In this post, I’m going to get into an area where you can run into real legal and financial trouble – the Federal Trade Commission’s guidelines on endorsements. Fortunately, there are just a few rules to follow that will keep you on the right side of the law.
The Federal Trade Commission, or FTC, is a U.S. government agency. The FTC has the power to investigate and prevent deceptive trade practices.
To keep it simple, in this blog post I’m going to use the word “endorsement” to include any type of endorsement, testimonial, or affiliate arrangement.
So What? I’m Not Deceiving Anyone, I’m Just Hosting A Podcast
The FTC regulates advertising, so if you include advertising on your podcast – including through testimonials, endorsements, or affiliate deals – these rules apply to you.
If you receive something for free – or at a discount – in exchange for a review or endorsement, you need to disclose that information. Even if it’s not a straight up quid pro quo, these rules apply.
To put it another way, if there’s a relationship between you and the source of the product other than “I went out and bought this on my own at full price,” there’s something you need to disclose.
For example, let’s say I know you’re a popular podcaster and I email you with the following offer: “Hey, Ms. Podcaster, I like your show. Here’s a coupon for 50% off XYZ Brand Podcast Headphones.” Nothing is said about an endorsement or testimonial. You buy the discounted headphones, try them out, like them, and talk them up on your show. Based on these rules, you must disclose that you received the goods at a discount.
OK, Just Take Me To The FTC Guides
Note that the .com Disclosures ebook doesn’t mention podcasts specifically, but the guidelines it provides for bloggers can be applied to podcasts as well, for the most part. My goal in this blog post is to make these rules of the road clear and easy to follow.
What kinds of “Products” do these guides apply to? The Guides define the word “product” as referring to “any product, service, company or industry.” So if you’re endorsing just about anything, these rules apply.
5 Simple Rules
Now that we’ve got some of the basics down, I’m going to break the Guides out into 5 rules that you should follow.
Rule #1: Be Honest
If you haven’t used the product, don’t say “I use this software every day!” The Guides state that “Endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser.”
Rule #2: If You Claim To Be An Expert, Actually Be An Expert
The Guides state:
Whenever an advertisement represents, directly or by implication, that the endorser is an expert with respect to the endorsement message, then the endorser’s qualifications must in fact give the endorser the expertise that he or she is represented as possessing with respect to the endorsement.
Let’s say you are paid to say on your podcast, “I’ve tried every product on the market, and Joe’s Muscle Powder is the best option for any athlete or fitness fan.”
This statement suggests that you’re an expert. Don’t make this kind of statement if you’ve never seen the inside of a gym and you couldn’t tell one fitness supplement from another.
Let’s be clear: it’s fine to run a pre-recorded advertisement for a product that you’ve never used and don’t know much about. However, you personally shouldn’t endorse or testify about the quality of that product.
Rule #3: It’s About the Relationship
The guides are just that – indications of how to go about making the proper disclosures. Ultimately, the key is to communicate the nature of the relationship so that your audience understands what’s going on.
The issue is – and always has been – whether the audience understands the reviewer’s relationship to the company whose products are being reviewed.
Here’s what the Guides say on this topic:
When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement…, such connection must be fully disclosed.
Most people would want to know if someone was paid or received something for free in exchange for an endorsement (or even a potential endorsement.) So if you fit into that category, you need to disclose that information.
Rule #4: You Can’t Hide or Bury the Disclosure
The .com Disclosures ebook says, in bold letters, Don’t be subtle.
The disclosure must be clear and conspicuous. Say it upfront. It’s not enough to endorse something at the top of your podcast and then reveal that you were paid or otherwise compensated 2 hours later at the end of your podcast.
If your endorsement is repeated in your show notes, blog post, or other medium, the disclosure must be repeated there as well.
What About A Link to the Disclosure? It’s OK to put details in a page that’s accessible through a hyperlink, if you need to explain the situation at length. However, the critical information (i.e., the fact that you were paid or compensated) needs to be included wherever the endorsement appears.
Page 20 of the .com Disclosures guide contains a paragraph that could be tailor-made for podcasts, so I’m going to reproduce the relevant part:
For audio claims, use audio disclosures. The disclosure should be in a volume and cadence sufficient for a reasonable consumer to hear and understand it. The volume of the disclosure can be evaluated in relation to the rest of the message, and in particular, the claim.
So you can’t just quietly mumble “this is an affiliate deal i’m making a few bucks” and then loudly proclaim “YOU’VE GOTTA TRY THIS NEW ENERGY DRINK IT’S THE GREATEST.”
Rule #5: Fancy Legal Jargon Is Not Your Friend
For disclosures to be effective, consumers must be able to understand them. Advertisers should use clear language and syntax and avoid legalese or technical jargon. Disclosures should be as simple and straightforward as possible.
Easy enough. Use the same type of language to explain the relationship between you and the product that you’d use in explaining anything else to your audience.
OK, But What If I Don’t Follow The Rules?
So you’re a super edgy podcaster who makes your own rules. More power to you, tough guy.
What do our friends at the FTC have to say about it?
Once the Commission has promulgated a trade regulation rule, anyone who violates the rule “with actual knowledge or knowledge fairly implied on the basis of objective circumstances that such act is unfair or deceptive and is prohibited by such rule” is liable for civil penalties of up to $11,000 per violation.
Let’s say you have a podcast that runs 3 times a week, and in each podcast you have 3 ads where you don’t follow the disclosure rules, and you’ve been doing so for 3 years…well, multiply all that times $11,000 and you’ve got a nice fat check to write. I’ll let you do the math.
You Americans Never Look Beyond Your Own Borders…What About The Rest Of The World?
OK, you noticed that I’ve only made reference to US law, and your podcast is enjoyed by countless fans around the globe and possibly on planets yet to be discovered. Every country has its own trade laws, and I’m not going to try to create a comprehensive survey of international advertising and marketing law.
Your primary concern should be the country where you’re based, of course. However, the tips provided above are good general rules of thumb. If you’re clearly and conspicuously disclosing the nature of your relationship with the endorsed product, you’re probably on the right side of the law under most rules around the world.
But don’t take my word for it – consult with a knowledgeable attorney in any country where there’s a question, particularly if you’re based out of that country.
To wrap this up: there’s nothing wrong with monetizing your podcast. You just need to know the rules and disclose the situation to your audience. Happy podcasting, everyone.