New FTC Regulations Affecting Your Business

There are new regulations for internet marketing from the Federal Trade Commission (FTC) that go into effect on December 1st. They will impact what you do in your business if you use certain types of internet marketing. If you have testimonials on your website, and I certainly hope that you DO use testimonials, you will want to become informed of how to respond to the new rules. If you review products or services on your blog that you received in trade or in order to review, you need to be in compliance. If you have others market and sell your products or services for you through affiliate relationships, or you are an affilaite for someone else, there is even more to consider in the new regulations.

The rules are the first revision of Guides Concerning the Use of Endorsements and Testimonials in Advertising since 1980. The purpose of the revision is to protect the consumer from misleading and fraudulent information, particularly in internet marketing. You can see the full text of the FTC rules including the helpful example scenarios. Internet marketers have been widely discussing what all this means and offering opinions. What the revisions require are new ways of disclosing more accurate information for the consumer. In some cases, this requires new legal language or more complete disclosures or more accurate descriptions of results. Transparency in the new key.

I am not an attorney and I am certainly not giving you legal advice of any kind. The purpose of this posting is to inform you of the need to learn more. I believe this is the type of change in regulation that ought to have you calling your own internet-savvy attorney for a consultation. Although I do not believe that a small coaching business is going to be an early target of active FTC prosecution, enforcement will be complaint driven so there is need for caution. You can read some on-line attorney opinions from Kevin Houchin and Mike Young. You should know I have no connection with either of these attorneys and am not endorsing their legal opinions. (Please note the irony in that disclaimer!) I recommend that you also do your own research and talk to your attorney.

Here is my understanding of how the changes may require you to proceed differently than in the past. First, testimonials must be reflective of the “generally expected performance” of your product or service. You can no longer quote the results of your best customer with the line “results not typical”.  You must include the typical results in addition to whatever else you say. You may use the big claims, but only if you describe the special factors that contributed to them and also include the typical results. In addition, it seems that you need data that show typical results to back up whatever you say – market research is required.  I don’t think of the new requirements as a negative in most cases because it also gives you the opportunity to discuss your guarantee or refund policies. Another important point to note is that if you use an expert or celebrity endorsement, you may use it only as long as that person uses the product and no substantial changes have been made to the product. Here is an excellent article by copywriter and consultant Michael Fortin about new ways to do testimonials.

Affiliate marketing is also impacted by the changes. Think transparency again and know that this means you must disclose any relationship you have to any product or service you endorse. Any relationship, any endorsement, anywhere. In addition, if you use marketing material that is provided for you as the affiliate, you are responsible for making sure the claims made are accurate before you use them.

The regulations go beyond simple requirements for the affiliate to include new responsibilities for the business owner. You, the business owner, are now responsible for the actions of your affiliates. Suggestions from internet marketers and on-line attorneys here include notifying all your affiliates of your expectation that they comply with the regulations. You may need to revise your affiliate agreements to include new language; you may need to collect applications from potential affiliates. After you read and understand the regulations and consult with your attorney, there are likely some types of changes that you will want to make.

Perhaps it would be helpful to you to see my action list for dealing with these changes although your best decisions could vary widely from my list. I plan to start action soon and have it well underway before the December 1st implementation date for the revised regulations.
1. Adjust the testimonials and endorsements on all of my websites and autoresponders if needed.
2. Develop a disclosure policy to post on my blog.
3. Develop and implement result measurement activities for my products and services.
4. Revise my affiliate marketing agreement and ask current affiliates to resign.
5. Develop an application for new affiliates.
6. Revise my current products that include product endorsements for others to be very clear about my relationships.

About the author – Janet Slack of Life Adventure Coaching and Solopreneur.Biz  is a specialist in helping coaches and other solopreneurs understand business practices in order to grow the successful business of their dreams.  Sign up for her free newsletter Biz Tips for Coaches or visit her blog for solopreneurs.