The FTC Drop an A-Bomb on Internet Affiliates
I’ve watched with an element of surprise, bemusement, and at times even “amusement”, this week as the affiliate come blogging world has thrown its arms in the air over the Federal Trade Commission’s (FTC, for short) newly released legislation regarding endorsements and testimonial ads.
If you missed the announcement you can read it on the FTC website, but for a more detailed description of what it is and how it might affect you, I’d also take the time to read TechCrunch’s article about it and then head over to Michel Fortin’s blog where you’ll find an active discussion going on.
Now, while I agree that this is something that we should all be aware of as website owners, bloggers and affiliates, much of the nonsense I’ve read over the last few days has left me somewhat perplexed. There are emails and blog posts flying around all over the Internet with headlines such as “this seriously affects you”, “affiliate marketing is dead” (Michel’s article had a rather more sensible twist to it than that) and one guy, who shall remain nameless, even emailed his subscribers yesterday with a message stating…
“Unfortunately, due to new FTC legislation, I’m forced to suspend all business until further notice. It simply isn’t worth the risk to my family and home to continue trading at this time”.
C’mon, that’s taking things a little too far. Armageddon isn’t upon us, not just yet anyway!
The FTC are simply trying to weed out the rogues and vagabonds who make a dishonest buck by making false claims, publishing fake testimonials and advertising results that are unlikely to be achieved by the majority of their customers. That’s it. There’s no big conspiracy, the FTC aren’t out to “get you” (unless, of course, you’re doing something wrong!) and there’s certainly no reason for you to shut up shop.
Remember that the FTC, like Trading Standards in the UK, is a “complaint driven” enterprise. In other words, if you’re operating legally and ethically, you aren’t misleading anyone and you run a good honest business, the chances of you EVER hearing from the FTC about anything at all are, well, slim to none.
Their job is to protect consumers and as a consciencious business owner that should obviously be your priority too. All they’re really asking you to do is to be upfront and honest. If you’re doing anything other than that, well, shame on you… you deserve to feel the wrath of the FTC. For the rest of us, we’ll be fine.
I think Lorraine Grula summed it up perfectly on Michel Fortin’s blog when she said…
“I’m not going to let it change anything I do, at least not right away. I’m already doing things above board, plus I’m a risk taker with an independent streak ten miles wide. If they come after me I’ll blog about the fact that they’re wasting taxpayer’s money on a witch hunt.”
Some, perhaps most, might disagree about that, but those are my feelings on the subject too.
Whether you agree, or disagree, feel free to comment below.
Paul Graham has worked as an independent affiliate for more than 15 years. He's helped to start and operate numerous successful Internet businesses, some of which have grown from basement operations into major corporations. If you'd like to learn how to create your own profitable affiliate business from scratch, go register FREE on Paul's website at 
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Thanks for posting this. I posted an important update based on recent clarifications made by the FTC…
http://www.michelfortin.com/affiliate-marketing/#update2
Thanks Michel. No offence was intended by what I said about you there BTW… I just found it all rather amusing. It seems like a bit of a storm in a tea cup to me. I’ll be very, very surprised if it’s a “game changer” as many people have said.
It’s too early to make an assumption about the consequences of FTC’s new ruling. We might as well observe further. Also, I believe that affiliate marketing will evolve with this changes. :-)
Yes, I agree Walter. A lot of people jumped on the bandwagon there with all of that “affiliate marketing is dead” nonsense, just to get visitors in the door, but like you say all we need to do is evolve, if necessary, and adapt our websites accordingly.
No big deal ;-)
~ Paul
Hey Paul – been following this story for a while. Why is our gov’t so scared (and yours for that matter) to let the market decide?! Everytime there’s a chance someone could get hurt, they come in to control, when in fact, what happens is TONS MORE people get hurt. B/c good people running fair and honest businesses get slapped with fines and red tape. It hurts the economy, etc….
Good lord, why everyone in this world isn’t a libertarian is truly beyond me. Fraud laws TAKE CARE of this problem already, but i know, lets add MORE bureaucratic nonsense to it to complicate things. Plus…. the market will decide. Any snake oil salesmen out there will quickly lose their audience if they are in fact liars. It’s like spam on twitter – it tends to take care of itself b/c people just simply stop following.
Sigh, if we could only leave the market alone! ;)
Ditto, ditto, ditto.
The thing is that this time not a lot has actually changed. They’re simply tightening up their legislation because it was totally outdated, but it isn’t going to create a flurry of prosecutions… there’s not a chance in hell of that.
All of the hype and propaganda about it, from people who should really know better, was just scaremongery. That’s it, in a nutshell.
Hope all is well with yourself and Mr Fennell Jr :)
~ Paul
Nice to read a sensible take on this. I have read so much hype about the FTC’s legislation, so it was a pleasure to read your article.
There is certainly a requirement to get rid of or try and control unscrupulous online traders.
I agree with both you and Walter that we just have to wait and see how it all pans out and adapt accordingly.
Hi Paul,
I don’t share the same opinion as a lot of these doomsayers say, but then again, I don’t think this is something that isn’t going to cause a lot of collateral damage in the form of some honest affiliate marketers being trounced right along with the so called ‘vagabonds’, as you put it.
First off, the law isn’t as explicit as it needs to be. Also, the fine is not enough to cause the big time scam artists to change any of their marketing tactics. It will cost many of them a lot more money in lost sales than the $11,000 fine will, if they start marketing honestly all of a sudden. This is not to condone dishonest marketing, but we all know it is far easier to make a killing if you don’t have pesky little things like morals, honor and ethics standing in the way.
On the flip side, the $11,000 fine will usually be more than enough to severly cripple, or put out of business altogether, the honest ma and pa affiliate marketers.
As a result, what you will be left with is a new playground for the affiliate scammers, created specially for them by the FTC.