Introduction
In the evolving digital economy, affiliate marketing has become a key method by which content creators, influencers, and publishers monetize their platforms. Under this model, affiliates embed special tracking links or codes into content so that when readers click through and make purchases, the affiliate receives a commission. Yet this business model carries potential pitfalls—especially when the affiliate relationship is not transparently disclosed. In response, the U.S. Federal Trade Commission (FTC) has in recent years sharpened its focus on undisclosed affiliate links, tightening rules and increasing enforcement to protect consumers from misleading endorsements.
Why the FTC Is Taking Action
At the heart of the FTC’s interest is truth in advertising. The FTC’s mandate includes ensuring that consumers are not misled by omissions or deceptions in marketing communications. When a blogger, influencer, or publisher hides the fact that their recommendation yields them a commission, readers may unknowingly trust the endorsement as more objective or impartial than it truly is.
Historically, studies have shown that a large proportion of affiliate content fails to disclose the commercial relationship. For example, a survey of YouTube and Pinterest content found that 90 percent of affiliate links were undisclosed or improperly disclosed. Global Dating Insights That level of opacity raises red flags about whether consumers can make fully informed decisions.
Moreover, the creator-economy boom has amplified the issue. Many content creators cultivate close rapport with their audiences; mixed messages or hidden monetization could erode trust quickly if discovered. In recent years, legal pressure, class‑action suits, and regulatory scrutiny have converged to push the FTC to act more decisively. Digiday+1
Key Policy Updates and Shifts
Over the past several years, the FTC has refined and strengthened its “Endorsement Guides,” which lay out how advertisers and endorsers must disclose material relationships. Some of the most consequential changes include:
- “Clear and Conspicuous = Unavoidable”
Disclosures can no longer be tucked away in footers, in “About” pages, or behind “read more” links. The new guidance states that disclosures must be so clear and obvious that a reasonable consumer cannot miss them. Tricia Meyer+1 - “Affiliate link” is often not sufficient
The FTC has cautioned that generic terms like “affiliate link” or “commissionable link” may not properly communicate the nature of the relationship to consumers. Instead, phrasing such as “paid link,” “I earn a commission,” or “I may receive compensation” is considered more explicit. Tricia Meyer - Ordering and placement matter
Disclosures should precede or accompany the affiliate link or endorsement—not appear afterward. They should be in proximity to the promotional content (e.g. directly above a link or within the content itself). Tricia Meyer+1 - Multiple parties can be liable
It’s not solely the affiliate (i.e. the content creator) who can be held responsible. Advertisers, agencies, and intermediaries who orchestrate, approve, or fail to monitor noncompliant disclosures may also bear liability. Tricia Meyer+1 - Platform tools are not always enough
While social media platforms often offer “paid partnership” labels or disclosure toggles, these built‑in tools don’t automatically satisfy the FTC’s requirements. If the default or platform-provided disclosure is insufficiently visible or clear, additional disclaimers may still be required. Tricia Meyer - Enhanced enforcement and remedies
The FTC has signaled that it will not only issue guidance but also take enforcement actions, including civil penalties for violations. In some past cases, the agency issued warning letters to high-profile influencers failing to disclose sponsorships. Nextgov/FCW+1 - Extending into related domains: fake reviews, incentives, and deceptive rankings
The latest FTC actions include new regulations targeting fake, incentivized, or manipulated reviews and ratings, which often intersect with affiliate promotion. Publishers and affiliate marketers must ensure reviews are genuine, transparent, and not misrepresented to manipulate consumer impressions. nucleuslinks.ai
Implications for Affiliates, Creators & Publishers
These policy changes carry important implications:
- Greater transparency is mandatory: Content creators and affiliates must audit their disclosure practices, ensuring that disclosures are placed properly, use adequate language, and are unavoidable.
- Contracts and training matter: Advertisers and agencies should build in disclosure requirements into their contracts and train influencers, affiliates, and intermediaries to ensure compliance.
