FTC Changes Guidelines for Customer Testimonials
The FTC has recently changed the way that testimonials can be used for marketing and affiliate purposes. Whether you are a consumer or business owner, these may affect some of the things you write for online marketing purposes. You may find yourself needing to do more research or being asked research question as companies try to satisfy the new FTC requirements.
For anyone who does not adhere to the new FTC guidelines for testimonials, there are steep fines and the possibility of losing a good reputation. These fines could be as much as $11,000 to $16,000 dollars per incident, so it’s a good idea to become informed about the new practices.
What has changed?
One particular kind of testimonial for marketing purposes known as the “results-based” testimonial is under the radar. This is the area the FTC has focused on to change. We’ve all seen those enthusiastic testimonials where someone made a particular amount of money in a short time (i.e., “Using the XYZ System, entrepreneur makes $68,048 in 4 days!”) Those numbers are what the FTC is cracking down upon. Realistically, most people who buy into that system will not see the same results. It’s akin to weight loss products, which typically have the fine print of “results not typical.”
The FTC has taken this a step further by stating that if you have a results-based testimonial on your website, you now have to tell prospective clients what the average return will be for the investment.
Why does this help consumers?
The obvious answer is that consumers will have a less likely chance of investing in a marketing scam. Many programs cost more for the time and investment than for the return, and the testimonial might promise more than meets the eye. There are also a lot of people who believe they will get huge results, but this often isn’t the case.
What are some of the problems?
For one thing, the companies who market these types of products often have no idea what the average return might be for a product. Many entrepreneurs are enthusiastic about product development, but not necessarily research, so they don’t actually have this kind of information at their fingertips. They might have sold thousands of kits to satisfied customers, yet without the ability to do number crunching from each of those customers, they don’t have data on exactly what it means to be satisfied monetarily. This type of research takes time and it might not even be something that is built into the company structure.
In those cases, there is now a risk with using these types of testimonials for marketing purposes. If you get the attention of the FTC, you might be looking at heavy fines or even a loss of a reputation. Both things are not attractive to your business.
How else does this affect companies?
Companies are going to need to spend more time doing research to satisfy the FTC guidelines for testimonials. This could actually be a good thing because once the research is done and the real numbers are on the table, the average might be even better than expected. Consumers are also going to trust these numbers more.
What kinds of testimonials are not affected?
Testimonials that do not describe results are not part of the FTC guidelines. For example, “The XYZ System is really fun to use” would not need to be altered. Those kinds of marketing testimonials are not results-oriented and do not fall under the new policy.
What other things are changing?
Mostly, there will need to be changes in affiliate programs where results-based testimonials are currently one of the devices used to attract new affiliates. Building strong, authentic relationships with affiliates will also become more important than ever before. It isn’t just going to be about making big promises, but actually disclosing more information from the start so that customers can make informed decisions.
For more information about the FTC guidelines, check out my blog post: New Rules for Endorsing Products Online
