Archive for the ‘Affiliate Marketing’ Category

The Law for Affiliate Marketing: Privacy Policies

Posted by | Affiliate Marketing, Privacy | June 24, 2014

Disclaimer: Obviously, this blog does not provide legal advice. How do you know? This is free. Legal advice you have to pay for.

Our overview of affiliate marketing rules now moves into privacy policy requirements. Online privacy is always in the news, and the balance between users’ privacy and your companies need for information is always going to be tricky. A site’s privacy policy explains to your users what information is being collected, and how it’s being used. This way, users can make an informed decision about working with you.

Do You Need a Privacy Policy?

Privacy policies are not legally required by the federal government. However, some states do require them. California requires privacy policies where the site collects information from any California resident. That’s right – resident. It doesn’t matter where you are. Unless your business in no way attracts users in California (or any of the other privacy policy states), you should put together a privacy policy.

Beyond the legal requirement, they’re a good idea anyway. At this point, users expect them. They’ll never read the damn thing, but it’s comforting to know it’s there. Sites without a privacy policy seem less legitimate. Some business will not even work with companies that don’t display privacy policies.

Finally, it’s just plain fair to your users. Remember, they’re the ones you’re trying to persuade. Ultimately, it’s their information and it shouldn’t seem like you’re sneaking it away from them. Let them make their own decisions. Respect your customers, and they will respect you.

Following Your Privacy Policy

I say this so often it seems like a mantra – Follow your privacy policy. While there is no federal law requiring a privacy policy, the FTC does require those with a policy to comply with it. And they love to enforce this one, even when the site didn’t put any thought into making it. They consider it a “deceptive” practice to post a privacy policy, but not follow it. If you remember the discussion about using disclosures to avoid deception, then you’ll know that you can’t tell customers one thing, and then do another.

Snapchat recently got caught up by the FTC for failing to comply with its privacy policy. The policy stated that users’ information would be deleted, which was the whole purpose of the app. However, there were so many ways to save the information and get around the deletions, that it was completely ineffective. Snapchat had to change their policy (notice they didn’t fix the app) to say that nothing would be deleted. Similarly, the FTC filed a complaint against Google because it was using information without permission to build the now defunct Google Buzz.

Once you put that policy out there, you need to know what it says and ensure that it matches your actual practice. Don’t just copy and paste something you found on another site, since lazy drafting is not a defense.

Don’t Forget the Little Children

The law is particularly strict when it comes to kids’ information. While a privacy policy isn’t required by federal law normally, it is if your site collects information on children. Under COPPA, sites cannot collect information from users under 13 without the guardian’s consent. This includes cookies.

This is a particularly tricky area, since it’s not always easy to know when users are under 13, and COPPA compliance brings in a whole array of requirements. The important thing to remember is that you are responsible for third parties. This means that even if you do not collect any information from kids, if one of your third party plug-ins or apps does, then you must comply with COPPA (they need to as well). It also means that you are responsible for your affiliates, so make sure they understand COPPA and won’t violate it.

What Goes Into a Privacy Policy

The general rule is to simply make clear what information you are collecting, and how it’s being used. Let them know if you’re selling it to third parties, or keeping it safe for them. Here are a few things to make sure you include:

  • What information is being collected;
  • What steps you are taking to make sure personal information (name, address, phone number, etc) is secure;
  • Whether you will share the information with anyone outside your, whether you sell it or not;
  • Let them know how they can opt out of communications, or modify/delete their information;
  • Unless you prohibit kids from visiting your site, include COPPA information like how a parent can delete their kids’ info;
  • Tell them how you will notify them when the policy changes (because you need to update your policy as you upgrade your business); and
  • The effective date of the policy (when it begins).

Depending on your practices, there may be specific clauses to add. For example, if you’re using Google Adwords remarketing, then they have specific language they want you to include in your privacy policy. You may also need language if you’re using analytics, Facebook integration, or other info sharing systems.

Do It Already!

A privacy policy is usually the last thing put on a site or app, and too often ignored. But it can have significant consequences. If you don’t want to mess with it, hand it off to an attorney. You’ve got enough to do already. If you do it yourself, make sure it matches your actual practices. Make notes of what your site or your affiliates are collecting, what kind of data security you have in place, and what you plan to do with all that information. Write it down. Now it’s 90% done. Put it through a privacy policy generator, like this or this. Then show that to your attorney to make sure it’s got everything you need. Finally, put a link on every page of your site or app so it’s easy to find. Common practice is to put it in the footer – you users will look for it there.

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The Law for Affiliate Marketing: Prohibited Advertisements

Posted by | Affiliate Marketing | June 06, 2014

Affiliate Marketing Worst Practices

Disclaimer: Obviously, this blog does not provide legal advice. How do you know? This is free. Legal advice you have to pay for.

