This could change IM forever!! You're Sued!

[EJ Lear]

"If a blogger received a free sample of skin lotion and then incorrectly claimed the product cured eczema, the FTC could sue the company for making false or unsubstantiated statements. The blogger could be sued for making false representations."

I read this on the Financial Times and thought that it can be potentially devastating for affiliate marketing. But could stop the hype machine once and for all:

FT.com / Companies / Media - Advertisers brace for online viral marketing curbs

The stupid part is, they don't sue the bogus testimonial writer, they sue the product owner.

This is a shot across the Clickbank marketers bow.

Respectfully,
EJ

[Jeremy Kelsall]

All this means is that people will have to stop saying things that they know are not true....

Not really anything to worry about, at least not in my opinion.

[kanwarjot]

This will create problem for those who tell something and sell something..nothing to worry about genuine sellers

[EJ Lear]

I wrote:

"The stupid part is, they don't sue the bogus testimonial writer, they sue the product owner."

My bust, they sue both of you... What a joke...

[Neil Morgan]

Hi Jeremy

That's what I was thinking too.

But product makers might pull their affiliate programs altogether because they could be sued for the actions of others.

Some MLM companies don't allow people to have their own websites in case they're making false claims about the product or earning potential.

Cheers,

Neil

[Johnathan]

Originally Posted by EJ Lear

"If a blogger received a free sample of skin lotion and then incorrectly claimed the product cured eczema, the FTC could sue the company for making false or unsubstantiated statements. The blogger could be sued for making false representations."

I read this on the Financial Times and thought that it can be potentially devastating for affiliate marketing. But could stop the hype machine once and for all:

FT.com / Companies / Media - Advertisers brace for online viral marketing curbs

The stupid part is, they don't sue the bogus testimonial writer, they sue the product owner.

This is a shot across the Clickbank marketers bow.

Respectfully,
EJ

It's not necessarily 'new' because you could always be sued (i.e., a civil suit)... I don't think it would affect small time bloggers, but rather 'big time' bloggers that have a large audience... but the thing is (from what I've seen), big-time bloggers won't endorse a product they don't believe in -- because their reputation is on the line.

So it's kind of like saying 'We are going to blow smoke in your face if you make that claim'.

As for the product owner, they will simply add disclaimers to their website like many before them have done (but in the 'offline' world). 'Kevin' Trudeau comes to mind as a guy who puts in a massive disclaimer in his 'miracle' cures book. (Basically says, 'use your brain, if you're dumb, then don't use this info').

[EJ Lear]

Originally Posted by Neil Morgan

But product makers might pull their affiliate programs altogether because they could be sued for the actions of others.

That's pretty much what I was thinking, being liable for what someone else says is bogus. I don't think that anyone would win this kind of court case but it's a dangerous precedent.

Respectfully,
EJ

[Floyd Fisher]

Originally Posted by EJ Lear

"If a blogger received a free sample of skin lotion and then incorrectly claimed the product cured eczema, the FTC could sue the company for making false or unsubstantiated statements. The blogger could be sued for making false representations."

I read this on the Financial Times and thought that it can be potentially devastating for affiliate marketing. But could stop the hype machine once and for all:

FT.com / Companies / Media - Advertisers brace for online viral marketing curbs

The stupid part is, they don't sue the bogus testimonial writer, they sue the product owner.

This is a shot across the Clickbank marketers bow.

Respectfully,
EJ

This law has been around for ages. Glad to see they are finally cracking down on this stuff online though.

[SeanSupplee]

I am all for it more power to those trust worthy blogger and not ones who go around hyping everything up.

[hotlinkz]

More idiocy from our so-called "governing bodies"!

When was the last time the FDA was held responsible for allowing the distribution of drugs that have actually caused the deaths of hundreds or is it thousands? And now this!

This FTC crap is what happens when you pay people to sit around all day thinking of ways to control the lives of others while they themselves run rampant!

[4morereferrals]

Will force some skanky affiliates to clean up their act if they are culpable as well.

[Bill Farnham]

This has been going on for ages... Ask Irwin F. Kern if he knows anything about this stuff. He's got a Masters in Disasters on this.

