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  1. #1
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    FTC Busts Fake Learn and Master Guitar Review Sites
    The Learn and Master Guitar program promoted by Legacy Learning to Pay FTC $250,000 to Settle Charges That It Used Misleading Online "Consumer" and "Independent" Reviews.
    Firm to Pay FTC $250,000 to Settle Charges That It Used Misleading Online "Consumer" and "Independent" Reviews
    The FTC charged that Legacy Learning and Smith disseminated deceptive advertisements by representing that online endorsements written by affiliates reflected the views of ordinary consumers or “independent” reviewers, without clearly disclosing that the affiliates were paid for every sale they generated.

  2. #2
    ...and a Pirate's heart. Convergence's Avatar
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    Under the proposed administrative settlement, Legacy Learning and Smith will pay $250,000. In addition, they have to monitor and submit monthly reports about their top 50 revenue-generating affiliate marketers, and make sure that they are disclosing that they earn commissions for sales and are not misrepresenting themselves as independent users or ordinary consumers. Legacy Learning and Smith also must monitor a random sampling of another 50 of their affiliate marketers, and submit monthly reports to the FTC about the same criteria.
    Who here wants the FTC checking them out?
    Last edited by Convergence; March 23rd, 2011 at 02:46 AM.
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  3. #3
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Disclosure is King
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  4. #4
    ABW Ambassador 2busy's Avatar
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    I am a LL affiliate and a few months ago they forced all of their affiliates to add wording to their sites. I already have a disclosure statement but they insisted that I add this line to every page where I promote their products:
    Disclosure: We are compensated for our reviews. <a link to the disclosure page /a>
    at the top of every page, even though there is already a link on every page and I don't do reviews of any of their products. At the time I thought they were over the top paranoid, but it's easy to see why now.

  5. #5
    Defender of Truth, Justice and the Affiliate Way
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    Matt posted about this in the L&L forum back in the early December. He also posted on the L&L blog.

    It has been brought to our attention by our friends at the Federal Trade Commission that many of our affiliates have not fully complied with their December 2009 disclosure requirements. They have also clarified for us what is required.
    If you think about it, L&L certainly isn't one of the biggest fish out there, nor is it's affiliate program (no offense to either L&L or their affiliates). Yet the FTC found issue and took action based on some of their affiliate sites (hence the FTC was already looking at affiliate sites, so that really doesn't change with the audit now).

    The FTC has never been crystal clear about what they wanted these disclosures to look like. Some of the other cases I've seen the FTC take action on regarding the disclosure have been a bit somewhat out of the realm of what someone might have expected to be an issue (eg Ann Taylor catching the FTC's attention when they offered bloggers a chance to win a gift card who attended one of their runway shows and blogged about it) There's a bit more guidance now based on the L&L situation.

    There's a lesson here for affiliates, merchants and managers/opms.

  6. #6
    Moderator MichaelColey's Avatar
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    The lesson for merchants is huge, and goes far beyond LL. You are responsible for what your affiliates do.
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  7. #7
    Beachy Bill's Avatar
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    Quote Originally Posted by MichaelColey View Post
    The lesson for merchants is huge, and goes far beyond LL. You are responsible for what your affiliates do.
    So...a merchant overlooking the fact that some URLs from referring sites are "hidden" is no longer de rigueur. Merchants will now need to be able to see and identify any and all referring pages - to make sure they are or are not "review" type sites/pages/referrals with/without proper "disclosure" statements.

    'Tis a shame that a few can cause inconvenience for many. We have finally grown our program enough that we need a separate TOS - and not just piggy-back on that at SAS. We have begun putting a distinct TOS together and will now require that we can see any referring page...or...(or what?). No cloaking, no redirects, no...

    Sop...what's next? Will price comparison sites be considered to be "reviewing" products - based on price and "perceived" value?
    Bill / Marketing Blog @ 12PM - Current project: Resurrecting my "baby" at South Baltimore..
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  8. #8
    Defender of Truth, Justice and the Affiliate Way
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    Bill, welcome to the world of regulatory intervention. I spent 2 decades dealing with it in my previous profession and it's enough to make you want to gouge your eyes out at times. The most frustrating part is not being really clear about what they are wanting until they come down on you in some way.

