Introduction

Welcome to the Simplifying Legal podcast, brought to you by Businessese. I’m your host, Danielle Liss.

Many years ago, someone told me I was the least lawyer-y lawyer she’d ever met because I helped make legal easier to understand. To this day, it’s one of the best compliments I’ve received in my professional life.

If you’ve ever felt legal was too scary, too overwhelming, too complicated, or just plain incomprehensible, you’re not alone. The Simplifying Legal podcast was created to help. 

In each episode, we’ll do a deep dive into a legal topic and give you concrete next steps so you can apply them to your business. 

My goal is for you to walk away from each episode thinking, oh, that was easier than I thought it would be.

Let’s get started. 

Episode Content

Hey there, I’m Danielle. Welcome to Episode 44 of Simplifying Legal for Small Business Owners. Today, I’m talking about FTC Disclosures for sponsored content and affiliate marketing.

Disclaimer: As always, before we get into today’s topic, a quick disclaimer. This podcast is meant to provide you with legal information only. It’s not legal advice and does not create any type of attorney-client relationship between us. Please don’t take any action without consulting your lawyer first. 

In 2013, I talked nonstop about the FTC’s disclosure requirements for sponsored content. Of course, that’s like 100 years ago in internet years. Now, depending on your industry, you may be a lot more comfortable with FTC Disclosures. 

The goal of this episode is to provide an overview of why the disclosures are required and what’s needed. If you engage in sponsored content or affiliate marketing, as either a brand or influencer, this episode is for you. 

Federal Trade Commission

Before I get into the disclosure piece, I want to talk a bit about the Federal Trade Commission, which is typically called the FTC. The FTC is a government agency with two main goals. One is to promote competition, which involves things like enforcing antitrust laws. This isn’t what we’ll be talking about in this episode. 

Their other goal is to protect consumers and this is done by stopping unfair, deceptive, or fraudulent practices. Under the umbrella of consumer protection, the FTC covers a really wide range of things, like dealing with scams, robocalls, and so much more. 

The FTC protects consumers from unfair or deceptive practices in advertising. For example, recently, they’ve investigated false claims that companies make regarding whether or not a product can protect against covid-19. 

One of the many areas that the FTC covers is the use of endorsements and testimonials. (And, sneak peek – in this episode, I’m talking more about the disclosures needed in sponsored content and affiliate marketing; however, testimonials are important to many small business owners and I’ll talk more about testimonials and FTC compliance in the next episode.) 

The FTC has always covered advertisements in all forms, whether it was the yellow pages (remember those?) or tv and radio. 

How to Make Effective Disclosures in Digital Advertising

In March 2013, the FTC published “.com Disclosures: How to Make Effective Disclosures in Digital Advertising.” At that time, I was working as CMO and General Counsel for an influencer network and I will say that the release of that guide caused so much confusion and concern from bloggers. I remember that some bloggers felt that adding a disclosure on sponsored content was going to be “too much,” and they decided to stop doing sponsored content.

Eventually, the dust settled and we got into a better groove. Disclosures became much more common and bloggers became more comfortable that their audiences wouldn’t be turned off by sponsored content. Over the years, the FTC has also provided additional guidance to help clear up some gray areas and I’ll link to some of their guides in the show notes.

Current Disclosures for Content

So, almost 9 years after the .com disclosures made major waves in the influencer marketing industry, the conversation about disclosures is a lot different. Now, it’s expected. Sometimes, you’ll even see people disclosing that things aren’t an ad because they want to make sure their audience knows that they are sharing something outside of a partnership. 

Frequently, brands are leading the discussion in sponsored content campaigns by including their specific requests for disclosure, but seasoned bloggers and influencers are also much more comfortable having disclosure conversations when needed. 

Even some social media platforms, like Facebook, Instagram, and TikTok, have made it easier to disclose with branded content tools. 

But, even though people are more comfortable with disclosures, I still think this is an important episode for those who are new to sponsored content or affiliate marketing. Many small business owners know influencer marketing is a great way to raise awareness of their products and services, but they may not have the experience that a large advertising agency has. So, what do you need to know? Let’s dive in. 