Some of the largest complaints about affiliate marketing concern illegal and unethical marketing techniques. While it seems like that benefits the retailer, remember, the retailer can be held liable for the acts of the affiliate marketer. Plus, no retailer wants to be associated with crummy advertising, no matter who’s doing it.

Some practices go beyond just annoying, and may violate laws or open up liability. Adware and spam are now heavily regulated. Intellectual property issues, like copyright and trademarks, might lead to expensive court cases.

Adware and Spyware

For as long as there’s been an internet, there have been people trying to sell crap and spy on you. Adware and spyware are prevalent, and as such, they are prime targets for the Department of Justice and the FTC. Spyware faces legal issues under a number of federal laws, including the Computer Fraud and Abuse Act, the Stored Communications Act, and the Wiretap Act. There are also numerous causes of action (legal reasons to sue) for spyware. While spyware is not necessarily illegal, it runs into legal trouble all the time, especially when the company does not adequately disclose that it is uploading software and what that software does.

Consider the case of ERG Ventures. They were targeted by the FTC for uploading spyware and adware onto their customer’s computers by promising free lyrics, browser upgrades, and ring tones, plus their affiliates’ promise of free background music for blogs. This cost the small company $2 million. That’s a lot of money, especially if it’s the affiliate’s doing.


We all know spam is not only annoying, but in most cases illegal. The FTC is pretty aggressive about going after violations of CAN-SPAM. Spam is any “unsolicited commercial email.” That’s three things: (1) an email – this one’s pretty easy; (2) commercial – anything advertising or promoting a product or service; and (3) unsolicited – if they didn’t ask for it, don’t send it to them.

This is especially important when dealing with affiliate marketers. If they spam customers, the retailer can be liable. Fines can be up to $300 per email (though that’s unlikely to happen). Plus, CAN-SPAM judgments follow you even if you file for bankruptcy. If your affiliates are using email, have a talk with them. If it’s even possible they’re spamming, drop them and move on.

Any emails you send for your company should at minimum:

  1. Only be sent to those who have requested to be added to your mailing list (don’t trick them);
  2. Provide a way to unsubscribe;
  3. Put your address in the email.

There’s more you can do, but that’s a start.

Special note on Canada – Next month (July 2014), Canada’s new anti-spam legislation goes into effect. If you or your affiliates are targeting Canadian customers, you need to know about this, since the rules are pretty strict. Under this law, a customer’s agreement to receive emails happens for 24 hours after making a purchase or agreement, 24 months after signing a contract, or six months after making an inquiry into a purchase. This adds a time layer into the scheme, and requires the customer to actively pursue the retailer. Keep an eye out for this.

Intellectual Property and Keywords

Like everything else, retailers are liable if their affiliates violate a copyright or trademark. This often happens when the affiliate copies pictures from the internet onto their site, or uses a logo or slogan that they don’t own.

Copyright refers to creative stuff, like writing or images. All work is automatically copyrighted, so do not assume you can copy it because it is on the internet or does not have a © next to it. Stock photo companies are particularly litigious when it comes to unpaid for use of their photos. Trademarks are similarly automatically created, and are heavily policed by the owners.

An issue particular to affiliate marketing, is the use of trademarked keywords, like a brand name that relates to your product. This area of law is still difficult, since some courts say it’s illegal, and others say it’s not. So using trademarks as keywords is done at your own risk. But think, is your “Better than an iPad!” ad so good that it warrants fighting Apple in court?

If you do want to take the risk, then try to be safe.

  1. Never use the trademark in the text of your ads;
  2. Label your ads as advertisements; and
  3. Identify yourself or the retailer.

Next – Privacy Policies >>

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The Law for Affiliate Marketing: Disclosures

Posted by | Affiliate Marketing | May 29, 2014

Using Disclosures to Avoid Deceptive Marketing

Disclaimer: Obviously, this blog does not provide legal advice. How do you know? This is free. Legal advice you have to pay for.

The Basic Laws of Advertising

The Federal Trade Commission (FTC) is charged with stopping “unfair or deceptive acts or practices” in advertising. In doing so, it considers the three basic laws of advertising:

  1. Ads must be truthful and not misleading;
  2. Advertisers must be able to back up their claims (substantiation); and
  3. Ads cannot be unfair

What do these mean? Generally, any advertisement must not state untrue facts, or facts that could mislead people into believing untrue things. Basically, you can’t lie. Under this rule, even omissions can be considered misleading. So saying your new diet pill will help everyone lose weight, but neglecting to mention they will also grow fins, would be considered deceptive.

Disclosures in Advertising

full-disclosureSo how do you do this and retain decent copy? This is where disclosures come in. Disclosures are required any time you need to explain a concept more fully in order to keep it truthful. For example, your health product may need to disclose certain side effects or limits on effectiveness. Or perhaps you’re offering a 12 ounce bottle of juice. It may be a good idea to disclose that 12 ounces might mean 11.5 or 12.5 ounces, if you can’t get it exact every time.

