The Federal Trade Commission (FTC) has strict rules and regulations for advertising, endorsements, and affiliate marketing relationships. Part of the FTC’s truth-in-advertising principles requires affiliates to disclose that they are receiving compensation in some form for endorsing or promoting your brand/product.
These rules apply regardless of the content being presented. If an affiliate may receive compensation for promoting your company’s products or services, they are responsible for disclosing the relationship to the consumer. While it is the affiliate’s responsibility to follow the guidelines, it is often the brand or affiliate program owner that faces scrutiny by the FTC and potential fines.
What Is an FTC Disclosure for Affiliates?
An FTC disclosure is a prominent statement that tells the consumer about the relationship affiliates have with your business as a retailer or product provider. This disclosure is a requirement in affiliate marketing because it protects the consumer. The FTC considers nondisclosure of any compensated endorsements, promotions, and such by an affiliate as an act of deception to the consumer. Furthermore, the FTC categorizes affiliate marketing in the same category as an endorsement, even if it’s not intended to be.
The FTC does not distinguish among types of endorsements. Whether you are providing commission on sales, leads, website clicks, or you offer free products and discounts, your affiliates must disclose this relationship and compensation to consumers.
The FTC provides an approved example of disclosure language: “I get commissions for purchases made through links in this post.”
While it’s not necessary to use this exact language, affiliates are required to make it clear that they receive compensation whenever a consumer uses their links to buy your products or services.
- A “Buy Now” button is not adequate notice as it doesn’t fully reveal the relationship between you and the affiliate.
- An “Affiliate Link” label does not meet the FTC threshold as some readers may not understand what this label means.
- A button stating “Disclosure” or “Legal” is also insufficient.
Since disclosures must be clear and conspicuous, attempting to obscure the meaning or placement violates the guidelines. For example, it is inadequate to use small fonts that are difficult to read or use very light gray text on a white background.The FTC says “ don’t be subtle” about your disclosure. Be sure your affiliates make it prominent and easy to read.
Where and When to Place Disclosure for Affiliates
Where the disclosure is placed and when it is made is just as important as the disclosure itself. The closer a disclosure statement is to an endorsement, the better. The statement must be clear, conspicuous, and made visible every single time an affiliate promotes (in any way) your product. This allows consumers to decide how much weight to give to the disclosure.
The FTC does not approve disclosures that are hidden on “About Us” or “Terms of Service” agreements. They also disapprove of putting a disclosure at the end of a blog or article where readers would have to complete the article or scroll to the bottom to see it. Links to disclosure policies alone are not adequate. For example, telling visitors to click on a link to read your disclosure policy does not meet the FTC’s standards unless your affiliates provide the required disclosure along with a link for more information. Adding disclosures or links in site navigation, such as headers, footers, sidebars, or navbars, is not considered acceptable.
Not every visitor to your affiliate’s site will enter through the home page, so putting a disclosure on only the homepage is not sufficient. Since affiliates don’t know which page visitors will enter first, the disclosure must appear on every page that contains an affiliate link to your brand, product, and/or service.
Keep in mind that your affiliates need to determine proper disclosure placement for mobile devices. More than half of internet traffic in 2021 is mobile, which formats content differently from desktop views. Mobile versions may place affiliate disclosures at the bottom of the screen, where consumers would have to scroll down to see them.
Remember that FTC disclosure for affiliates needs to be prominent, noticeable, and as close to the affiliate link as possible.
The FTC rules also apply to social media posts. Suppose your affiliates include an endorsement and or link to your business in their Facebook or Twitter posts. In this case, they must disclose the relationship in the same manner as all other formats. Character limitations can make this challenging on Twitter or Instagram, but the FTC does not accept space limitations as a reason not to disclose. In fact, the FTC advises against using a social media format for endorsement if that format makes it impossible to provide the necessary disclosure. One option around this is to use the hashtag “#ad” in an endorsement post.
Even if a social media platform provided a built-in feature to disclose paid endorsements, it might not be enough to satisfy requirements. The FTC will look at placement in the context of the social media platform used. For example, on Instagram, users typically scroll through images. “A disclosure placed above a photo may not attract their attention,” the Commission states. In short, your affiliates are obliged to meet FTC disclosure compliance rules for affiliate marketing regardless of the type of platform used.
Disclosures should appear in a prominent place within the video itself. Your consumers can easily miss a disclosure in a video, especially if it only appears in the video description. Disclosures in the lower corner of a video may be challenging to read — especially on a mobile device. Consumers may not read the disclosure before clicking on the video.
Disclosures can appear at the beginning of the video or in proximity to any product mentions. If you or your affiliates provide the disclosure verbally, it should be read in a volume and cadence that is easy for consumers to understand. The language must be clear and straightforward. When putting a disclosure on the screen, it must be displayed in an easy-to-read format and stay on-screen long enough for consumers to read and understand.
The FTC is aware that some viewers may watch videos with the audio off, and others may only listen to the audio and not view the screen. Therefore, to fully comply with the regulations, both audio and visual disclosures are required by your affiliates.
The FTC clarified its position on social media influencers in 2020 with even stronger language: “When companies launder advertising by paying an influencer to pretend that their endorsement or review is untainted by a financial relationship, this is illegal payola,” said FTC Commissioner Rohit Chopra.
Influencers using affiliate relationships need to follow the same rules with clear and conspicuous disclosures to the products featured.
How the FTC Evaluates Affiliate Disclosures
There is no set formula to define the clear and conspicuous rules for affiliate disclosures. The FTC allows for creative freedom in content development as long as the necessary information is delivered. As a business owner, the best way you can comply with affiliate disclosure is to make sure your affiliates are following the seven ways in which the FTC judges how a disclosure meets regulations:
1. Disclosure placement and proximity
2. Disclosure prominence
3. Whether the disclosure for consumers is unavoidable
4. Whether other items would distract consumers from viewing the disclosure
5. Whether the disclosure is on each page and where an endorsement or affiliate link appears.
6. Whether video or audio disclosures are clear and easy to understand
7. Whether a reasonable consumer would understand the disclosure. In most cases, affiliates failing to follow the rules will most likely get a warning for the first offense.
The FTC has the power to assess fines and penalties for failure to comply, which can be substantial. Keep in mind that while your affiliates may get the warning letters, often, it’s your brand that will get the fines.
No Exceptions to FTC Disclosure Rules for Affiliates
There are no exceptions to the FTC disclosure compliance rules for affiliate marketing. From the most minor blogger to the largest corporation, FTC disclosure compliance rules for affiliate marketing apply to everyone. Consumers must be made aware if your affiliates receive compensation from affiliate links to your brand, product, or service.
Ultimately, the litmus test the FTC uses is whether a reasonable consumer can tell if someone is receiving compensation for providing an affiliate link. The FTC offers further clarification: if a substantial minority of users might miss a disclosure, that disclosure is not clear and conspicuous enough.
There is no upside to hiding that your affiliates receive compensation as members of your affiliate marketing program. Consumers have the legal right to know there is an agreement and potential compensation. It is a bad business practice to hide the information or make it difficult for consumers to find and understand the relationship.
The Bottom Line on Affiliate Disclosures
When managing an affiliate marketing program, you need to educate your affiliates on FTC disclosure rules. You should clearly define the requirements with marketing materials and contractual agreements. Questions could arise about whether an affiliate was properly disclosing their arrangement with your business. Therefore, having a legally binding document requiring your affiliate to follow FTC guidelines may help protect you against fines or legal issues. It may also give you grounds for terminating an affiliate relationship due to a breach of contract.