But it didn't stop him from making a fortune in Internet Marketing.

You guys worry too much...

KJ

[newsecrets]

Originally Posted by hotlinkz

More idiocy from our so-called "governing bodies"!

When was the last time the FDA was held responsible for allowing the distribution of drugs that have actually caused the deaths of hundreds or is it thousands? And now this!

This FTC crap is what happens when you pay people to sit around all day thinking of ways to control the lives of others while they themselves run rampant!

I completely agree with Hotlinkz.

Many people in this thread are missing the point. This law is NOT about shutting down fraudulent testimonials and scammy reviews. (We already have other laws in place that take care of that. IF the issue here is fake testimonials and fake reviews, like the fake Acai review blogs, then they can just go after the people who post fraudulent reviews and testimonials - they don't need this law).

So this law is really about shutting down REAL and TRUE testimonials and reviews from REAL customers. If the FTC somehow doesn't "like" your real testimonials - watch out! (Remember, the FTC shut Frank Kern down because they didn't like his REAL testimonials. It was NOT about fake testimonials.)

In other words, this law is a total violation of our first amendment rights (freedom of speech).

What this law is saying, is that even if you bought a product that helped clear up your eczema (for example), you're not allowed to tell people about it.

That's ridiculous. A testimonial and a product claim are two totally different things. It's one thing to say "this product worked for ME personally". It's a totally different thing to claim "this product will work for YOU".

Also, the merchant has absolutely no control over what their customers post on their personal blogs! It's one thing to hold a merchant liable for testimonials that he posts on his own website. It's a totally different thing (and totally absurd) to hold a merchant liable for testimonials that are posted on his customers' personal blogs (which he has no control over)!

So those of you who think this doesn't affect honest merchants, think again. This DOES affect honest merchants.

In fact, if you really think about it, this affect honest merchants MUCH MORE than it affects scammy merchants.

Really, think about it. A scammy merchant who sells an eczema product that DOESN'T work, is NOT likely to get their customers raving about their product on their personal blogs (I'm talking about REAL testimonials here, not fake ones).

On the other hand, an HONEST merchant who sells an eczema product that REALLY works, is VERY likely to get their customers raving about their product on their personal blogs. (And then the FTC comes in and sues the merchant AND the customers!)

So, this law actually gives merchants an INCENTIVE to sell SHODDY products that DON'T work. That's how absurd this law is!

And if you think this doesn't affect you because you don't sell health products, think again. Today they impose ridiculous regulations on the health industry, and you let them get away with it... tomorrow they may be coming for YOUR industry.

This following quote applies here:

"They came for the Jews and I did not react because I was not a Jew.

"Then they came for the trade unions and I did not react because I was not a trade unionist.

"Then they came for the communists and I did not react because I was not a communist.

"Then they came for the social democrats and I did not react because I was not social democrat.

"Then they came for me and there was nobody left to defend me."

[thomashoi]

Don't go for the money, go for the benefits of your customers.

Be ethical and you don't need to worry at all.

[4morereferrals]

Nahhh DUDE ... it's just S.S.D.D. [ same **** different day ]

Been dealing with this crap in the offline world for 20+ years. Frivolous lawsuits are NOTHING NEW.

I've been transferring that risk to insurance co's for years.

If you're overly concerned with the defense costs associated with transacting business online. I suggest you inquire with your favorite commercial insurance broker about Cyber Liability programs to include Personal Injury and Advertising Injury Liability. Errors and Omissions cover, and Security Breach - for when the Russian Mafia jacks your customers CC's through your shopping cart vendor.

Buying the right policy allows you to have -on staff - on a moments notice a team of highly motivated, over caffeinated Legal BULLDAWGS to tear your frivilous lawsuit claimant a NEW ARSE on retainer at all times. Or they write a check, and you pay a small deductible. <--- its all relative

Originally Posted by newsecrets

I completely agree with Hotlinkz.