- Monitoring and enforcement capabilities: Platforms or networks working with affiliates may need to establish review, auditing, or pre-approval mechanisms to catch disclosure failures before publication.
- Heightened risk: Noncompliance can lead not only reputational harm but legal penalties and loss of affiliation privileges.
- Cross-border relevance: Although the FTC is a U.S. agency, its guidance often influences global norms. Affiliates whose content reaches U.S. audiences may be subject to U.S. standards.
Historical Background of Affiliate Marketing & Disclosures
Affiliate marketing has become a foundational aspect of the modern digital economy. As an advertising model built on performance-based compensation, it has allowed businesses to expand their reach and enabled individuals to monetize their content. However, this rapid growth has not been without complications. Among them, the issue of transparency and the need for proper disclosure have remained contentious since the early days of affiliate practices. To fully understand how affiliate marketing and disclosure norms have evolved, it is essential to examine their historical roots, the early practices regarding disclosure, and the regulatory attention that shaped today’s standards.
Origins of Affiliate Marketing
Affiliate marketing, in its most basic form, is a commission-based arrangement in which an individual (the affiliate) promotes a product or service and earns a commission for each sale or action driven through their unique referral. While the concept of referral-based sales has existed for centuries in traditional business models, the digital version of affiliate marketing emerged with the rise of the internet in the 1990s.
Early Commercial Models
The earliest iterations of affiliate marketing can be traced back to the early days of e-commerce. One of the first online retailers to employ an affiliate marketing model was PC Flowers & Gifts, which launched an affiliate program on the Prodigy Network in 1989. However, the breakthrough moment for affiliate marketing is widely credited to Amazon, which launched its Associates Program in 1996. The Amazon Associates Program allowed website owners to place links to Amazon products and earn a commission on sales generated through those links.
This model was revolutionary because it aligned the interests of content creators, bloggers, and webmasters with that of online retailers. It allowed even small publishers to monetize their websites without creating their own products or services. With minimal barriers to entry, the model rapidly gained popularity across different online niches, from tech and fashion to health and personal finance.
Growth in the Early 2000s
The early 2000s saw an explosion of affiliate networks such as Commission Junction (now CJ Affiliate), ClickBank, and ShareASale. These platforms acted as intermediaries between merchants and affiliates, offering tracking tools, payment processing, and campaign management. The rise of blogging, online forums, and email marketing further expanded the reach of affiliate content.
By this point, affiliate marketing had grown into a multibillion-dollar industry, but this growth came with new problems—primarily a lack of transparency regarding how and why certain products were being recommended.
Early Practices of Disclosure (or Lack Thereof)
In the early stages of affiliate marketing, disclosure of affiliate relationships was practically nonexistent. Affiliates often promoted products without revealing that they had a financial interest in the purchases made through their links. This lack of transparency led to ethical concerns about deceptive advertising and manipulation of consumer trust.
The Trust Problem
Many affiliates positioned themselves as unbiased reviewers or experts while secretly earning commissions from the very products they promoted. For example, a personal finance blogger might recommend a specific credit card without disclosing that they would earn a commission from each signup. Similarly, health and wellness influencers might endorse supplements or weight loss products under the guise of personal use, while being compensated by the companies selling them.
This practice created a fundamental conflict of interest. Consumers, unaware of the affiliate relationships, were misled into believing that recommendations were based on objective evaluations rather than financial incentives. As affiliate marketing expanded into new platforms—especially with the rise of YouTube, Instagram, and other social media—the problem became more pervasive.
Affiliate Spam and Deceptive Tactics
Additionally, the anonymity and reach of the internet enabled a darker side of affiliate marketing: aggressive and deceptive tactics. This included keyword stuffing, fake review websites, and clickbait headlines, all designed to drive traffic and increase affiliate conversions without regard for the consumer’s actual experience.
The problem of affiliate spam was particularly acute in email marketing. Before anti-spam legislation caught up, many affiliates sent unsolicited emails packed with affiliate links, often promoting questionable or low-quality products. This contributed to the general public’s growing distrust of affiliate-driven content.
