Justin Michie's Internet Marketing Blog

New Federal Trade Commission Policies For Internet Marketers

November 5th, 2009 · 11 Comments ·

Unless youíve been hiding out deepest Amazon jungle unplugged from the internet for the last month, then you should know that on October 5, Internet Marketers across the US were thrown into uncertainty when the Federal Trade Commission revealed their latest ruling concerning the use of online product endorsements and customer testimonials.

But, before I get more into it, I should mention that no part of this post should be considered legal advice and that you should consult your own legal counsel before taking any action.

Anyways, starting December 1, 2009 website owners who promote or endorse products as an affiliate can no longer do so without stating, in a clearly visible location, that they will be compensated financially should the visitor decide to buy the product after reading their endorsement.

Product sellers will also have to use extreme caution when using customer testimonials on their sales pages. For example, a testimonial like “I lost 27lbs in 10 days with the XYZ diet” or “My Uncle’s Grandma made $935 in just 48 hours using the ABC’s system” because even if the testimonial is 100% truthful and a grandmother did make $935 (and you have proof to back it up) the marketer must emphasize what the Ďaverage userí can expect.

Therefore after the $935 claim, the product seller must state “Results not typical. The average user will never follow this system and the 5% who do, can expect to earn $1.43.”

Of course it is extremely difficult, meaning almost impossible to know what results the average user can expect – it is a fact that many people will buy a product and forget all about it a few hours later, and start using it as a coaster left to gather dust and spilled coffee.

Many other buyers will download, read, but fail to take action, therefore a product seller will never truly be able to demonstrate Ďtypicalí results… leaving it safer not to use testimonials at all – if you are to comply with the new FTC Internet Marketing rulings. (If you cannot back up your testimonials with documented proof that the alleged success story did indeed use your product, donít even think about using them).

This leaves many marketers with quite a dilemma – after all, some sales pages are little more than a long list of customer testimonials – and really, real world proof is one of the best ways to get people to buy.

What About Non-US Marketers?

I’ve always felt that US based marketers have had a tiny advantage over those of us who live in other countries… and now thanks to the FTC, it’s time to take that back.

All kidding aside, given that the FTC is a US Government body and cannot make laws for those residing outside the United States, everyone else can go on using testimonials till their heart’s content. I know I’ll keep using them and wonít be making any changes – except that maybe, I’ll throw in a few extra just to rub it in a little :)

Though, on the other hand, if you have affiliates, US based customers, web hosting, or shopping cart services that are based in the US, it might be wiser to consider complying with the new regulations, since theoretically, a website hosted by a US hosting company etc. could still be shut down.

To be completely safe and avoid your operation being targeted by the FTC a product owner would have to reside in a non US country, not sell to US residents, and have a merchant account or shopping cart based in his own country.

But really, I’m not going to worry too much about it. As long as your testimonials and proof and 100% legit and you have actual proof to back that up, I’m gonna keep it business as usual.

So How Can We, As Marketers Find a Way Around This?

There are a number of ways we can demonstrate our products to be of good value without claims from our friends or past customers that they made $XXX dollars or experienced XXX results in a remarkably short time.

Here are a few options we can use in the space where those testimonial boxes used to reside and keep away from the unwanted attentions of the FTC.

  • A Ďcharacter basedí testimonial is one way of filling up those testimonial boxes. I have received emails from clients thanking me for my follow-up support – they may have had trouble downloading the product or understanding a certain aspect of the system, and later kindly send an email thanking me for the fast support they received to solve their particular problem.

This will give you credibility as a vendor, and build confidence in your buyer, but I donít recommend using too many of these – one or two would suffice as visitors will likely find it boring to read again and again how fantastic the vendor is- and therefore click away from the sales page.

Another idea that can work just as well as testimonials, is to use quotes, research or scientific studies to back up what you’re saying. If there’s a scientific study that proves that skinnier people live longer, more enjoyable lives, use that. Or if there’s a quote about the recession and how it’s worse than ever before, use that when selling your ‘how to make money’ product.