Many people in this thread are missing the point. This law is NOT about shutting down fraudulent testimonials and scammy reviews. (We already have other laws in place that take care of that. IF the issue here is fake testimonials and fake reviews, like the fake Acai review blogs, then they can just go after the people who post fraudulent reviews and testimonials - they don't need this law).

This law is about shutting down REAL and TRUE testimonials and reviews from REAL customers.

In other words, it's a total violation of our first amendment rights (freedom of speech).

What this law is saying, is that even if you bought a product that helped clear up your eczema (for example), you're not allowed to tell people about it.

That's ridiculous. A testimonial and a product claim are two totally different things. It's one thing to say "this product worked for ME personally". It's a totally different thing to claim "this product will work for YOU".

Also, the merchant has absolutely no control over what their customers post on their personal blogs! It's one thing to hold a merchant liable for testimonials that he posts on his own website. It's a totally different thing (and totally absurd) to hold a merchant liable for testimonials that are posted on his customers' personal blogs (which he has no control over)!

So those of you who think this doesn't affect honest merchants, think again. This DOES affect honest merchants.

And if you think this doesn't affect you because you don't sell health products, think again. Today they impose ridiculous regulations on the health industry, and you let them get away with it... tomorrow they may be coming for YOUR industry.

This following quote applies here:

[TiffanyDow]

Oops just posted about the same thing - I didn't know from your title that it was about the FTC stuff.

[Sipboy3000]

Originally Posted by Killer Joe

This has been going on for ages... Ask Irwin F. Kern if he knows anything about this stuff. He's got a Masters in Disasters on this.

But it didn't stop him from making a fortune in Internet Marketing.

You guys worry too much...

KJ

I totally agree. People worry to much. If you are running an ethcial business, no need to worry. People will always find reasons to sue. When I was in management in Corporate America, I dealt with this stuff all the time. People would literally hurt themselves just to try to sue to get money.

Funny thing is that 99% of the time, the outcome came out the way is should have.

What about the other 1%? Consider it a business expense.

[Randy Bheites]

This won't pass even the most cursory initial legal challenge.

To hold a manufacturer liable for what someone outside of his control says about his product is to open the door for his competitors to ruin his business.

Say I'm in direct competition for your cool "Super-Fast Internet Riches" e-program. All I have to do is throw up a WP blog and say it cures cancer and erectile dysfunction. Presto, the FTC shuts you down.

Did you read the whole article? Here's the 'gotcha': "determining which bloggers are acting as an agent of a company may prove difficult. "

Never happen.

[Johnathan]

Ah, sorry, I misunderstood. Very good point.

It is a rather dangerous precedent.

Originally Posted by newsecrets

I completely agree with Hotlinkz.

Many people in this thread are missing the point. This law is NOT about shutting down fraudulent testimonials and scammy reviews. (We already have other laws in place that take care of that. IF the issue here is fake testimonials and fake reviews, like the fake Acai review blogs, then they can just go after the people who post fraudulent reviews and testimonials - they don't need this law).

So this law is really about shutting down REAL and TRUE testimonials and reviews from REAL customers. If the FTC somehow doesn't "like" your real testimonials - watch out! (Remember, the FTC shut Frank Kern down because they didn't like his REAL testimonials. It was NOT about fake testimonials.)

In other words, this law is a total violation of our first amendment rights (freedom of speech).

What this law is saying, is that even if you bought a product that helped clear up your eczema (for example), you're not allowed to tell people about it.

That's ridiculous. A testimonial and a product claim are two totally different things. It's one thing to say "this product worked for ME personally". It's a totally different thing to claim "this product will work for YOU".

Also, the merchant has absolutely no control over what their customers post on their personal blogs! It's one thing to hold a merchant liable for testimonials that he posts on his own website. It's a totally different thing (and totally absurd) to hold a merchant liable for testimonials that are posted on his customers' personal blogs (which he has no control over)!

So those of you who think this doesn't affect honest merchants, think again. This DOES affect honest merchants.

In fact, if you really think about it, this affect honest merchants MUCH MORE than it affects scammy merchants.

Really, think about it. A scammy merchant who sells an eczema product that DOESN'T work, is NOT likely to get their customers raving about their product on their personal blogs (I'm talking about REAL testimonials here, not fake ones).