Prior Regulatory Attention
As affiliate marketing practices became more widespread—and in some cases, more exploitative—regulators began to take notice. In the United States, the Federal Trade Commission (FTC) emerged as the primary regulatory body addressing deceptive advertising and lack of disclosure in affiliate marketing.
The FTC’s Mandate
The FTC’s core mission is to protect consumers from unfair or deceptive business practices. Under Section 5 of the FTC Act, deceptive advertising is prohibited. This includes not only false claims but also omissions that would mislead a reasonable consumer. The agency determined that failure to disclose material connections—like affiliate relationships—could constitute deceptive advertising under the law.
Early Warnings and the 2009 Guidelines
While the FTC had long monitored deceptive advertising practices, the agency did not issue clear guidance on affiliate marketing disclosures until 2009. That year, the FTC published its “Guides Concerning the Use of Endorsements and Testimonials in Advertising.” This marked the first major federal recognition of the need for disclosure in online affiliate marketing.
Key takeaways from the 2009 guidelines included:
- Endorsers (including bloggers and influencers) must disclose any material connection they have with a brand.
- A “material connection” includes any payment, free product, or affiliate commission.
- Disclosures must be clear and conspicuous to the average consumer.
These guidelines signaled a significant shift. For the first time, affiliate marketers and content creators were legally expected to disclose their financial relationships in a manner understandable to their audience. This was a wake-up call to the industry, though enforcement remained inconsistent in the early years.
Enforcement Begins
In the years following the 2009 guidelines, the FTC began taking enforcement actions against individuals and companies that failed to disclose affiliate relationships. One notable case was in 2016, when the FTC settled with gaming network Machinima for paying YouTubers to endorse Xbox products without requiring proper disclosure. This case was significant because it showed that individual influencers, as well as sponsoring companies, could be held liable.
Another turning point came in 2017, when the FTC sent over 90 warning letters to influencers and brands regarding inadequate disclosures on Instagram. These letters clarified that disclosures must be placed in the first three lines of a caption and should not be hidden behind “more” tags or hashtags buried in a list.
Evolution into the 2020s
By the 2020s, regulatory scrutiny had increased substantially. The FTC updated its endorsement guidelines again in 2023, further refining expectations around disclosures and clarifying standards for newer platforms like TikTok and podcasting. Disclosures now had to be unambiguous and unavoidable, using clear language such as “I earn a commission if you buy through this link.”
The rise of AI-generated content and influencer marketing only heightened the FTC’s interest in ensuring transparency. Affiliate marketers today must be diligent not only in their disclosures but in how those disclosures are presented across different platforms, including blogs, videos, livestreams, and social media.
Outside the U.S., regulators in the UK (Advertising Standards Authority), EU, and Canada also established clearer rules around affiliate disclosure, reflecting a global trend toward transparency in digital advertising.
Evolution of the FTC’s Position on Affiliate Disclosures
The Federal Trade Commission (FTC) has played a central role in shaping how affiliate marketing is practiced in the United States, particularly in terms of transparency and consumer protection. As digital marketing evolved, so too did the FTC’s expectations for disclosures in affiliate relationships. From vague early warnings to formal guidelines, and eventually to active enforcement, the FTC’s position has transformed significantly over the past two decades.
This article explores that evolution, focusing on early guidance and statements, key regulatory updates, and the agency’s shifting enforcement posture.
I. Early Guidance and Statements
Pre-2000s: A Reactive Approach
Before the rise of widespread internet commerce, the FTC’s concerns about advertising disclosures focused largely on traditional media—TV, radio, print, and telemarketing. While the principles of “truth-in-advertising” applied universally, there was little direct guidance on how those rules should translate into digital and affiliate marketing contexts.
