Material Disclosure Statement

Do I Need A Disclosure Statement?

The need for Disclosure Policies comes mostly from the Federal Trade Commission (FTC) which mandates truth in advertising rules and regulations.

The Material Disclosure Statement

As it applies to the average Internet marketer, the Material Disclosure refers to revealing to the reader or site visitor that there is the possibility of a material connection between the promoter and the seller of the products and services being promoted.

Meaning that, if a sale is made, the promoter will usually receive some form of compensation such as an affiliate commission payment, or payment for producing a referral lead, or free products, and any similar form of compensation.

Does This Apply to Me?

Bloggers or website owners receiving cash or other payment to review a product are considered to be endorsing the product.

The specific rule (16 CFR, Part 255 – Guides Concerning the Use of Endorsements and Testimonials in Advertising) further implies that the relationship between the promoter and the seller of the advertised product might be providing a less than truthful endorsement as to the quality and reliability of the item being sold; and, that the buyer needs to know of the material connection arrangement because it might not be anticipated and such a connection might affect the buyer’s decision.

Truth in Advertising

The rule also discusses basic truth in promotion when it comes to results that can be expected when using the product.  If the advertisement shows a consumer testimonial stating that he made $1 million dollars overnight, proof of such must be shown, and furthermore, a statement must be made to the effect that these results are not typical. Endorsements must not be deceptive; they may not make false or misleading claims.

If a result from using the product or service is not typical, then it must be mentioned as such. Furthermore, disclaimer statements such as: “results not typical” do not diminish falsity and are not acceptable for diminishing the liability accompanying false advertising.

An Accompanying Disclaimer

Frequently, a disclaimer will accompany the disclosure statement. The disclaimer will say something to the effect that the buyer should use “due diligence” before purchasing – meaning that the buyer should not solely rely upon the information within the advertisement when evaluating the product or service.

Prominent Display of the Disclosure Statement

Other parts of the ruling dictate that disclosure statements be prominently displayed on the site and in emails that promote products whereby the sender of the email might receive commission payment of any sort. It is required that the sender of the email indicate that his or her endorsement of a product, and the email promotion of such, will possibly be rewarded, upon a successful sale or other transaction type, with payment of some sort.

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