On the other hand, an HONEST merchant who sells an eczema product that REALLY works, is VERY likely to get their customers raving about their product on their personal blogs. (And then the FTC comes in and sues the merchant AND the customers!)

So, this law actually gives merchants an INCENTIVE to sell SHODDY products that DON'T work. That's how absurd this law is!

And if you think this doesn't affect you because you don't sell health products, think again. Today they impose ridiculous regulations on the health industry, and you let them get away with it... tomorrow they may be coming for YOUR industry.

This following quote applies here:

[ptone]

Sure, there are a few scammers and over-the-top marketers that need to be brought under control. But, that's what the market is for. We don't need the Government to do this for us!

One of the great things about the Internet has always been that it gives power to the consumer. How many sites are out there that report scammers, bad customer service, bad products, etc so that consumers can investigate prior to making purchasing decisions?

If you come across a dishonest review site or a paid-to-post blog, there is nothing stopping you from hopping over to Google and finding a few more resources to back-up or oppose their claims.

But alas, we have created a society where everyone wants the Government to hold their hand through every action they take in life. "Wah - I just made a stupid purchase on the Internet and I want my Government to help me so I don't feel so stupid."

I am really surprised to find a few marketers here brushing this off or even welcoming this move by the FTC. Do you really want the Government to come in and start telling you how to run your business? Do you really think the FTC is going to stop here? REALLY?!? If you don't like Google's TOS, or you don't like Clickbank's TOS, or whoever's TOS you are bound by, this is nothing compared to the regulations the Government will hang around your neck!

I believe we should let the market weed out the bad apples. Especially on the Internet where the consumer has so much power. Don't let the Government come in and muck it up like they do with EVERYTHING else.

[hotlinkz]

Originally Posted by newsecrets

I completely agree with Hotlinkz.

In other words, this law is a total violation of our first amendment rights (freedom of speech).

What this law is saying, is that even if you bought a product that helped clear up your eczema (for example), you're not allowed to tell people about it.

That's ridiculous. A testimonial and a product claim are two totally different things. It's one thing to say "this product worked for ME personally". It's a totally different thing to claim "this product will work for YOU".

Also, the merchant has absolutely no control over what their customers post on their personal blogs! It's one thing to hold a merchant liable for testimonials that he posts on his own website. It's a totally different thing (and totally absurd) to hold a merchant liable for testimonials that are posted on his customers' personal blogs (which he has no control over)!

So those of you who think this doesn't affect honest merchants, think again. This DOES affect honest merchants.

In fact, if you really think about it, this affect honest merchants MUCH MORE than it affects scammy merchants.

Just think how simple it would be for less-than-honest perps to start shutting their competitors down!

[inewman]

Having been involved with one of the largest and oldest manufactures of vitamins and supplements (Nutrilite) I am extremely aware of the FTC's view on product claims and "testimonials".

When I first started looking at affiliate marketing several months ago I was appalled at what I saw. I realized immediately that many of these companies were making false claims and eventually would come under the scrutiny of the FTC. I knew right away that if I spent time and money promoting these products there would be a very good chance that the companies would be shut down or just go away at the first sign of government review.

When it comes to health related products the government is not at all interested in your "testimonial". Unless your claim is backed up by hard scientific evidence your word is meaningless.

Legitimate companies that want to stay in business spend a great deal of effort in policing their distribution networks to avoid false claims issues. Distributors that violate claims loose their distribution rights. When the manufacturer show a good faith effort to police their distributors they usually can work out an agreement with the FTC. Amway, Herbalife, Nuskin and all large manufactures of health related products have been through this review.

In affiliate marketing the supplier has little to do with policing the marketers promoting their products. I think it very reasonable that when the supplier fold up their tent and disappear into the night the affiliate marketer will be left holding the bag. I'm not sure what the liability of the marketer would be in this case

I suspect that from what I've seen, most companies using affiliate networks to promote health related products are in it for the short haul. When the government comes around they will just disappear leaving you, the affiliate marketer a lot of wasted time and energy and possibly a very large legal bill defending yourself.