As the internet economy grew in the late 1990s, the FTC started to notice that online content creators were often compensated for endorsements or product placements, but without clear disclosure to users. However, these early concerns were met with a mostly reactive regulatory stance, lacking formal rules specific to affiliate marketing.
2000: The Dot-Com Disclosures
A foundational moment came with the 2000 publication of the “Dot Com Disclosures” guidelines. This was the FTC’s first major effort to translate traditional advertising principles to the online environment.
Key takeaways included:
- Online advertisers must provide clear and conspicuous disclosures.
- The format of digital content (e.g., hyperlinks, scrolling pages) must not obscure necessary information.
- Disclosures should be placed close to the related claim or content, rather than buried in terms and conditions.
While not specific to affiliate marketing, the Dot Com Disclosures laid the groundwork for how the FTC would later approach affiliate disclosures—emphasizing visibility, clarity, and context.
II. Key Updates Over Time
2009: Endorsement Guides Update — A Turning Point
The 2009 revision of the FTC’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising” marked a pivotal shift. This was the first time the FTC directly addressed bloggers, influencers, and affiliates under the umbrella of “endorsers.”
Major Developments:
- Any material connection between an endorser and a brand (including payments, free products, affiliate commissions) must be disclosed.
- The disclosure must be clear, conspicuous, and placed in proximity to the endorsement.
- Simply linking to a “Disclosure” page or burying it in a privacy policy was deemed insufficient.
- Affiliate marketers were officially recognized as endorsers, and affiliate links were categorized as material connections.
This shift acknowledged the growing power of individual content creators to influence purchasing decisions and recognized the potential for deception if relationships weren’t made transparent.
The 2009 update triggered widespread discussion in the marketing and blogging communities. Some affiliates began adding short disclosures (“I may earn a commission from links in this post”), but enforcement remained sparse, and compliance varied significantly across platforms.
2013: FTC Staff Guidance and Examples
To address confusion around the 2009 rules, the FTC released staff guidance documents and FAQs in subsequent years. In 2013, an updated set of FAQs clarified:
- “Affiliate link” is not enough—you must explain what that means in plain English.
- Disclosures must be on every page or piece of content that includes an affiliate link—not just in a sidebar or “About” page.
- The use of hashtags like #ad or #sponsored was approved for platforms with character limits (e.g., Twitter), but they had to be clear and understandable.
These clarifications highlighted the FTC’s growing concern with the real-world presentation of affiliate content and the user experience of disclosures.
2017: Influencer Crackdown and Social Media Focus
With the explosion of influencer marketing on platforms like Instagram and YouTube, the FTC shifted its focus to social media endorsements.
In April 2017, the FTC sent over 90 letters to influencers and brands warning them about inadequate or missing disclosures. This was a clear signal that the agency was moving beyond passive guidance and into active surveillance and correction.
The letters highlighted several key issues:
- Disclosures buried in long lists of hashtags were not acceptable.
- Using vague terms like #partner or #sp was insufficient.
- Disclosures must be “unavoidable”—not hidden under “More” tags or placed at the end of a video or post.
The FTC also released additional FAQs tailored to influencers, solidifying that individuals, not just companies, were responsible for proper disclosure.
2020: Revisiting the Dot Com Disclosures
In 2020, the FTC began reassessing both the 2000 Dot Com Disclosures and the 2009 Endorsement Guides, asking for public comment on their effectiveness and relevance in the modern marketing environment.
Some of the questions raised included:
- Are the current rules sufficient for mobile apps, streaming content, and voice-assisted devices?
- Do users understand terms like “affiliate link” or “sponsored”?
- How can disclosures be standardized across platforms and formats?
This review period reflected the FTC’s acknowledgment that technology had outpaced regulation—and that user behaviors, such as scrolling, swiping, or skipping, created new challenges for effective disclosure.
2023: Revised Endorsement Guides
In July 2023, the FTC released a major update to its Endorsement Guides, the first since 2009.
Key updates included:
- Clear definition of a “material connection”, including affiliate relationships.
