Are Affiliate Managers and OPMs Responsible for Disclosure?
Earlier this year, the FTC updated its guidance regarding disclosure of advertising in blogs and on social media (See .com Disclosures: How to Make Effective Disclosures in Digital Advertising.) It got a little bit of attention, but mainly from attorneys and “the sky is falling” types. A few of us wrote about it, but not many of us affiliates have actually started obeying it. Why should we? The guidelines basically say that affiliates will not be held liable, the merchants will. It will just be a lot of work for us to make changes to our sites.
But the FTC isn’t laying low in this. In fact, they are moving forward even further with a workshop scheduled for December to “examine the practice of blending advertisements with news, entertainment, and other content in digital media.” The end result may be even more “guidance” that restricts how affiliates operate.
I’m surprised that affiliate managers and Outsourced Program Managers (OPMs) haven’t jumped on all of this. In fact, I thought they would be the ones leading the charge to get affiliates compliant. Why? Because I think they are the ones actually most responsible for all of this.
What Are the FTC Guidelines?
In short, the new doc.com Disclosures are just a clarification of existing law from the Federal Trade Commission Act. They regulate “unfair or deceptive acts or practices.” I wrote a previous post that describes it all in much more detail and is aimed toward affiliates (Affiliates Take Note: New FTC Disclosure Guidelines).
The new guidelines clearly state that disclosure law applies to blog posts and social media, even where you have limited characters to disclose. The guidelines also apply whether you are making a commission off of your links, received a placement fee, or even just received free product for the review.
The guidelines make it clear that the “old way” of putting a basic disclaimer somewhere on your site or even at the bottom of blog posts no longer counts. If you put an affiliate link on Facebook or Twitter, you must disclose that it is an advertisement BEFORE the link. How many people do you see actually doing that?
Who Is Liable When the Rules Are Broken?
The FTC has been clear so far that bloggers will not be liable for the advertising. It really doesn’t make any sense. If the rules apply to us and we break them, why won’t we get in trouble? I suspect it is only a matter of time before this gets changed.
Merchants are completely liable. Just ask Legacy Learning Systems, who happened to be the first casualty in the enforcement of these rules. Because affiliates were giving them positive “reviews” and not disclosing their affiliate links, Legacy had to fork over a $250,000 settlement. Plus pay lots of attorney fees. Plus now be monitored closely by the FTC for years to come.
They weren’t doing anything that the rest of us are not doing. Someone just complained and they got caught (probably a competitor).
Why Affiliate Managers Should Be Responsible
The average merchant doesn’t have much to do with managing their program. They either have one person in-house who understands affiliate marketing or no one in-house and have outsourced the management to an OPM. The merchant trusts that the affiliate manager (in either case) is the one who understands affiliate marketing and knows the rules.
Affiliate managers are the ones who are recruiting bloggers (who may not even know anything about affiliate marketing when they put up the links). Affiliate managers are arranging free products to be sent out in exchange for the reviews. Affiliate managers may even be negotiating “special placement” for a merchant in exchange for money. In short, affiliate managers are the ones working closely with the affiliates, encouraging them to promote the merchants and seeing first-hand where the links are being placed.
Merchants rely on the person managing their program to be educated about the industry, which includes things like advertising disclosure. The FTC itself has said that how the disclosure is “monitored and enforced” will be taken into account by the FTC if a complaint is brought against a merchant. That falls directly into the purview of the affiliate manager.
What Should Be Done?
I don’t want to create more work for all of us, and without a doubt these guidelines create more work for affiliates, affiliate managers, and merchants alike. At the same time, I fear for who will be caught in the cross-fire as the government continues to crack down on online advertising. I think it’s up to the affiliate managers and OPMs to include “disclosure terms” in their terms of service and spot check their affiliates to ensure that they are complying.
What incentive is there for me to comply if no one else is? If affiliate managers start requiring it, we will all have to comply or lose our relationships with the merchants.
There are resources out there to point affiliates to. Affiliate managers do not have to reinvent the wheel. Heck, just point your affiliates to this post going forward. Or the other links within this post.
The FTC is reasonable. If you have a couple of affiliates here and there who are driving almost no revenue and you don’t catch their links, I don’t think you will be in trouble. But if your top 10 revenue-driving affiliates are all violating the guidelines and you do nothing about it, you are opening your merchant up to a lot of liability. Take a page from the Legacy Learning Systems settlement and put into place a system where you monitor the highest ranking affiliates frequently and the rest on a spot check basis.
Many of us will be keeping our eyes open for the results of that FTC workshop in December, but waiting until then to make any changes to our sites would be foolish.
Who do you think should be responsible for disclosure violations–the merchants or the affiliates? What role do the affiliates managers play in education and compliance? Will you make changes to your disclosure if the merchants do not require you to make them?
(Fine print–I’m a lawyer but none of this should be taken as legal advice. Because that’s the way it works with lawyer bloggers)