterlessSamurai)
July 9th, 2009 at 9:19 am #
as much as I hate big government stepping in and trying to control every aspect of our lives…i am glad that this industry will have to clean itself up to become more honest.
i want to feel good about what i am promoting and know that the real human on the other end of the offer is gaining real value from the products they buy/try.
we’ll see where it goes.