FTC Guidelines
It's important you are aware of the FTC (Federal Trade Commission) guidelines and how that affects you as an affiliate marketer.
Basically the FTC has released a set of guidelines for using testimonials and endorsements in your sales, advertising and marketing.
They’ve brought out these rules to stamp out sites that display for example, fake results of a product they’ve never used, fake photos and made-up or grossly embellished testimonials.
(Owners of these sites often tout “risk free trials” but fail to mention recurring billing.)
Basically any deceptive and deliberately misleading sites that are not FTC compliant are what they will prosecute against. The FTC wants to safeguard the public who believe these sites are real and really do buy products based on harmful misinformation.
At the time of print the maximum fine was 11K USD. Before being fined you will get a warning. (And in case you don’t have a contact email address they will find you via your hosting or domain registrar.)
As an Affiliate Marketer these guidelines do affect you. Even if you are not in the US the country that you are in now will likely follow suit with their own versions of this act. And if you do advertize in the US now then these rules do apply and may affect you.
As well as being truthful in your marketing you must also be transparent. You as an affiliate marketer must make it clear you are benefiting financially from the recommendations you make. Basically your promotions cannot be disguised as “personal preference” or “news sites”.
It is up to you how you choose to interpret (and how worried you are about) this act. At one end of the spectrum underneath each and every affiliate link you can say something like… “Note: The above link is a sponsored advertisement for such-and-such product. The owner of this website is not a bona fide user of such-and-such product being recommended.”
(Mark has said exactly this with one of his sites and found through testing that his sales decreased by 10%)
That said the FTC makes the laws strong so they can prosecute the more malicious marketers who advocate “make money scams”.
If you don’t follow the recommendations exactly they’re unlikely to spend money pursuing you, if you’re an otherwise honest marketer (who provides quality sites with plenty of content sprinkled with affiliate links.)
At the other end of the spectrum you can still adhere to the FTC’s guidelines without being so explicit by having a disclaimer on each of your webpages. Most of Mark’s sites state in the footer, “The owner of this website is an affiliate of the products promoted.”
In a nutshell you are responsible for any false, misleading or unsubstantiated claims you make. The FTC states that at the time you endorse the product you must be a bona fide user of it. If you are not, then say you are not.
Any testimonials you use must reflect “generally expected” results. And not “exceptional” results. If you are a product owner you must carry out market research to find out what the norm is—so any claims made can be backed up and matched against existing data.
The same applies to email newsletters. As an affiliate marketer state in your footers that you earn commissions from the products you promote in your emails. (Mark has tested this and his sales haven’t been affected.)
Regarding banner advertizing—you don’t have to be transparent that you are earning money from any sales made. This is because banners are considered obvious as sponsored advertising.