If you are like us here at FTC Guardian, and you have an Affiliate program, this article is a great reminder that such programs are considered part of our marketing practices and being montiored by the FTC as well.

Is your affiliate program compliant with FTC regulations? It can be, by knowing the facts and establishing a process.

The Federal Trade Commission (FTC) has made it clear that Section 5 of the FTC Act, which prohibits ‘‘unfair or deceptive acts or practices in or affecting commerce,” governs not only a company’s own marketing, but also its affiliate marketing practices.

Many affiliate marketing programs do not, however, meet the advertising compliance standards laid out by the FTC. This oversight places companies at risk, even though a simple understanding of FTC requirements can result in the establishment of an effective compliance process.

Consumer protection is at the core of the FTC regulations surrounding affiliate disclosures. If a publisher receives commission payments via traditional affiliate links, or is provided free or discounted merchandise in exchange for a review, then a “material connection” exists between the publisher and the company. A disclosure statement needs to be prominently displayed on the publisher page where affiliate links or reviews appear.

How publishers disclose “material connections” to the consumer is entirely at the discretion of the affiliate marketing team. There is no rule stating what the paid-relationship disclosure must articulate.

The FTC simply wants the average consumer to understand that a publisher is benefiting by the promotion of a product or brand on their site. Indeed, the average consumer is likely unaware that affiliate marketing exists in the first place, so it is important to make disclosure statements clear, concise, and comprehensible. The disclosure is required to be visible across all devices.

In a settlement with the company Legacy Learning Systems, the FTC required monthly disclosure monitoring of their top 50 affiliates, along with randomized monitoring of 50 additional affiliates. Employing a similar process is in all companies’ best interest. If the affiliate program is too large to track manually, automated software to monitor publisher content might be necessary.

A written compliance process should also be in place. If an FTC investigation is initiated, they may ask for established procedures to identify violations. A memo that outlines the company’s disclosure requirements, the process for identifying violations, and a framework for resolving known violations, will satisfy this requirement.

With that said, every company is legally responsible for ensuring the compliance of their program. It is crucial that companies understand the FTC Act and the requirements it imposes upon them.

Mason Smith is a Sales Manager with BrandVerity who specializes in performance marketing compliance.

This article appeared in issue 28 of FeedFront Magazine, which was published in October 2014. http://issuu.com/affiliatesummit/docs/feedfront-28

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Disclaimer:  This article is provided for informational purposes only. It’s not legal advice, and no attorney-client relationship is created. Neither the author nor FTC Guardian, Inc. is endorsed by the Federal Trade Commission.