Important FTC Disclosure Requirements for Direct Sellers

FTC Disclosure Requirements copyThe Federal Trade Commission (FTC) has required anyone endorsing a product who will benefit from its sale to disclose that up front since 2010. For those in direct sales or network marketing, that means that you must make sure people understand that you sell your product line when you’re talking about how great it is, particularly online. But the FTC has not necessarily been militant about enforcing this. Recent clarification by the FTC, however, indicates that this may be about to change when it comes to enforcement.

This article from Marketing Land is a great overview of the requirements. If you haven’t read it yet, go do that now. I’ll wait.

So how does this affect you as a direct seller?

  • When talking about the benefits of any product that you sell or your business opportunity, it is always better to include a note that you sell it. This could be as simple as “Contact me to order,” or a hashtag such as #ad. The recent clarification by the FTC says that naming your company on your Facebook Page alone is not enough.
  • If you write a blog, or work with a blogger to have them do a product review, it’s essential to disclose whether that product was given for free, or you will benefit from its sale. This is an FTC requirement, because it helps the reader decide how much weight to give to the review based on benefits the blogger may have received to write it.
  • If you run contests that require entrants to make a positive social media post for an entry, require that a hashtag such as #brandcontest is included in the post, so that people understand that the post is not a pure endorsement, but an entry to a contest.
  • If you create videos, make sure that a disclosure is included in the video itself, and not just on the details page of YouTube. That way the disclosure travels with the video no matter where it’s viewed. In fact, the FTC wants you to put that disclosure up front, so start with a splash screen that includes your name and title with your company, or make a statement at the very beginning that you sell the product or promote the business opportunity.
  • Lots of you love your Before/After photos. These can be problematic, as I have written before. Here’s what the FTC says about them:

    Another principle in the Guides applies to ads that feature endorsements from people who achieved exceptional, or even above average, results. An example is an endorser who says she lost 20 pounds in two months using the advertised product. If the advertiser doesn’t have proof that the endorser’s experience represents what people will generally achieve using the product as described in the ad (for example, by just taking a pill daily for two months), then an ad featuring that endorser must make clear to the audience what the generally expected results are.

You can read the entire list of clarifications from the FTC here.

The important thing to remember about all of this is that you MUST disclose your relationship with your company when you talk about it online. Every time. This protects consumers who may make purchasing or joining decisions based on your favorable review. The FTC is very clear. To stay within the law, disclose. Every time.

How do you disclose your relationship to your company when posting in social media? What tips do you have? Please share in the comments!

6 Responses to Important FTC Disclosure Requirements for Direct Sellers
  1. Jonathan Shapiro
    November 11, 2016 | 7:05 pm

    great article. Thank you. Would love to get some facts and figures if you have any on the importance of regulation. trying to create a whitepaper highlighting its imporance

  2. Stephen Juarez
    October 27, 2015 | 1:13 am

    Oh… no wonder they have those disclosures on several posts I read. Thank you Jennifer!

  3. Spencer Reese
    July 10, 2015 | 11:48 am

    Great post Jen! Of important note, its not just the FTC that’s questioning endorsements through social media. The FDA has also gotten into the act. We had a case in which a neutral user of a company’s products (the user was NOT a distributor or consultant for the company) made a social media post claiming that the company’s products cured her medical problem. A distributor/consultant for the company clicked the “like” button on the post. The FDA claimed that because the distributor/consultant “liked” the neutral person’s post, the distributor/consultant, and therefore the company, were making illegal drug claims about the products. While the FDA’s theory was quite a stretch, it illustrates how volatile the use of social media can be. So the message to direct sellers, both in the corporate and field ranks, is “think before you post!”

    • Jennifer Fong
      July 10, 2015 | 1:03 pm

      Wow, that’s crazy Spencer! I would hope that the FDA ultimately chose not to pursue that particular case, but it does highlight the importance of staying tightly within disclosure and product claim rules. Thanks for commenting!

  4. Denise Swyers
    June 25, 2015 | 8:10 am

    Thanks Jen for another great article to help direct sellers. It is much appreciated.
    In everything I send out, I always include my website and invite them to visit, so never a question if I am selling. I liked to feel I am being dealt with upfront when shopping and that is how I treat my customers.

    • Jennifer Fong
      June 25, 2015 | 11:34 am

      Thanks for commenting Denise! Yes, including your website makes it clear you sell the product. Being upfront with our customers is always the best policy!

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