This is a very real scenario in the network marketing industry with fly by night companies show up with their wonder products, set up their networks by using amazing claims move tens of thousands of dollars of products and then disappear at the first sign of government oversight.

The fact that affiliate marketing in now in the cross hairs of the FTC doesn't surprise me at all. I am being very careful in types of products I will promote and am staying away from the health and finance related industries. These are the industries the FTC goes after first.

BTW, this is nothing new. The FTC and other government agencies have been reviewing these industries for decades. It is the IM industry that is new to the game. Welcome to the real world.

[Elliott]

The government has always "come in and told us how to run our business". When has it ever not done that? It's been a done deal from the beginning of time!

The MLM companies went through all this 20 years ago, with distributors making wild claims. Now the MLMs mostly insist on distributors using ONLY "company approved advertsing."

I think the big legal debate will be about the actual relationship between the product owner/manufacturer, and the person promoting it by "word of blog" or tweeting about it etc.

It's a lot less clear than the MLM company/Distributor relationship, if there is no signed agreement......

Elliott

[Elliott]

Inewman beat me to posting, but he has said it all there.

Elliott

[SirKhan]

After all you can use fake names or a company name registered in an offshore heaven and you're good forever

[fhharris]

Originally Posted by newsecrets

I completely agree with Hotlinkz.

Many people in this thread are missing the point. This law is NOT about shutting down fraudulent testimonials and scammy reviews. (We already have other laws in place that take care of that. IF the issue here is fake testimonials and fake reviews, like the fake Acai review blogs, then they can just go after the people who post fraudulent reviews and testimonials - they don't need this law).

So this law is really about shutting down REAL and TRUE testimonials and reviews from REAL customers. If the FTC somehow doesn't "like" your real testimonials - watch out! (Remember, the FTC shut Frank Kern down because they didn't like his REAL testimonials. It was NOT about fake testimonials.)

In other words, this law is a total violation of our first amendment rights (freedom of speech).

What this law is saying, is that even if you bought a product that helped clear up your eczema (for example), you're not allowed to tell people about it.


This following quote applies here:

"They came for the Jews and I did not react because I was not a Jew.

"Then they came for the trade unions and I did not react because I was not a trade unionist.

"Then they came for the communists and I did not react because I was not a communist.

"Then they came for the social democrats and I did not react because I was not social democrat.

"Then they came for me and there was nobody left to defend me."

WOW!!!! We read two different articles and two different cases about US V KERN. KEren was sued for making unsubstantiated claims and defrauding customers. He was also sued for false claims which he admitted in the consent order were false.

Here they specifically say

Companies regularly offer free samples and concert tickets to bloggers and journalists, in the hope of generating press. However, determining which bloggers are acting as an agent of a company may prove difficult.

A single incident of this is what I found is not actionable. It is a regular and continuous pattern of behavior. And yes there are companies that are intentionally using "payola" to get endorsements in the public eye that they could never pass through even a first year law student.

NO Chicken Little the sky is not falling. They are not trying to shut down affiliate marketing and CB, CJ et al.

And how disgusting to compare this to the holocaust!!!! A slap in the face to all who lost family and friends.

[fhharris]

4morereferrals I am sure glad to hear that you think your legal "bulldogs" are going to tear the FTC a new one.... Most of those BULL dogs turn into PUSSY cats and pay your fine and put you out of business in the process a la consent decrees. I have watched folks like William and Chantal McCorkle end up going to jail for 24 years in what cost the government over a million dollars to prosecute.

If you think your legal BULL dogs can or will protect against that..... this I want to see. Not in this life.

[Jon Steel]

Originally Posted by Jeremy Kelsall

All this means is that people will have to stop saying things that they know are not true....

Not really anything to worry about, at least not in my opinion.

I agree...

js

[gus89]

I believe that it is very important to set up a privacy policy on your blog where you state everything about your stance in product reviews and that there is no affiliation between you, the blogger, and the manufacturer of the company as well as results etc and vary.