- More emphasis on platform-specific disclosure strategies—what works on Instagram may not work on TikTok or YouTube.
- Disclosures must be unavoidable—not easily missed by scrolling or skipping.
- Clearer liability standards: both influencers and the sponsoring brands can be held liable for deceptive or undisclosed endorsements.
Notably, the FTC also addressed child-directed content and emerging tech (e.g., virtual influencers, AI-generated content)—anticipating future developments in the marketing ecosystem.
III. Shifts in Enforcement Posture
Over the years, the FTC has moved from guidance and education to warnings and enforcement. Its enforcement posture has evolved in three major phases:
1. Informal and Educational (2000–2015)
In the early years, the FTC focused on raising awareness. Guidance documents, workshops, and FAQs were the primary tools. There were very few enforcement actions during this time, as the agency hoped that voluntary compliance would suffice.
2. Warnings and Settlements (2015–2020)
The second phase saw the FTC move toward public warning letters and settlements with offenders. High-profile cases included:
- Machinima (2015): The gaming network was charged for failing to disclose paid endorsements on YouTube.
- Warner Bros. (2016): The company settled charges for paying YouTubers to promote games without requiring disclosure.
- Cure Encapsulations (2019): Charged for buying fake Amazon reviews—though not affiliate-based, this showed a broader focus on deceptive digital marketing.
These actions demonstrated that failure to disclose was not just an ethical lapse—it was a legal one.
3. Proactive Surveillance and Public Accountability (2020–Present)
In the current phase, the FTC has adopted a more aggressive, proactive stance, including:
- Publishing names of influencers and brands who received warning letters.
- Increasing fines and penalties in settled cases.
- Launching formal investigations based on consumer complaints or media coverage.
- Exploring algorithmic detection tools to monitor disclosure compliance across platforms.
At the same time, the FTC has encouraged platforms (e.g., YouTube, Instagram, TikTok) to build disclosure features directly into their systems. However, the agency has maintained that the ultimate responsibility lies with the individual or business making the endorsement.
FTC Policy Changes and Legal Framework in Affiliate Marketing and Endorsements
The Federal Trade Commission (FTC) plays a central role in enforcing consumer protection laws in the United States, especially as they apply to advertising, endorsements, and affiliate marketing. Over the years, the FTC has adapted its regulatory approach to keep pace with the evolution of the digital marketplace. This includes updates to longstanding legal frameworks, the introduction of detailed guidance documents like the Endorsement Guides, and the issuance of new policies and memos that directly respond to emerging technologies and influencer-driven marketing.
This article examines the legal and regulatory framework governing affiliate disclosures and endorsements, starting with the statutory foundation under the FTC Act, followed by the development of official guidelines and rules, and concluding with recent policy changes that reflect the FTC’s sharpened enforcement stance.
1. Statutory Basis: The Legal Foundation of FTC Authority
The Federal Trade Commission Act (FTC Act)
At the core of the FTC’s authority lies the Federal Trade Commission Act of 1914, particularly Section 5, which prohibits “unfair or deceptive acts or practices in or affecting commerce.”
Under Section 5:
- An act or practice is “deceptive” if it misleads or is likely to mislead a consumer acting reasonably under the circumstances, and
- It is “material” if the misleading information affects the consumer’s purchasing decisions.
The FTC interprets undisclosed endorsements and affiliate relationships as potentially deceptive if they create a false impression of impartiality. If a content creator receives compensation (whether monetary or otherwise) and promotes a product or service without disclosing this connection, the audience may reasonably assume the endorsement is unbiased—making the omission deceptive.
Section 12 of the FTC Act
Section 12 specifically addresses false advertisements for food, drugs, devices, services, or cosmetics, declaring it unlawful to disseminate misleading information in these domains. This section is frequently invoked in cases involving health or wellness claims, particularly where affiliate marketers or influencers promote products without sufficient evidence or proper disclosure.