    The lesson for merchants is huge, and goes far beyond LL. You are responsible for what your affiliates do.
    Very well said. Part of the FTC's "concern" is that they felt L&L did not properly educate affiliates on how to put proper disclosures on their sites. That goes well beyond just having a clause in your TOS that proper disclaimers must exist. I know L&L sent out an email to affiliates telling them what those disclosures must look like.

    Sop...what's next? Will price comparison sites be considered to be "reviewing" products - based on price and "perceived" value?
    I wouldn't rule it out. Merchants should recognize that while "reveiw" type sites are in the FTC's cross hairs right now, the whole disclosure thing isn't just about reviews. Remember the whole blogger disclosure thing?

    A couple of other areas that jump out at me that merchants and affiliates might want to consider are:

    1) Sites with user generated reviews that might not be solely a review site. I've seen more than one site where those "reviews" were obviously generated by the site owners if you took more than a half second look at the site.
    2) Sites with rating systems (ie star system). Again I've seen aff sites where all merchants got the highest rating.

    Those are just 2 areas I personally feel could be problematic.

    The bottom line of what the FTC seems to be saying is that if you are "recommending" something in anyway and are also getting some kind of financial compensation (not just actual money), then you have to disclose it.

  9. #9
    Speechless OTProf's Avatar
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    Verrrrrry Interesting.

    I don't do review sites but I have long had it on my do/try list so I am trying to understand the implications if I ever do get to making such sites.

    I am thinking this will be a really tricky needle to thread in a lot of ways.

    So say I (since Bill is in the thread) make a site that compares some online business check sites/options and show (my opinion) that Bill's is the cheapest/ships the fastest/has the most # of checks w/American Flags./etc. I would now need to have disclosure statement right?? Based on what is above it seems like in some cases this could be part of an "About Us" or "Privacy" section but some merchants are now requiring such disclosure to be on more/less every page right?? Would a generic statement along the lines of everything on the site is my opinion (along with paid remuneration disclosure in a Privacy Policy) be sufficient?

    Makes sense but also seems like it can get cumbersome quickly. Overall though, it is good to see some pressure coming down on the innumerable flogs that muck up the web

  10. #10
    Defender of Truth, Justice and the Affiliate Way
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    Some FTC resources for compliance:

    http://www.ftc.gov/os/2009/10/091005...mentguides.pdf
    BCP Business Center (whole section on advertising and marketing)

  11. #11
    Beachy Bill's Avatar
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    I think it's going to be a merchant requirement BECAUSE it is an FTC requirement - that, at least, the minimum example that 2busy posted above is on every page that contains a review - and in a conspicuous place.
    Disclosure: We are compensated for our reviews. <a link to the disclosure page /a>
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  12. #12
    Full Member gcarson's Avatar
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    I did a 'review' site once. More of a blog chronicling my use of a product. I put in a widget that appears on every page in the sidebar near the top of the page something along the lines of:

    Pursuant to new FTC regulations, I am fully disclosing my financial interest in this blog. I am a part time affiliate. If I write about something, link to where you can buy it, I might just make some money if you click on the link and make a purchase. If you don't think I should make any money, please just google the product to buy it. If I provided you with value, go ahead and click on a link. If you're bored, you can read my full disclosure here.
    Figured it was best to be blunt and obvious.
    Last edited by gcarson; March 23rd, 2011 at 02:41 PM.

