August 21, 2014

Update on Legal Issues in Affiliate Marketing

Editor’s Note: Here’s another installment in our series of  coverage from the Affiliate Management Days conference – this one on the new legal landscape of affiliate marketing. This series of articles is on topics of interest to businesses that offer affiliate programs. More coverage of #AMDays.

 

Gary_KibelGary Kibel (pictured), Partner at Davis & Gilbert LLP, spoke at #AMDays about legal issues in affiliate marketing.

Gary began with an attention grabbing statement that “as an affiliate manager, you are a trusted advisor.”  As such, affiliate managers need to know enough about the legal landscaping of affiliate marketing to speak wisely to it and provide resources for more information.  This scope extends to online marketing as well.

The highlights of his session are provided below.

Deceptive Advertising

  • Be sure your advertising meets the requirements of FTC.
  • Disclaimers can be helpful but it should be a good disclosure.
  • Disclosure is a fluid concept, dependent on multiple factors.
  • Consider the placement of the disclosure.
  • Be very careful when you use the word “Free.”
  • Omissions can also be a violation and considered deceptive.
  • Everyone is responsible from the marketer, to the affiliates, to the affiliate networks.  This means you need to monitor the affiliates’ marketing efforts and make sure they are consistent with your brand’s.

Copyright and Trademark

The first step is to dismiss the myth that everything on the Internet is free.   Copyright is defined as an original work of authorship. This includes images and content.  You cannot grab something online and use it in your promotions.  Photographers are very aggressive when they see their photo online.  Be careful and mindful here.

Trademarks are less stringent. You can use another person’s trademark without permission but you can’t do it in a way that is confusing.

Affiliate Marketing Contracts

Gary also talked about legal issues in affiliate marketing contracts, and what these contracts should include.   I know I will be double checking future contracts for all my online services, not just affiliates:

Contract terms to include:

  • Parties to be bound; do not use personal name, use business name.
  • A term and cancellation.  Don’t do evergreen contracts that have no end limit.
  • Fees – think of penalties/holdbacks.
  • Include escalation provisions for disputes.
  • IP ownership – make sure you own data.
  • Include restrictive covenants.
  • Be careful about non-competes and non-solicitation clauses (customers and employees).
  • If something goes wrong you need to protect yourself.  Create a limitation of liability.
  • Indemnification clauses:  helps if a third party makes claims.

Privacy

And of course, there could not be a legal discussion about online marketing without addressing privacy. It is important for affiliate managers to understand the FTC Fair Information Practice Principles.  Rules may vary based on audience and products.  Here are some key components.

  • Be sure to notify consumers about your privacy policies.
  • Give them choices to be included or opt out.
  • Give them access to communicate with you to opt out or with questions.
  • Be sure your data is secure.  Provide a plan of what you will do if the information is no longer secure.
  • Be careful what data you collect online.  Just because it is available online doesn’t mean it is wise to collect it.  While there is no law that says social media harvesting is against the law but it could be perceived as unfair
  • COPPA – you cannot collect information from children under 13 without a guardian authority.  FTC defined personal information as a consistent identifier. You cannot cookie a user under the age of 13 due to the recent COPPA updates.

Social Media

Gary also discussed social media.  You are responsible for your affiliates as well. So be sure your affiliates are playing by the rules.  Below is a quick summary – but do your research.

  • If you are using social media for professional purposes be sure you are familiar with the terms.  They change all the time.
  • Endorsement and testimonials:  you need to fully disclose your relationship with the testimonial if they are hired or receive any compensation.  Bloggers need to disclaim if they are being sponsored to promote the product.  This includes free products.
  • You cannot make fake reviews on your products.
  • Everyone needs to abide by long-held principles of truth in advertising.
  • There are no magic legal words. It is about being honest and using clear communication.
  • How to disclose on Twitter. Use hastags like #spon #paid  to let people know your relationship with the company. Make sure your blogger affiliates know this.
  • Control your content.  Be careful what you say online and what people say online including your affiliates.

Behavioral Tracking

He lightly touched on changes in the industry and a demand for more user control over behavioral tracking.  This could have a huge impact on our affiliate industry because cookies could get impacted as well.

Many browsers are implementing a browser application allowing consumers to choose “Do Not Track.”  It is a voluntary process.   Many browsers are developing within their systems. IE does defaults. Safari blocks 3rd party cookies.  This could have a big impact on affiliate marketing since we are cookie based.  It is important to follow this issue.

Gary’s quick summary was my favorite: Don’t be creepy when you are online.  And I would add: just try not being creepy over all.

Note: Gary’s remarks are for general information purposes only and should not be taken as legal advice. Please consult your own attorney for legal advice specific to your situation.

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Stephanie Robbins


Stephanie Robbins Stephanie Robbins is the owner at Robbins Interactive, an eRevenue consulting agency specializing in launching small businesses online. She manages the integrated online presence for all her clients including affiliate marketing, social media, search engine marketing, store management and brand monitoring.

2 Reactions

  1. I have my own affiliate marketing website so I have been involved in a lot of reading on this topic. Nice and refreshing to read a serious article on the legal side of this wonderful area, and nicely condensed. Well done.

  2. Hi! I was looking into having a booth at a local festival to promote my website with affiliate marketing. I would have business cards and other informations about my affiliate links as well as order forms for the affiliate products or possibly pay to have internet access so people could order online right there, but a friend has told me that I would need a business license for this. I do not directly sell these products. The orders go to an actual business–not me–and then the products get shipped directly to the customer–from that business. Are affiliate marketers “businesses”? Thanks for any info you can give me on this

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