Other Relevant Laws
While the FTC Act provides the main enforcement tool, several other laws and regulations intersect with FTC policies:
- Children’s Online Privacy Protection Act (COPPA): Requires parental consent before collecting personal data from children under 13, which can impact influencer content directed at children.
- CAN-SPAM Act: Regulates commercial email, including affiliate offers delivered via email marketing.
- Truth in Advertising laws: These broader consumer protection statutes are enforced in conjunction with state attorney generals.
2. Guidelines, Rules, and Updates: Codifying FTC Expectations
2000: “Dot Com Disclosures”
The first major attempt to apply traditional advertising principles to the digital world came with the FTC’s 2000 “Dot Com Disclosures” guidance. This document emphasized that all advertising disclosures must be clear and conspicuous, even when delivered via websites, emails, or other digital media.
Key elements of this guidance included:
- Placement and prominence: Disclosures must appear close to the relevant claim, not buried in footers or links.
- Language clarity: Technical or legalistic language should be avoided.
- Platform-specific considerations: Scrolling, pop-ups, and mouseovers should not hinder access to disclosures.
While not a rule in itself, this guidance laid the foundation for future regulations addressing affiliate and influencer disclosures.
2009: Endorsement Guides – Major Revision
The FTC’s 2009 update to the “Guides Concerning the Use of Endorsements and Testimonials in Advertising” was a pivotal moment in affiliate marketing regulation. It was the first official acknowledgment that blogs, influencers, and affiliate marketers fall under the umbrella of “endorsers” and are thus subject to advertising disclosure rules.
Key provisions included:
- Disclosure of material connections: If there’s a relationship between an endorser and a seller that might affect how the audience evaluates the endorsement, it must be disclosed.
- Applies to monetary compensation, free products, discounts, commissions, or other incentives.
- Disclosures must be “clear and conspicuous” and must not be buried in footnotes or linked off-page.
The 2009 update spurred significant awareness in the affiliate marketing and blogging communities but did not initially lead to widespread compliance, prompting further action in the following years.
2013–2017: FAQs and Clarifications
To address confusion and inconsistency in compliance, the FTC published a series of FAQs and example scenarios between 2013 and 2017. These documents clarified points such as:
- “Affiliate link” is insufficient: Use plain language like “I may earn a commission from purchases made through these links.”
- On social media, disclosures must appear before the fold (e.g., not hidden under “more” tags).
- Acceptable hashtags include #ad and #sponsored, but vague labels like #sp or #collab are not adequate.
During this period, the FTC also sent out educational warning letters to influencers and brands, signaling increased oversight.
2020: Review of Guides and Modernization Efforts
In 2020, the FTC launched a public review of the 2009 Endorsement Guides, asking for input on whether the guidelines were still effective and how they could be improved for emerging platforms such as TikTok, livestreaming, and podcasting.
The agency acknowledged that consumer behavior, influencer marketing, and advertising platforms had outpaced existing regulatory language. The review set the stage for the next major overhaul.
2023: Updated Endorsement Guides and “Health Products Compliance Guidance”
The July 2023 update to the Endorsement Guides modernized FTC policy in several key ways:
Key Changes:
- Expanded definition of “endorsement”: Now includes virtual influencers and fake or AI-generated endorsements.
- Stronger disclosure requirements: Disclosures must be “unavoidable”—for example, placed at the beginning of videos or in the first few lines of a social post.
- Liability: Endorsers, brands, and platforms can now all be held liable for deceptive content.
- Child-directed content: Special scrutiny is applied to content aimed at children, reflecting concerns about developmental understanding and manipulative tactics.
Health Claims
At the same time, the FTC issued an updated Health Products Compliance Guidance, clarifying that all health-related product claims must be backed by scientific evidence and must not be presented deceptively by influencers or affiliates.
3. Recent Policy Changes and Memos: Shifts in FTC Strategy
The FTC’s recent actions reflect a broader policy shift toward proactive enforcement, increased transparency, and technology-driven oversight.