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  14. #13
    ABW Ambassador 2busy's Avatar
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    I have had a disclosure policy linked from every page since the FTC requirement came out, no objection, but if I am not presenting any reviews it looks silly to say that I am compensated for my reviews when we are only compensated for sales.
    We have begun putting a distinct TOS together and will now require that we can see any referring page...or...(or what?). No cloaking, no redirects, no...
    That requirement would shut down your program Bill, there is no way affiliates can control everything that can influence the referrer showing or not showing. If a visitor has elected not to show referrers there will be no referrer. If the visitor visits your site via their browser's history or types in your URL after previously visiting via a clickthrough, the referrer will not show any page clicked on. There are other scenarios that can prevent referrer from showing and it is not necessarily anything that the affiliate has done or not done. I see increasing numbers of clicks in the SAS interface that do not show any referring page or link when the merchant has only plain old SAS issued links or PopShops links on my sites. It is a scary proposition for merchants but that isn't the answer.


  15. #14
    OPM and Moderator Chuck Hamrick's Avatar
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    So...a merchant overlooking the fact that some URLs from referring sites are "hidden" is no longer de rigueur. Merchants will now need to be able to see and identify any and all referring pages - to make sure they are or are not "review" type sites/pages/referrals with/without proper "disclosure" statements.
    We need networks to step up on this. It shouldn't be allowed to use a site ID for a different site. For the biggest network in the business I can not generate a URL report but I can look at each individual sale then dig back. That means 1-2 full time employees filtering the information that the network owns.

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  17. #15
    Analytics Dude Kevin's Avatar
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    Exactly right Chuck. This is another glaring example of where the bad actors have created a horrible situation for everyone. Had merchants and networks been more proactive in removing bad affiliates (networks: you know who you are) instead of coddling and promoting them, we likely wouldn't even be having this discussion.

    Instead though, the entire industry comes under fire due to a small percentage of affiliates, whom unfortunately drive large amounts of sales and traffic through nefarious means.
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  19. #16
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    I signed up with Legacy at the beginning of their program and stopped promoting them after noticing a huge quantity of "negative" review sites.
    I had a few back and forth discussions with Matt (August 2009) and it seems it was OK with them at that time. I even said these fake reviews or blog posts were damaging their brand. These affiliates were using PPC and organic traffic with aggressive titles.
    Just a few examples: Learn & Master Scam! Do not buy this program! Don't waste your money on L&M, Learn & Master Scam or Gold, Make sure you read this first, Don't buy until you read this review and much, much worse...
    Other affiliates concerned:
    The acts and practices of respondents as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.
    http://www.ftc.gov/os/caselist/10230...315llscmpt.pdf

    I don't know what has triggered the FTC investigation, negative ads, deceptive ads... Competition complaint...

  20. #17
    ABW Ambassador Greg Rice's Avatar
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    We manage a direct competitor to LL and after this news came out the merchant asked about how their program's affiliates were in compliance. After checking on those who were getting traffic and sales, we found that the vast majority of our affiliates were in compliance and a few who were "iffy". We keep tabs on affiliates and what they're doing so we were not surprised, but those "iffy" affiliates are being asked to place a disclosure just to be safe.

    I've been doing some research on this and, from what I understand and please feel free to correct me, is that if the site's owner is recommending a product or service (like a review, why you should buy, a blog post, etc.) that the FTC wants the disclosure and not just a link to one but one that is conspicuous on the page where the review is located.

    Some excerpts from the FTC site:
    Would a single disclosure on my home page that “many of the products I discuss on this site are provided to me free by their manufacturer” be enough?

    A single disclosure doesn’t really do it because people visiting your site might read individual reviews or watch individual videos without seeing the disclosure on your home page.

    Would a button that says DISCLOSURE, LEGAL, or something like that be sufficient disclosure?

    No. A button isn’t likely to be sufficient. How often do you click on those buttons when you visit someone else’s site? If you provide the information as part of your message, your audience is less likely to miss it.

    I’m an affiliate marketer with links to an online retailer on my website. When people click on those links and buy something from the retailer, I earn a commission. What do I have to disclose? Where should the disclosure be?

    Let’s assume that you’re endorsing a product or service on your site and you have links to a company that pays you commissions on sales. If you disclose the relationship clearly and conspicuously on your site, readers can decide how much weight to give your endorsement. In some instances, where the link is embedded in the product review, a single disclosure may be adequate. When the product review has a clear and conspicuous disclosure of your relationship – and the reader can see both the product review and the link at the same time – readers have the information they need. If the product review and the link are separated, the reader may lose the connection.

