As a business owner, you will know that the Federal Trade Commission (FTC) protects buyers from unfair business practices, fraud, and deception. It does this through a consumer protection laws update, which came into effect recently on the 26th of July, 2023. But what does this mean for us as affiliate contact website businesses?
While the FTC updates have mostly stayed the same in the sense of the laws themselves, considerable definition updates and expansion on the guidance laws and rules governing reviews and endorsements will require greater awareness when advertising with modern social media methods.
To understand what this means for affiliate businesses, we have unpacked all the critical points of the updated FTC guides and looked at how the updates will affect how we, as affiliate businesses, advertise within the modern market realities of social media.
What The 2023 FTC Updates Mean For Affiliate Contact Website Businesses
Although traditional advertising is still used, much modern marketing uses more modern means such as social media platforms. The recent 2023 FTC updates offer further guidance and explanation for business owners on the correct advertising standards for digital and social media platforms.
With much advertising now done through affiliates and endorsements rather than by the brands themselves, the FTC updates now guide with a broader interpretation of what constitutes endorsement and extend such liability into the realm of intermediaries and endorsers.
While this may seem somewhat alarming initially, the reality is that provided businesses and affiliates market only truthful claims that steer clear of deception and remain compliant with the FTC guidelines, there is not all that much to worry about as a business owner. The key is to ensure that employees and affiliates are aware of the expansion of these terms and definitions.
Let’s look at the updates and what they mean for affiliates.
‘Endorsement And Endorser’ Definition Updates
By updating the definition of an endorsement and endorser, the FTC has primarily broadened the overall applicability of both terms to include a much more comprehensive range of forms and individuals. Business owners should be aware that an endorsement can be anything that seems as such, be it a tag, review, statement, or depiction.
The definition of an endorser expands to include any individual, instruction, or group who is or appears to endorse a product. This broader definition means that affiliates must be more prudent in how and what they decide to be involved with and more wary of the use of fake reviews and virtual influencers.
The term endorser now also encompasses even writers of fake reviews and fake profiles, often used in creating product endorsements.
Addition Of The Definition Of “Clear And Conspicuous”
The FTC update includes the addition of the definition of clear and conspicuous, which has implications for affiliates in terms of how clear their disclosure is. Some platforms have built-in tools for disclosure, but more than these may be needed to provide clear disclosure of affiliation, and business owners may need to do more to give easily noticeable disclosures to consumers.
Not only do affiliation disclosures now have to be noticeable, but they also need to be more easily understandable.
Incentivized, Fake, Negative, And Publishing Of Reviews
The FTC updates provide business owners more guidance on reviews, with those made by employees or incentivized reviews now needing to be fully disclosed as such. The same applies to fake and negative reviews about competitors, as these are now considered deceptive and violate the FTC Act.
The updates offer more significant guidance on disseminating reviews through boosting positive reviews or editing and removing negative reviews. The updates require that reviews accurately represent the consumers and that reviews published do not distort the reality of what consumers have expressed concerning the product.
The updates also provide more variety of examples, although they do note that examples provided do not necessarily address every possible issue that may occur.
Proposed Rule
This update is significant for business owners and affiliates as it deals with any deception in providing reviews and testimonials. Businesses and affiliates should use no fake reviews in their marketing; reviews can only be provided by a client who has used the product.
The rule also prohibits incentivizing reviews, so influencers are not compensated for giving a specified review, whether positive or negative. Insider reviews are also prohibited, with businesses not being allowed to publish reviews by employees, managers, owners, or agents.
Potential Liability Of Advertisers, Endorsers And Intermediaries
Potential liability is a big thing the FTC updates address and should be taken seriously by business owners. Affiliates must be more aware of potential liability concerning connections, incentives, and disclosures. The updates are much more explicit about how information is represented, emphasizing more on ensuring no deception.
Potential liability extends to all intermediaries, from advertising agencies, public relations firms, and management companies to endorsers, influencers, and review brokers.
Child Directed Endorsement Concerns
The more stringent updates within the FTC are those concerning endorsements directed at children. Disclosures need to be more evident due to children’s cognitive development not fully comprehending some of the more ordinary practices at disclosure.
If your business is aimed at children, this is one of the updates you should take serious note of.
Details Concerning Connections
Business owners and affiliates must ensure more specific mention of connections, primarily concerning material connections.
The entire details of the connection need to be kept private, provided the parties offer sufficient information for the consumer to consider the likely relationship between the endorser and the product. Influencers need to disclose the monetary value of endorsements, but they need to mention the material value involved.
The updates offer guidance for affiliates on when disclosure needs to be made and how to ensure compliance with the FTC.
Social Media Indicators And Influence
The FTC updates also look at bought influence, where influencers and affiliates boost their online sway by buying fake likes, views, followers, or subscribers. It also pertains to businesses and persons who use fake indicators for commercial gain.
Businesses and affiliates will need to ensure that their footprint provides real influence numbers using fake influence, opening them up to potential liability and fraud accusations.
Conclusion
The FTC updates have been coming and offer a more comprehensive guideline for affiliates and businesses. The updates build on the pre-existing rules and guides to fully cover modern marketing realities as online presences via digital and social media become more central in advertising campaigns.