Increased Use of Warning Letters and Public Accountability
Beginning in 2017 and accelerating into the 2020s, the FTC began sending warning letters to influencers and companies who failed to properly disclose relationships. While initially private, the agency now often publishes these letters, adding a reputational enforcement dimension.
For example, in 2021, the FTC sent letters to multiple TikTok and Instagram influencers promoting vaping products and health supplements without clear disclosures.
The publication of names serves to:
- Warn others in the industry,
- Educate the public,
- And create accountability through transparency.
FTC Penalty Offense Authority Revival (2021–2022)
In 2021, the FTC revived its “Penalty Offense Authority”, a legal tool that allows the agency to seek civil penalties against companies that knowingly engage in deceptive practices that the FTC has previously determined to be unlawful.
This revived authority enabled the FTC to send notices to over 700 companies, warning them that failure to disclose endorsements and misleading reviews could now result in monetary penalties up to $50,120 per violation.
This was a major escalation in enforcement capability, as it allowed the FTC to penalize without first engaging in lengthy administrative proceedings.
Focus on Dark Patterns and Platform Accountability
In recent memos and public speeches, FTC Chair Lina Khan and other commissioners have emphasized the need to target “dark patterns”—deceptive user interface designs that mislead users or obscure important information, including disclosures.
Affiliate marketers and brands can no longer rely on minimalist or hard-to-find disclosures, especially in mobile apps, pop-up ads, or auto-scrolling content. Platforms themselves may also come under scrutiny for enabling deceptive practices, particularly if they lack disclosure tools or fail to enforce their own ad policies.
AI and Emerging Technologies
Recent memos from the FTC’s Bureau of Consumer Protection have also addressed the risks associated with:
- AI-generated influencers
- Synthetic reviews
- Chatbot endorsements
While these technologies offer new marketing potential, the FTC warns that using them to create false or misleading endorsements will be treated as a violation of FTC rules—just as with human influencers.
The FTC’s 2023–2024 business plan includes further investigation into automated ad disclosures, machine learning detection tools, and cross-platform enforcement mechanisms.
Key Features of the New Crackdown
Introduction: Why a “Crackdown” Now?
In 2023, the Federal Trade Commission (FTC) finalized significant updates to its Endorsement Guides, marking a turning point in how it approaches digital marketing, influencer content, and affiliate relationships. Federal Trade Commission+1 With these revisions, the FTC has made it clear that prior guidance is no longer sufficient; organizations and individual content creators must anticipate stricter scrutiny, more aggressive enforcement, and more exacting disclosure obligations.
Below, we explore the principal features of this new enforcement era.
1. Enhanced Disclosure Requirements
One of the most visible hallmarks of the FTC’s new posture is the tightening of when, how, and where disclosures must be made. The idea is to ensure disclosures are “clear and conspicuous”, but under far more rigorous real‑world conditions.
“Unavoidable” Disclosures
Under the updated Endorsement Guides, disclosures must be unavoidable — that is, placed such that a reasonable consumer cannot miss them simply by scrolling or swiping. DLA Piper+3Federal Trade Commission+3Federal Trade Commission+3 For example:
- In a video, disclosures should appear in the beginning frames or be audibly stated immediately, not buried at the end.
- On social media, the disclosure should appear within the first few lines/captions, not tucked beneath a “Read More” or hidden behind ellipses. Federal Trade Commission+2Perkins Coie+2
- Relying solely on a platform’s built-in “Paid Partnership” tag is now deemed insufficient in many cases, because it may not be obvious or understandable to consumers. Frost Brown Todd+3Federal Trade Commission+3www.hoganlovells.com+3
The FTC now explicitly warns that disclosure tools native to platforms (e.g., in Instagram or TikTok) might not satisfy the requirement unless they are clear, conspicuous, and legible in context. Federal Trade Commission+2DLA Piper+2
Plain Language, Not Jargon
The updated rules emphasize that disclosures must use plain, understandable language, not industry jargon or abbreviations. For instance:
- Simply saying “affiliate link” is insufficient if consumers don’t understand what that means in practice. DLA Piper+3Federal Trade Commission+3Perkins Coie+3
- The FTC encourages language such as “I may earn a commission if you buy through this link”, or “Paid ad” or “Sponsored post.” DLA Piper+3Perkins Coie+3Federal Trade Commission+3
- Vague labels like #sp, #collab, or “Thanks to [Brand]” without context are often inadequate. www.hoganlovells.com+2Federal Trade Commission+2
Contextual & Platform‑Specific Disclosures
The FTC emphasizes that compliance hinges on context. It expects marketers to adapt disclosures to platform formats, user behavior, and medium constraints.