    As for where to place a disclosure, the guiding principle is that it has to be clear and conspicuous. Putting disclosures in obscure places – for example, buried on an ABOUT US or GENERAL INFO page, behind a poorly labeled hyperlink or in a terms of service agreement – isn’t good enough. The average person who visits your site must be able to notice your disclosure, read it and understand it.
    A pretty good interview with the FTC is here.

    The interviewer asked the FTC representative if this disclosure
    Disclosure: Compensated Affiliate
    would be adequate above the link to the merchant and he said yes.

    This is certainly much shorter than the one I drafted and will likely be the one I'll be sharing with our affiliates from now on.

    Some important points I got from the interview are:
    1) The FTC is looking for blatant or intentional misleading of the public. Sites that review like they were an actual customer and didn't disclose they were being compensated.
    2) They just want the public to understand the relationship between the site's owner and the merchant. If the site is a shopping mall site, it doesn't seem like a disclosure is needed, unless you fit #1 above. People who go to a shopping mall site, according to the FTC, expect to see products endorsed for merchants. Bloggers and "review" or "independent review" sites are a little more fuzzy and the public may not realize the "reviewer" is compensated for their review.

    I would say, if you're not sure post the disclaimer. This is what we are asking our affiliates. The FTC is not saying exactly what they want so we need to be careful or be prepared to defend our position with lots of cash for legal expenses. The disclosure is a pretty cheap solution IMO.
    Last edited by Greg Rice; March 25th, 2011 at 11:26 AM.
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  22. #18
    ...and a Pirate's heart. Convergence's Avatar
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    What constitues a paid relationship?
    There are web publishing standards that have been accepted over the years - labeling a banner ad as an 'Ad', 'Advertisement', 'Sponsor', etc. Same goes with showing PPC ads on a site. They typically are labeled as such.

    If a publisher is not reviewing or offering their opinion on a product/merchant, does that constitute a paid relationship in the eyes of the FTC, and therefore, require a 'disclaimer' with every 'link'?
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  23. #19
    ABW Ambassador Greg Rice's Avatar
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    Quote Originally Posted by Convergence View Post
    There are web publishing standards that have been accepted over the years - labeling a banner ad as an 'Ad', 'Advertisement', 'Sponsor', etc. Same goes with showing PPC ads on a site. They typically are labeled as such.

    If a publisher is not reviewing or offering their opinion on a product/merchant, does that constitute a paid relationship in the eyes of the FTC, and therefore, require a 'disclaimer' with every 'link'?
    My understand is that the it's not the relationship with the merchant that dictates if a disclaimer is needed but how the public (and the FTC) perceives the site in question, if that makes sense.

    For example, if it's a shopping mall or coupon site then the public is likely to assume the purpose of the site is to promote and sell products. Therefore a disclosure is not needed.

    If the site is a blog (the FTC seems more focused on blogs and so called "independent review" sites) then the public may not understand that the blog poster or reviewer is getting compensated for the blog post or review and as such their post or review could certainly be biased in favor of the merchant because of the compensation. Therefore, in the eyes of the FTC, it is deceptive.
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  25. #20
    ...and a Pirate's heart. Convergence's Avatar
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    Quote Originally Posted by Greg Rice View Post
    If the site is a blog (the FTC seems more focused on blogs and so called "independent review" sites) then the public may not understand that the blog poster or reviewer is getting compensated for the blog post or review and as such their post or review could certainly be biased in favor of the merchant because of the compensation. Therefore, in the eyes of the FTC, it is deceptive.
    In our case, we have started to add blogs to some of our websites. Each site is their own site, the blogs are for us to discuss our website's features, recently added merchants (where we may or may not have an affiliate relationship with them but who may have paid for advertising space), to discuss popular searched for/viewed products/merchants, and to keep our visitors abreast of Updates/Changes to the website, ie: New and/or improved user functions.