Who Needs to Disclose

First, let’s talk about who needs to disclose. When we talk about sponsored content or affiliate disclosures, typically, the person disclosing will be a blogger or influencer. But, even if someone doesn’t label themself as an influencer, disclosure is still required. If you are endorsing and recommending a brand, either through sponsored content or as an affiliate, you need to disclose. 

If you still aren’t sure, the FTC looks to see if there is a material connection between the endorser and the company. This includes personal, family, or employment relationships between you and the brand. Or, if there is a financial relationship. 

The financial relationship is where most sponsored content or affiliate marketing comes in. In many of those cases, a brand is paying an endorser to promote the products. However, even if it is for free or discounted products, this is still a financial relationship and would be considered a material connection that requires disclosure. It doesn’t have to be a payment of cash from one party to the other. 

Since one of the goals of the FTC is to protect consumers from deceptive advertising, disclosure of these material connections allows the viewer to evaluate your recommendation. 

So, to answer the question of who needs to disclose, it’s a person who is promoting or endorsing a product or service when they have a material connection with the company.

When to Disclose

Next, let’s look at when to disclose. The simple answer for when to disclose is at the point that you are endorsing that product or service and you have that material connection. 

Ask yourself: am I getting something in return for this mention? That might be cash compensation, free samples, or discounts. 

Disclosure Examples 

Now, let’s go over an example. I’m going to use Businessese as the company. Let’s say I reach out to an influencer to do sponsored content for our website policies. They write a blog post about the product. The blog post needs disclosure and we’ll talk about how to do that in a moment. 

But, what happens if the influencer also wants to promote the Businessese content contributor agreement in another piece of content. There, even though we didn’t contract for that sponsored content, there should still be disclosure since we have a financial relationship for the other products. That material connection is still there.

If you are an influencer and you’ve worked with a company on multiple campaigns, you can’t assume that your audience knows about the relationship, so you do need to continue to disclose. 

Remember when I mentioned that some influencers will disclose that things aren’t an ad? That isn’t a required disclosure for the FTC. Usually, that is so their audience knows that it isn’t sponsored and they are talking about a product because they really want to. 

How to Disclose

Now that you know who should disclose and when to do it, how do you disclose? 

The most important rule to remember is that a disclosure should be clear and conspicuous. 

• For example, the disclosure should be close to the endorsement. For a blog post, this means that you would say, this post is sponsored by X. It’s not sufficient to have a link in your footer to a disclosure policy that says you sometimes include sponsored content. It needs to be close to the sponsored content.
• Use clear language. Generally, #sponsored, #ad, and #advertisement are acceptable. Don’t shorten the disclosures into industry jargon that the average person won’t understand. For example, #sponcon is clear to other influencers, but it might not be clear to someone else. 
• You can also use natural language disclosures. For example: instead of #ad, you can say something like this post is sponsored by the brand. 
• You can also use the brand name in the disclosure, as long as it has additional language. For example, if Businessese is your sponsor, you can’t use #Businessese only. That doesn’t make the relationship clear. But, you can use #BusinessesePartner or #BusinesseseAmbassador. 

Disclosure Format

For appropriate disclosure, the format is also important. 

• If your content is written, the disclosure should be written. 
• When using an image on something like Instagram Stories, put the disclosure on the image. 
• If you are using a video, the disclosure should be in the video, not just the video description. If there is a voice element in the video, use both a spoken and visual disclosure. 
• And, when doing any type of live stream, give a disclosure periodically just in case people don’t watch from start to finish. 

As I mentioned earlier, many platforms have added branded content tools. This tool may be sufficient, but you may still need additional disclosure, especially depending upon the format. 

For example, if you are doing a sponsored video, but the branded content tool provides only a written notice in the caption that the content is sponsored, you should do additional disclosures for the video. 

Brand or Sponsored Content Considerations

Remember, if you are working closely with a brand or agency on sponsored content, carefully review what requirements they have for sponsored content. If they want you to use certain hashtags or phrases, you need to use whatever you are contractually required for the brand. 

