FTC Disclosures: What You Need to Know

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This presentation is from Performance Marketing Summit 2014 in Denver, CO (June 17, 2014). Session description: This session will provide guidance for advertisers and publishers to meet FTC disclosure guidelines. The current guidelines will be reviewed and case studies will be provided for best practices.

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FTC Disclosures: What You Need to Know

  1. 1. FTC Compliance: What You Need to Know
  2. 2. About the Speaker Mason Smith Sales Manager BrandVerity Twitter: @brandverity Web: www.brandverity.com
  3. 3. Overview • What is the FTC and what do they enforce? • How does this affect affiliate marketing? • What should you and your affiliates be doing differently? • Case studies: where the FTC has taken action, and what could have been done differently
  4. 4. The Federal Trade Commission and the FTC Act • The Federal Trade Commission is responsible for enforcing the FTC Act • Section 5 of the FTC Act establishes authority over affiliate marketing practices • The FTC is establishing precedents to take action on abuses through new advertising mediums
  5. 5. Affiliate Marketing: Satisfying FTC Requirements • Disclosing the financial relationship • Clear and conspicuous • Not at footer or separate disclosure page • Next to active affiliate links • Where does accountability for proper disclosures fall? • All parties are accountable!
  6. 6. Insufficient Disclosure by FTC Standards
  7. 7. How Disclosures Should Look
  8. 8. Important Cases Where the FTC Took Action • Learn and Master (Legacy Learning Sytems, et. al.) – 2011 • Cole Haan and the “#WanderingSole” Pintrest contest – 2013 • Green Coffee Beans (NPB Advertising, Inc., et al.) – 2014
  9. 9. Legacy Learning Systems, et. al. • Learn and Master affiliates drove at least $5 million in sales • Affiliates posed as independent reviewers while providing “best of class” ratings when they were actually paid endorsers • FTC settled for a $250,000 fine, and strict monthly compliance reporting
  10. 10. #Wanderingsole Pinterest Contest • Cole Haan held a Pinterest contest with a $1,000 cash prize • Participants were encouraged to “pin” photos using #WanderingSole • FTC did not pursue action – looked to establish precedent
  11. 11. NPB Advertising, Inc., et al. • Around April 26, 2012, Dr. Oz proclaimed Green Coffee Bean Extract a “magic” weight loss supplement • Soon after, Pure Green Coffee incorporated as a business and began advertising through affiliates • The merchant and their affiliates drove traffic through banner ads and paid search ads • Product testimonials were misrepresented, and fake news sites were created Affiliate Page
  12. 12. How Does my Program Become Compliant? • Some merchants are at higher risk due to the nature of their product • If a “material connection” exists between the advertiser and the merchant, there needs to be a clear disclosure • Disclosures must be clear across desktop, mobile, and tablet devices • Affiliates, especially content affiliates, must disclose they are being compensated when giving positive reviews • Review your top affiliates sites once a month – randomly check in on non-top performing affiliate pages • Important - create an internal memo that lays out your compliance process • Document instances where advertising behavior was corrected – screen shots and dates found
  13. 13. How Disclosures Should Look
  14. 14. Resources • Rachel Hirsch – Ifrah Law – a lawyer specializing in FTC litigation and a friend of BrandVerity • The Performance Marketing Association – www.thepma.org • The FTC website – www.ftc.gov • Myself and BrandVerity – mason@brandverity.com

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