    Our blogs do not allow for user submissions but are simply a reporting tool and some SEO advantages

    Just don't want the FTC and government to automatically assume all websites that have blogs that the content on them are considered reviews or direct endorsements.
    Last edited by Convergence; March 25th, 2011 at 02:32 PM.
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  26. #21
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    Quote Originally Posted by Bill View Post
    I think it's going to be a merchant requirement BECAUSE it is an FTC requirement - that, at least, the minimum example that 2busy posted above is on every page that contains a review - and in a conspicuous place.
    That statement that LLS requires is ridiculous, because the affiliates are NOT paid for their reviews - which is something else entirely. They are paid only if someone buys something as a result of a review. And that is what I would say; except, of course, if I had LLS links and they insisted on that exact wording ... in which case, I probably wouldn't put in the links. I actually do belong to their program and had a banner up for a very short time. Nobody showed much interest (my site is about one musician, but there are a lot of guitar players and "I'd like to learn" folks who visit).

    What I didn't understand about them is how I could write a review, since they did not offer copies, even used copies, and their lessons are not cheap. It's one thing to buy a $15 book which you really want to read anyway, if you can't get it from the publisher (I usually can), but it's another thing to pay $150 or $250 or whatever their lessons cost. Maybe they give free copies to some affiliates? Anyhow, when I got their email I wrote back and said I had no links at all now, but that I knew what was required. (At least I think I know). I did not know they had been collared by the FTC. That is very interesting!

    I handle the disclosure requirements with a long statement in "Legal". (This is not "Privacy"; some people confuse them). My Legal disclosure is a bit tongue in cheek when I go on to list the items that I got free ... going back to the start of the web site (1998), I frankly can't tell you for sure what I got for free and what I bought. I give a best efforts list. And now, when I review something that I got for free, I say so ... and whether it's from the publisher, record label or artist. It's a simple sentence that I place at the end of the review (this may not work for LLC, but they may be subject to more stringent requirements); however, placing it at the top probably wouldn't be a big deal. It's a true statement, and I find nothing wrong with it. The statement about earning commissions is in the Legal disclosure only. I can't imagine that the FTC would have any problem with my site, but then again my volume is such that they would never look at it.
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  27. #22
    Full Member gcarson's Avatar
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    Quote Originally Posted by shuvee View Post
    I can't imagine that the FTC would have any problem with my site, but then again my volume is such that they would never look at it.
    Reading your statement and thinking about LLS vs all those weight loss or get rich quick schemes out there. I can't image LLS is one of the biggest offenders or most egregious offenders by any means compared to other things I've seen.

  28. #23
    Full Member Lanny's Avatar
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    @Michael Can you move this thread to Legal?
    @Michael Can you move this thread, to the Affiliate Legal Lounge, or somewhere where many more people will see it? This is a *VERY* important topic.

    Sad that Legacy has had their reputation badly tarnished by this. Probably many other companies will soon follow them...

  29. #24
    ABW Ambassador 2busy's Avatar
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    If a publisher is not reviewing or offering their opinion on a product/merchant, does that constitute a paid relationship in the eyes of the FTC, and therefore, require a 'disclaimer' with every 'link'?
    That was specifically my complaint about adding a statement. It looks stupid since there is no review. I have a section about different types of personal growth on one site and show things such as music, art and languages that people can learn but no reviews of any of it. The main article offers links to their videos with product links on those pages, but again, no review. They insisted on the disclosure that I posted above and there is even a section that details the requirements of color contrast and font size.

    I did not have spare time in Dec. so I added their disclosure and as I find time to do remodeling there it will be gone. I have not seen similar disclosures anywhere online.

  30. #25
    Moderator MichaelColey's Avatar
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    Quote Originally Posted by Lanny View Post
    @Michael Can you move this thread, to the Affiliate Legal Lounge, or somewhere where many more people will see it? This is a *VERY* important topic.
    I've moved it to the new Affiliate Industry Insights forum that we're in the process of rolling out.

    It has also been featured (which puts it on the homepage), tweeted, and included in the list of the best monthly threads.
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