[die()]

It just goes to show that you must control the quality of the comments that are on your blog. I personally turn off comments altogether. Having comments just opens up the possibility for spammers. Even if you moderate the comments, you will have to decide who is a spammer and who isn't, and sometimes it is hard to tell. I don't believe you should ever allow unmoderated comments, even if the person has posted a comment before and you think you can trust them.

[Andy Crofford]

Originally Posted by Jeremy Kelsall

All this means is that people will have to stop saying things that they know are not true....

Not really anything to worry about, at least not in my opinion.

I agree with this 100%. All the fake weight loss blogs and review sites need to go away.

[Jimnopks]

I constantly preach about the need to not own anything. Lawyers look for assets and when they cannot find any assets that belong to you, they go away.

There are a half a dozen ways of transferring assets into an artificial enity, but only one of them will pass the muster.

If you hire a lawyer to protect your assets, ask him or her if what they suggest is statutory or common law. I have yet to meet a lawyer that would use a common law document with a non-disclosure agreement.

Why? Because they stopped teaching common law in law schools in the 30s, and even if they learn about it, don't want to do it, being it is contrary to what they are comfortable with.

Jim

[Launder]

Originally Posted by 4morereferrals

Will force some skanky affiliates to clean up their act if they are culpable as well.

I love this phrase here. I agree too that this could have some issues for certain people but I don't think that the legitimate marketers will have any issues at all. Its those dishonest ones who will have the issues.

[Arted4Life]

Suing and winning a lawsuit are two completely different things. Besides you don't have to worry if you don't make bogus claims. It is nice to seem them cracking down on people though.

[sbucciarel]

I think the FTC crackdown on fake testimonials and false advertising is great. All you need is to be the victim of one of these continuity scams and see what a nightmare it creates in your bank account to feel what it's like on the "other side" of false advertising. You would think by some marketers reaction to this that there are no legitimate products and no legitimate methods to market them without telling lies.

[LB]

If you guys think the biggest offenders are located in the US...you are sorely mistaken.

Most of the worst offenders are completely outside the US and very difficult to track. The FTC goes after easy prey...i.e. Americans.

[Charles Washington]

Originally Posted by LB

If you guys think the biggest offenders are located in the US...you are sorely mistaken.

Most of the worst offenders are completely outside the US and very difficult to track. The FTC goes after easy prey...i.e. Americans.

Amen to that. If the FTC cracked down on every review blogger in America, the problem would still be just as bad.

Next, the FTC would have to go after the content writers who supply the non-English speaking marketers with their "reviews and testimonials."

[MeCanX]

Originally Posted by hotlinkz

More idiocy from our so-called "governing bodies"!

When was the last time the FDA was held responsible for allowing the distribution of drugs that have actually caused the deaths of hundreds or is it thousands? And now this!

This FTC crap is what happens when you pay people to sit around all day thinking of ways to control the lives of others while they themselves run rampant!

Agreed...it's amazing how we are controlled by the uncontrolled...

But the idea of making things right for consumers is the base of all this...

[Kurt]

Originally Posted by EJ Lear

"If a blogger received a free sample of skin lotion and then incorrectly claimed the product cured eczema, the FTC could sue the company for making false or unsubstantiated statements. The blogger could be sued for making false representations."

I read this on the Financial Times and thought that it can be potentially devastating for affiliate marketing. But could stop the hype machine once and for all:

FT.com / Companies / Media - Advertisers brace for online viral marketing curbs

The stupid part is, they don't sue the bogus testimonial writer, they sue the product owner.

This is a shot across the Clickbank marketers bow.

Respectfully,
EJ

And this is the point that many have missed on this thread, and that is: YOU ARE RESPONSIBLE FOR WHAT YOUR AFFILIATES DO AND SAY.

If you have an affiliate program for your products, you are liable for your affiliates. This means if you use RAP, $7 scripts, Paydotcom, you better be aware what your affilites are saying and doing, because it's your butt the FTC will come after.

[phylma]

I would think just taking a closer look at what people say in a testimonial should be enough. If you're not sure of the claim and can't find anything to document it, don't use it.