So you’re interested in affiliate marketing, but want to get a better understanding of the legalities surrounding it. In this post, I’m going to answer the question...is affiliate marketing legal?
This post was inspired by fellow marketer David Sandy, so I figured I'd share my own experience as an affiliate marketer, while also referring to the Federal Trade Commission and other reputable sources to clearly answer any questions.
But before I begin, I’ve got to add this quick disclaimer.
Legal Disclaimer: This article is for informational and educational purposes only, does not constitute legal advice and does not establish any kind of attorney-client relationship with me. I am not liable or responsible for any damages resulting from or related to your use of this information.
Before I get into the nitty-gritty of how you should approach affiliate marketing from a legal standpoint and keep yourself fully compliant, here’s the quick answer.
Affiliate marketing is definitely legal and is a legitimate online business model that can earn you a lot of money. The way to remain compliant as an affiliate marketer is by disclosing the affiliate links you use to promote a product or service and earn a commission from every click resulting in a purchase.
Now, let’s have a closer look at some of the things you need to be mindful of when creating a website, using disclosures, and creating ads to run a legal affiliate marketing business.
As an affiliate marketer, you are able to promote a company’s products or services in return for a commission payment. There are many multinational companies such as Amazon and ClickBank that utilize affiliate platforms in their business.
Though there are many companies that utilize affiliate marketing, there are certain legal criteria that affiliate marketers must abide by in order to stay compliant.
Amongst this criteria, you must include disclosing any place that you may be putting an affiliate link on a web page such as:
How Is Affiliate Marketing Regulated?
In some form or fashion affiliate marketing is regulated by a country’s governing body. They are responsible for enacting the necessary regulations. In the United States, the Federal Trade Commission (FTC) regulates the laws focused around affiliate marketing.
The FTC focuses on protecting the consumer of these products that affiliates promote. Your audience must know when they’re clicking on an affiliate link and whether or not a company or you as a marketer are being compensated for it.
What this does is promotes a healthy relationship with your potential customers by building trust with your brand through open and honest disclosure of your affiliate relationships with companies and when you’re participating in sponsored deals..
If you’re online long enough, you’ll find that there are a lot of businesses that bend the rules for short-term gains. In the end, the ones that remain compliant by disclosing their affiliate relationships will win in the long-term and become way more successful.
Affiliate Marketing Compliance
Most people that want to earn a passive income online get into affiliate marketing. Reason being that it’s a low cost barrier to entry and requires very little maintenance to make a steady income. It’s also a very reliable income stream if done properly.
But it’s of the utmost importance that you run a legal and compliant affiliate marketing business if you plan on reaching an income of thousands of dollars per month.
Let’s have a look at some of the basic things that an affiliate marketer is required to do in order to remain compliant.
One of the most common complaints from companies that utilize affiliate marketers is the lack of affiliate disclaimers being placed where products are being promoted.
If you’re planning on getting into the business of affiliate marketing, you need to recognize the importance of including an affiliate disclaimer for ALL affiliate products.
An affiliate disclaimer should be used wherever you are using an affiliate link to earn a commission. It must be located on the same page as your affiliate links are and not require someone to click through to a new page to view the disclaimer. Doing this keeps you transparent with your audience.
When writing blog posts, you can either put an affiliate disclaimer at the end of your post (like I do), at the beginning, or in the footer of your site. Every affiliate marketer should make it a habit to do one of these because it'll allow you to stay compliant and not run into any legal issues with your affiliate marketing business.
If you should ever feel any doubt, just follow the 4P’s:
- Placement (Put disclosures close to the claim they qualify.)
- Proximity (Don’t make users scroll or zoom to see disclosure)
- Prominence (Make it stand out on the page.)
- Presentation Order (Make it “unavoidable” that consumers see disclosure before they can proceed.)
Registering trademarks is an important factor in all businesses, especially affiliate marketing.
When starting your affiliate marketing business it is good practice to not only make sure you register your domain name, but also doing a quick trademark search before doing so. A great place to identify existing trademarks is using the Trademark Electronic Search System (TESS).
Inside you’ll find the basic word mark search to look up the domain name you may be considering and see if there’s already a trademark for that name or a similar name which could conflict with an existing trademark.
Once your business is off the ground and your brand continues to grow, you may want to consider registering a trademark to protect your business.
A copyright protects the rights of creators and authors both online and offline.
Everything online isn’t fair-use. You’ve either got to have permission from the copyright owner in writing to be able to use certain content (usually photos) or create the work yourself.
Data security has become a top issue as an affiliate marketer. With more and more gaffes coming from big tech, more people are becoming aware of their data and how it’s being used.
Stock Photos & Videos
Stock photos and videos are an important aspect in affiliate marketing. It allows us to get our point across when promoting products.
There are numerous free stock photo sites that you can use, but not all of the photos can be used for the same purpose. Some photos are restricted to just personal use on your website, and other’s allow for commercial use, but may need you to give credit or pay a small fee.
I recommend using a pay website for stock photos and videos or just taking your own photos and videos to ensure you stay compliant.
The stock photos site that I use and have found to be really great for finding everything that I need is Deposit Photos and if you must use a free option, then go with Pexels.
Collecting Personal Information As An Affiliate Marketer
Name and contact details
If you’re collecting any personal information then it must be addressed.
As an affiliate marketer, you're going to be using an email autoresponder and opt-in forms to collect information. Typically, you’ll be collecting names and email addresses.
It’s very common to collect customer purchase history to determine the ROI (Return On Investment) for your business.
If you plan collecting such information, then make sure you’re disclosing how that information is being obtained and kept. It is very important that your visitors know that data is being collected.
Be sure to disclose any transactions and communications with customers.
What Steps Are Required To Legally Run An Affiliate Program For Your Product?
In your journey as an affiliate marketer, you may get to the point in your business where you create your own product with an affiliate program attached to it. This is another aspect of running an affiliate marketing business that requires compliance.
Here are some of the things you need to be aware of to legally run your affiliate program.
Terms Of Your Affiliate Program
The terms and conditions for affiliates are extremely important to avoid a letter from the FTC. This can include a description of the program, policies, fee payments, and more.
Setting Standards For Your Brand
An affiliate application helps to protect your brand. You can narrow down who you want to accept as an affiliate of your products to ensure that they are promoting it ethically. Remember you are responsible for the actions of your affiliates.
Final Thoughts On Affiliate Marketing Being Legal
It’s not difficult to run a compliant affiliate marketing business. You just have to understand what the FTC or your governing body wants and just do it. Remember, when in doubt, always consult an attorney on the legalities of your business.
The info I’ve provided is not a one-all solution, but it is a starting point in getting some of the more important matters in place when running a compliant affiliate business.
Ultimately, by promoting products as an affiliate you need to disclose your relationship with other companies to your customers, it’s as simple as that. This protects the rights of the consumer and keeps your business protected as well. It also goes a long way in building trust and establishing a reputable brand.
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