Just make sure that the brand isn’t asking you to skip disclosure. That used to happen years ago, but most brands have become savvier. Don’t put yourself at risk by accepting any money from a brand that wants you to potentially put yourself in a position where you’d be liable with the FTC. Their fines can be tens of thousands of dollars, so it is not worth it. 

Other Important FTC Considerations in Sponsored Content

Remember, the FTC does look at more than just the inclusion of a disclosure. Here are a few other things to remember in your sponsored content that are relevant to the FTC: 

• Make sure you aren’t including any false claims about the product. I’ll be talking about using claims in marketing in a couple of weeks. But, for example, to use the same sponsored content agreement for Businessese that I used earlier: 
  • The blogger could say: “The templates had instructional videos that made it easy for me to customize and install them on my website.” This is their experience with the product and it’s true. 
  • But they couldn’t say something like: “The templates will protect you from absolutely anything and you’ll never be sued if you use them.” That’s way too broad and not necessarily true. 
• You also need to be honest about whether or not you’ve tried a product. Don’t talk about your experience with something if you haven’t tried it. 
• And don’t lie about your experience with the product. Sponsored content should include your honest opinion. 

Considerations for Affiliate Marketing

Now, let’s look at disclosures for affiliate marketing relationships. I’ve talked a lot about sponsored content, and a lot of the same principles are true for affiliate marketing. 

As an affiliate, you will typically try to get sales of a product or service. Then, when someone completes a purchase, you receive a commission of some kind. This can be cash or other incentives, like gift cards, etc. 

Even though your commission isn’t guaranteed for every click, you still need to disclose it. You are including the affiliate link because of the financial relationship that you’ve established with the company. There is still a material connection, even if every post doesn’t result in compensation. 

Where things can get tricky is that some people may not understand what an affiliate link means. To cover this, the FTC has stated that you should describe this more. For example, this is a common disclosure for a blog post with affiliate links: This post contains affiliate links where noted. This means we will receive a commission if you make a purchase after clicking on the link. 

This is a clear disclosure for someone who doesn’t know what an affiliate link is. 

Your Business is Being Promoted

So, what should you do if your business is the one being promoted, either in sponsored content or affiliate marketing? It’s simple: Make sure your sponsored content agreement or affiliate program terms address disclosure. 

Usually, a sponsored content agreement or affiliate program terms will contain the required guidelines. Then, after content is posted, make sure you do reviews to ensure compliance. If something isn’t disclosed properly, reach out to the person and ask them to make an adjustment.  

If you aren’t sure what you need, this is definitely a good time to talk to your lawyer so you can set a disclosure policy for your programs. 

Action Steps

This wraps up my tips on FTC Disclosures in sponsored content and affiliate marketing. Now let’s talk about today’s action steps.

1. If you are a blogger or influencer, are you using appropriate disclosures on your sponsored content? Or are you relying on a separate disclosure policy linked with your other website policies, like your terms and privacy policy? While a disclosure policy is nice to have if a reader wants more information, simply having that linked in your footer is not sufficient for a particular piece of content without another form of disclosure. 
2. Are you phrasing your disclosures properly? Remember, don’t use jargon or things that your audience might not understand. It needs to be clear and conspicuous. 
3. If your business is engaging in sponsored content or affiliate marketing, make sure you’re clear on the type of disclosure requirements you want to see. If you haven’t done this in the past, consider whether or not to make updates to your sponsored content agreement or affiliate program terms. 
4. Last, as always, if you have questions about disclosure, from either the influencer or brand side, please contact your lawyer. I regularly work with clients on this through my law firm, Liss Legal, and I’d be happy to discuss to see if we would be a good fit to work together. If you’d like to learn more, visit LissLegal.com. 

Thanks for joining me for today’s episode. Next week, we’re going to continue the conversation on the FTC and talk about using testimonials in your marketing. To find show notes for today’s episode, visit businessese.com/podcast.

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I’d love to connect with you outside of the show. Visit Businessese at businessese.com. If you have any questions, you can reach out via email at: [email protected]. 

Thanks for listening and we’ll continue Simplifying Legal on next week’s episode.