Here’s a few other ideas:

  • Run cheap trial offers giving the user a taste of what he will get when he buys the full version. This is a good method of boosting sales – your sales copy does not have to be so long or involved when you are only asking the buyer to part with a few dollars for a trial period.
  • Be absolutely sure your customer support is top notch. The standard way the FTC would monitor webmasters is through consumer complaints for deceptive advertising. If you respond to clientís queries quickly and ensure you resolve any issues they may have they are far less likely to make a formal complaint.
  • Make your offer absolutely totally irresistible – when you are selling a first class item for a realistic price your sales letter can concentrate on the huge benefits the reader will receive when using your product, without you having to depend so heavily on testimonials to sell your amazing creation!
  • If you are an affiliate endorsing products on your site or blog, be transparent. Simply state that although you do have a vested interest in endorsing the product, there are tens of thousands of similar companies also paying commissions but you chose to endorse that particular company because in your opinion, they sell the superior product. More importantly, buy and try the product.

Some bloggers and webmasters already use the following approach:

“If you like my site, please buy through my affiliate link.” and “If you donít, hereís the direct link.”

Many have described excellent results using this method and people dig honesty.

And the Bottom Line?

The bottom line is “Don’t Worry!”

A quick scan through the ClickBank marketplace reveals many of the best selling products do not, and have never used customer testimonials.

Of the current 20 best selling products, at least 5 of them do not have any customer testimonials and concentrate on the benefits of the product itself, rather than what other customers are saying about it.

The ĎFatloss 4 Idiotsí program which has consistently been at the top of the diet category since itís launch does not have one customer testimonial on the page, and it is rumored the product has made well over $20 million for itís owners in 2008 alone!

Transparency is never a bad thing, and the new policy could even improve sales in the long term as people feel less likely they are about to be scammed when buying online.

No matter how you look at it, it’s not the end of IM, but a slightly new beginning and I’ll for one be looking forward to the new marketing practices and techniques that will come out because of it.

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Tags: Internet Marketing · Legal Info

11 responses so far ↓

  • Sam7246 // Nov 5, 2009 at 9:17 pm

    Frustrating that the government just keeps making it harder for us to make money. Thanks for laying it out there though.

  • Kimberly Young // Nov 8, 2009 at 2:34 pm

    I can’t say I was too disappointed to hear about this – it might just give me a bit of an advantage over my competitors since I’m outside the US and how can I argue with that?! It does suck for IMers in the States tho.

  • Zariff // Nov 9, 2009 at 10:37 am

    Sucks that they are butting in like that. Don’t they have anything better to do!

  • Utah Internet Marketing // Nov 13, 2009 at 2:22 am

    Thanks for sharing a news about Internet Marketing, but they must not do that!

  • Alex - Ultimate List Building // Nov 13, 2009 at 7:22 am

    Great post…Very detailed and informative.

  • GRACE WONG // Nov 13, 2009 at 8:52 am

    You know you’re an Internet marketer when you are earning income that leads you to financial freedom and to fulfill your dreams that an employee cannot achieve.

  • Kim Ling // Nov 13, 2009 at 11:14 am

    Thanks for the info, nice to get a top marketers opinion on it.

  • Kentucky Internet Marketing // Nov 16, 2009 at 1:38 am

    Great post. I enjoy reading your blog. It’s informative and great article.

  • Freelance Biz // Nov 19, 2009 at 1:50 pm

    The government will ALWAYS butt in when and where people are making money. Petty bureaucrats who are jealous because they are unable to do the same.

  • Samy // Dec 28, 2009 at 2:12 pm

    Many people afraid to buy online.
    I hope this new rules helps them to trust on real sellers and all the scammers will be out of the market.

    Transparency is good, but sometimes anything we do OVER looks stupid.

    Let’s hope for the best!

  • Michael // Jun 30, 2010 at 1:33 am

    That really crazy that the US government keep on pushing more laws against people who is making money online, what next, rule what we can said on our site, what give them any of that right.. the Internet is not control by the US government at all, so how can they push laws on something that they have no control over?

    Getting back into the game, so much had change since the late 90s, and see how people are buy, and learning more on internet marketing.. As an American living in Australia (for the last two years now) I can said that without any question the government will do anything to push their control over the net matter what we do.

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