New FTC Rules and Guidelines – When to Use “Material Connection” Disclosures

By Karen Brunet | October 29, 2009

ftc-material-connection The FTC has announced some major changes to their advertising rules regarding testimonials and endorsements. And one of the biggest changes has to do with the importance of disclosing any “material connection” between the advertiser and the endorser.

In this article we’ll look at how this applies to coaches and consultants and give you a better understanding of what “Material Connection” means.

How Does This Apply to Coaches and Consultants?

To rephrase this in layman terms, you need to let people know of any relationship between you the coach or consultant (advertiser) and the person who gives you a testimony (endorser) about your services or programs. And the disclosure should be put with the testimonial, either within it or right below it.

It also applies to you if you give someone a testimony or if you give a review of a product or service. And it will apply to you if you make any recommendations and use your affiliate link.

Also, the FTC wants you as the advertiser to tell your endorsers (affiliate marketers) that they need to include the necessary disclosures when they recommend your services or products.

What Does Material Connection Mean?

One of the questions we received after our recent teleseminar, “New FTC Rules - What You Need to Know,” was about this issue. So let’s look at what the FTC means by a “Material Connection” relationship between an advertiser and an endorser.

To avoid quoting several paragraphs from the FTC, I’ll give you a summary. It seems to me that the FTC’s main concern is about the credibility of an endorser’s recommendation.

For instance, let’s say you are considering vacation travel destinations online. And you find one resort that has lots of great testimonials and reviews about how wonderful the service, amenities, and food was. That would sway most of us to seriously consider that resort.

But what if you found out that all (or most) of those where written by people who were either:

paid by the resort to write those reviews
given a free stay at the resort in exchange for their testimony
given something else of value in exchange for their review
or were related to the resort owners, e.g. spouse, cousin, in-laws, sisters or brothers, etc.

Would you now give the same credibility to those glowing reviews and testimonies as you did before you knew of the “material connection” between the resort and the endorsements? Probably not.

So when do you want to disclose a “material connection?”

I believe that any of the following needs to be disclosed, whether it is for a testimony you give, a testimony you use on your website, or a review you give about a product or service:

A client relationship - You want to include these in your testimonials and have probably been doing it anyway.
An affiliate relationship, e.g. you earn a commission on any sales
Something of value you received or gave away in exchange for the review or testimonial, e.g. free product, money, free services
A close personal connection, such as a relative, best friend, etc.

If on the other hand, I buy a product or service with my own money and decide to write a testimony or review as a favor to the company - with no compensation - then no disclosure is needed. This is an honest, highly credible review or testimony.

How to disclose without killing your marketing?

A disclosure doesn’t have to ruin your marketing efforts. It depends on how you write it. Here’s an example of a testimonial with disclosure written in a positive way.

I’ve been coaching with Mary for 6 months and have gotten fantastic results. So when she asked me to try out her new Infinity Program as a favor and tell her what I thought, I jumped at the chance. The Infinity Program was exactly what I needed to get to my next business level and was worth far more to me than what she’s offering it for. I highly recommend it to anyone who is ready to move to the next level in their business.

Here’s another example with a brief review:

I’ve used Infinity Software for years and love it. Its built in tools and pre-programmed icons make difficult and time consuming tasks a snap. That’s why I’ve become an affiliate and recommend Infinity Software on a regular basis to all my clients. Read more about how you can double your productivity with Infinity here: [affiliate URL inserted here]

For more information about disclosures and the new FTC rules, download a free copy of our recent teleseminar New FTC Rules - What You Need to Know.

Please note that no legal advice is dispensed on this website or during the teleseminar, and any information or opinions shared are for educational and entertainment purposes only. If you want legal advice, please seek the services of an attorney for your particular circumstances.

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