Most people know that the U.S. Federal Trade Commission (FTC) regulates trade, both in the “real world” and online. If you didn’t know that, now you do.

Their main objective is to ensure that advertising is truthful and not misleading. And, they make sure people don’t use unfair methods of competition and unfair or deceptive acts or practices.

It’s pretty vague, I know, but that’s what the statute says. Check it out here if you’re interested – Unfair Methods of Competition.

Luckily, there are rules to shed some light on the statute. It doesn’t matter if you’re involved in internet marketing or direct mail advertising, the rules apply to everyone involved in trade in the U.S.

More specifically, the FTC regulates endorsements and testimonials in advertising.

Testimonials are those fancy little quotes from customers that used to be poor until they bought your product and now they make $10,000.00 per night, while they sleep, on autopilot, with no work whatsoever.

Yes, those are testimonials.

An endorsement is anything that consumers are likely to believe reflects the opinions, beliefs or experiences of a person, other than the advertiser. So, when you write on your blog or website that you have tried a product and it’s the greatest product with the best features ever, you are “endorsing” a product under the FTC guidelines.

So, what difference does it make if you give an endorsement or a testimonial? Well, there are some things that you can’t do if you’re giving an endorsement or testimonial.

Since the FTC treats both endorsements and testimonials the same, let’s just refer to both as E&T to make things a little easier.

E&T MUST BE HONEST

I shouldn’t have to say this but I do. You can’t give a dishonest E&T. It has to be truthful. It has to be based on your honest experience or findings. It has to be your honest opinion.

If you’ve never used a product before you can’t tell your readers how awesome it is. If you’ve never read a book, you can’t say that it was the most fascinating book you’ve ever read and then promote it.

You can still advertise the products on your website, but if you want to stay legal, skip the E&T. Put it up as an advertisement with no extra commentary. When you add your 2 cents, that’s when the rules apply.

The bottom line is, if you’re gonna talk up a product, be sure it’s the truth, based on your own experience.

GENERAL DISCLAIMERS ARE NOT SUFFICIENT

Not too long ago, it used to be common to see this little phrase – “Results Not Typical.” Well, that phrase doesn’t cut it any more.

Typically, that phrase was used when people used testimonials. It was common in weight-loss and money making opportunities.

You might see something like, “I lost 100 pounds in 2 months with weight-away.”

Followed by – “Results Not Typical.”

Or, you might see, “I made $1,000,000.00 in one month with the make money system.”

Followed by – “Results Not Typical.”

If you’re going to use testimonials today, you can’t get away with a general disclaimer.

You MUST disclose the actual expected result. If most of the people buying your “make money system” make $0, you have to disclose that. If most people lose 0 pounds using your “weight away” product, you must disclose that.

The FTC presumes that any E&T shows the typical result that buyers can expect. If it is not typical, then you probably shouldn’t use it in the first place. If, for some reason, you feel like you have to use that exceptional testimonial, then you will also have to disclose the typical results.

Let me give you an example. Let’s say that you sold a “make money” product. Out of 1,000 units sold, one guy made $50,000.00 in 3 months. The other 999 people reported no income whatsoever.

If you use a testimonial from that one guy that made $50,000.00 in 3 months, the FTC presumes that anyone buying your product will get similar results. That’s not the case however. The typical result is $0.

You can’t use a general “Results Not Typical” disclaimer. You have to state that the typical result from people that buy your product is $0. Otherwise, you should not use the testimonial.

It’s also important to use verifiable evidence to support your claims. Results based solely on consumer E&T is not good enough for the FTC. Unfortunately, collecting verifiable evidence is not cheap. If you can’t afford to pay for the resources, you might want to reconsider using any E&T that demonstrates expected results.

DISCLOSURE OF MATERIAL CONNECTIONS

One of the most common points of confusion with the FTC rules is the disclosure of material connection requirement.

Here is the gist of it.

If you are endorsing a product and you have a connection (especially financial) with the product, and the connection is not obvious to the audience, you must disclose that connection in an obvious location. Make sense?

Here’s an example. I write a blog post about how great my web hosting company is. In the post, I include an affiliate link to the web hosting company where people can buy web hosting through my link. If someone buys hosting through my link, I get a commission. That’s a material connection that must be disclosed.

Your disclosure should be as close to the endorsement as possible. Not on some random legal disclosure page where the link can only be found in the footer of your website. It does no good there. The purpose is to inform the reader that you have a connection with something you are promoting and your opinion could be biased.

The disclosure doesn’t have to be anything special. It just has to disclose the facts. In some cases that might mean putting (affiliate link) next to your link. In other cases, it might mean disclosing the circumstances within the text of your content.

For example, if you’re a blogger and you frequently get free books to review on your website, you will have to disclose that fact if you write a review promoting one of the books you received for free.

The whole purpose of this disclosure requirement is to let the reader know of your potential bias. The fact that you get money if someone else buys the product you’re endorsing could bias your thoughts and opinions. That might not be the case, but the FTC wants the consumer to be able to decide.

Remember, this disclosure requirement applies when you are endorsing a product. If you have a sidebar labeled advertisements without any endorsement from you, then you will not need a disclosure, in most cases. If the connection is obvious to your visitors, then it’s very possible you won’t need a disclosure.

SUMMARY

One thing you might notice if you spend any time online is that there are violations of the FTC Act all over the place. There are website owners that could care less about being honest. There are people that endorse products and use affiliate links everywhere without disclosing the connection. That’s their choice. It could catch up with them sooner or later, or maybe not.

The FTC is not out patrolling the internet looking for people that failed to disclose an affiliate link on one of their blog posts. They want the big fish – organizations or agencies with numerous complaints and violations. That doesn’t mean they can’t come after individual bloggers, but it’s unlikely unless you’re intentionally violating the rules on a regular basis.

That doesn’t mean you shouldn’t follow the rules. Whether you use E&T’s properly and disclose material connections can affect the level of trust with your visitors as much as it could affect your legal future.

Do you disclose material connections on your website, in your emails, and on social media sites?