FTC Compliance: What You Need to KnowFTC Compliance: What You Need to Know

About the SpeakerAbout the Speaker

Mason SmithSales Manager

BrandVerity

Twitter: @brandverity

Web: www.brandverity.com

OverviewOverview

• 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

The Federal Trade Commission and the FTC ActThe 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

Affiliate Marketing: Satisfying FTC RequirementsAffiliate 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!

Insufficient Disclosure by FTC StandardsInsufficient Disclosure by FTC Standards

How Disclosures Should LookHow Disclosures Should Look

Important Cases Where the FTC Took ActionImportant 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

Legacy Learning Systems, et. al.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

#Wanderingsole Pinterest Contest#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

NPB Advertising, Inc., et al.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

How Does my Program Become Compliant?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

How Disclosures Should LookHow Disclosures Should Look

ResourcesResources

• 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