One of the important rules to remember in affiliate marketing is that the affiliate must disclose their financial incentives. The FTC considers failure to disclose financial incentives to be a conflict of interests, and thus deceptive. Many affiliates use customer reviews, website reviews, social media posts, or other non-obvious advertising tools. All of them are still required to include the disclosure of compensation and conflicts. This is true even for free products.

Placing an Effective Disclosure

In 2009, the FTC issues guidelines regarding endorsements and testimonials in advertising. Basically, disclosures must be frequent, clear, conspicuous, and require no action.

  1. Frequent – This means that the disclosure must be included on any and all pages that may have the advertising language, whether it be a blog post, a tweet, or a testimonial.
  2. Clear – The disclosure should make very obvious that the advertiser is receiving compensation for the material.
  3. Conspicuous – It should begin with the word “disclosure” and be immediately easy to see.
  4. Requires No Action – You can’t hide the disclosure in a link. Also, the disclosure should be right up front and the user should not need to move the page or scroll to find it.

Disclosures in Social Media

Disclosures are required any time an affiliate is being paid for their referral. This includes reviews, blog posts, and social media. It is even required when there is a character limit like Twitter. Try using hashtags like one of these:




Don’t use #spon The FTC has already said that’s not sufficient.

And Now You Know

You can read it from the FTC themselves in the link below. Now that you know everything there is to know about disclosures, I am sure you will have no problem acting on it. Of course, if you do have more questions about your particular ads, then think about speaking with an attorney. Better to avoid a lawsuit than avoid an attorney.

FTC – Disclosure Guidelines

Next – Prohibited Advertisements >>

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The Legal Side of Affiliate Marketing

Posted by | Affiliate Marketing | May 27, 2014

Keeping Your Affiliate Marketing Arrangement on the Up and Up

Disclaimer: Obviously, this blog does not provide legal advice. How do you know? This is free. Legal advice you have to pay for.

Over the next few weeks, we are going to discuss some of the legal issues surrounding a very popular online business model – affiliate marketing. If you are unfamiliar with the practice, affiliate marketing is a relationship between a retailer and affiliates who market and sell products on the retailer’s behalf. The affiliate gets a commission from each sale that they bring in.

While this seems on the surface like a fairly unremarkable business relationship, it actually brings out a number of important legal issues, especially since it is regulated by the Federal Trade Commission (FTC). The laws behind the FTC prohibit “unfair or deceptive acts or practices” by advertisers, and covers most mediums including the internet. The FTC has also promulgated regulations for many sectors and actively enforces deceptive advertising.
Of course, the FTC is not the only law in town regarding internet businesses. Most internet laws will have some effect on affiliate marketing, since so much of the practice occurs online. The first thing to remember is that the FTC and the courts have been very willing to hold the retailer liable for the affiliate’s actions. This means that if your affiliate breaks a law, you as the retailer may need to pay the fines or damages. Therefore, it is very important that you carefully monitor all affiliate advertising.

For this post, we will just give a very general outline of some of the more pressing legal issues that you should be aware of if you are an affiliate marketer or looking to hire an affiliate marketer. We will expand on these issues in the coming days.

Required Disclosures

The FTC prohibits any deceptive advertising practices. They have interpreted this task very broadly. Not only do they enforce false advertising, but they also require certain disclosures in ads. For example, any copy that requires qualifiers in order to be true, must include disclosures explaining the qualifiers. All disclosures must be clear and conspicuous so that the reader will easily see them. In addition, the FTC has determined that failing to disclose an affiliate marketer relationship is deceptive. This means that any affiliate marketers who are earning money from their advertising must disclose their financial incentives. This is required even for social media posts, customer reviews, and blogs.

Read more about Disclosures

Prohibited Ways of Advertising

Affiliate marketing has gotten a bad reputation lately for illegal and unethical practices. The government provides hefty fines for marketing that uses spam or adware. Beware of marketing using brand names as trademark and copyright issues may arise. And avoid negative advertising, since it may be more trouble than it’s worth.

Read more about Advertising


Always follow your privacy policy (I can’t stop emphasizing this). Give people an opt-out provision and keep their personal data secure. Know your COPPA rules regarding collecting kids’ information.

Read more about Privacy Policies

Other Legal Best Practices

There are many things you can do to help protect your affiliate marketing business. Perhaps the most powerful move is to create a formal business entity to provide limited liability for the owner, so that they cannot go after your personal assets. Just as important, understand your affiliate contracts. There are many pitfalls and liabilities you can protect yourself from with a well drafted contract. Finally, remember that your website’s Terms of Service are your contract with your customers. Ensure it provides you with protection and a clear structure.

We’ll be talking more about each of these issues in more detail in the coming days.

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