Affiliate Marketing: FTC Busts Fake Review Site
As you’re probably aware the FTC revised their guidelines on endorsements and testimonials used by affiliate marketers back in 2009.
These new guidelines detail exactly what the FTC considers deceptive endorsements or testimonials by affiliates.
The guidelines state, a positive review by a person connected to the seller – or someone who receives cash or in-kind payment to review a product or service – should disclose the material connection between the reviewer and the seller of the product or service.
Apparently the company Legacy Learning and Smith didn’t get the memo.
Legacy was required to pay two hundred fifty thousand dollars to settle charges of deceptive advertising practices.
According to the FTC’s report, Legacy Learning and Smith promoted their ” Learn and Master Guitar program” with Internet affiliate marketers.
These online affiliates portrayed themselves as every day users of the product and third party objective product reviewers. ( Which of course was not the case)
The FTC reports these online affiliate marketers used “Review Ad” affiliates to promote its courses by endorsements in articles, blog posts, and other online editorial material.
These online affiliates received commissions as a result of their bogus reviews and referrals.
The FTC Reports Legacy Learning and Smith sold more than five million dollars of “The Learn and Master Guitar” program.
The FTC states Legacy’s promotional tactics were deceptive because the reviews and endorsements by their online affiliates appeared to be written by ordinary consumers of their product.
Their affiliates also failed to disclose they were being paid a commission for every sale they made.
“Whether they advertise directly or through affiliates, companies have an obligation to ensure that the advertising for their products is not deceptive,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “Advertisers using affiliate marketers to promote their products would be wise to put in place a reasonable monitoring program to verify that those affiliates follow the principles of truth in advertising.”
In addition to the two hundred fifty thousand dollar fine, Legacy Learning and Smith will have to submit earning reports to the FTC for their top 50 revenue generating affiliate marketers.
Bottom line here is you need to check on your affiliates and make sure they’re following these guidelines.
After all, you don’t want to find yourself in hot water with the FTC.
If you’re promoting the products and services of others you’ll want to be transparent and truthful.
If you’re reviewing a product, make sure you buy the product and try it out for yourself.
You’ll save yourself from the FTC and you’ll write better reviews. This will translate into more affiliate commissions.
So what are your thoughts on this topic?
What are you doing to prevent rogue affiliates from getting you jammed up by the FTC?
What are you seeing other affiliates doing to protect their backsides?
I’d love to hear your thoughts so please post them in the comment box below.
Now go dominate Google,
P.S. Keep an eye out next week for an announcement on a brand new series of FREE webinars I’ll be hosting.
The topics will include SEO, online lead generation and online lead conversion.
Have a great weekend and I’ll talk to you next week.