- On stories or ephemeral content (Instagram Stories, Snapchat), disclosures may need to be overlaid visually or as audio early in the content so they are seen within limited display times. Federal Trade Commission+2Perkins Coie+2
- Disclosures must remain visible throughout content when necessary (e.g., if the endorsement continues over time).
- For podcasts or audio-only content, a clear verbal disclosure must be made at the start; visuals alone are insufficient.
Disclosure of “Material Connections”
The concept of a material connection (i.e. any relationship that could affect the weight or credibility of an endorsement) is central. Under the new guidance:
- Affiliate commissions, freebies, gifts, discounts, or paying for placement all qualify as material connections. Federal Trade Commission+3Federal Trade Commission+3Perkins Coie+3
- Even non‑monetary incentives, like early access or contests, may require disclosure if they could influence the endorser’s view. Perkins Coie+2Federal Trade Commission+2
- The disclosure must appear wherever the endorsement is made — not just in a separate sidebar or linked page.
In sum, the FTC is demanding that disclosures be integral, obvious, and context‑sensitive, rather than afterthoughts or hidden footnotes.
2. Expanding Definitions & Scope
A key feature of the crackdown is expansion of who and what counts as an endorser, affiliate, or participant in marketing communications. The boundaries have become broader.
Endorsement Redefined
The updated Guides expand the definition of endorsements to include:
- Virtual influencers, synthetic or AI-generated personas, or avatars. Even if the “endorser” is artificial, if it’s used to market a product, it may be treated as a paid endorsement. Federal Trade Commission+2DLA Piper+2
- Social media tags and handles (e.g. “@BrandPartner”) may count as endorsements, depending on context. DLA Piper+3Federal Trade Commission+3Federal Trade Commission+3
- Reviews by employees, competitive negative reviews, or incentivized reviews: All may now fall within the scope of prohibited or regulated activity. Federal Trade Commission+2Federal Trade Commission+2
The new definition is deliberately inclusive, designed to capture marketing practices that previously skirted older rules.
Consumer Review Practices & Manipulation
The 2023 update adds a strong new principle: the FTC now prohibits manipulating consumer reviews in ways that distort perception of a product. Examples include:
- Procuring, suppressing, organizing, upvoting/downvoting, editing, or misrepresenting reviews to make them appear more positive. Federal Trade Commission+2Federal Trade Commission+2
- Incentivizing reviews conditionally (e.g. “free product in exchange for a 5-star review”) unless clearly disclosed. Federal Trade Commission+2Federal Trade Commission+2
- “Review hijacking” — re-using a review written for one product to appear as though it’s for a different product. JD Supra+2Federal Trade Commission+2
These practices are now explicitly called out as potentially deceptive and subject to enforcement.
Broader Liability
Liability is no longer narrowly placed on the content creator. The new framework underscores that advertisers, intermediaries, platforms, agencies, and endorsers may all be held responsible:
- If a brand works with influencers, the brand is expected to guide, monitor, and police their behavior to ensure disclosure compliance. DLA Piper+3Perkins Coie+3Federal Trade Commission+3
- Agencies or networks acting as intermediaries may be liable if they direct or disseminate content lacking proper disclosures. Federal Trade Commission+2Federal Trade Commission+2
- Platforms themselves may face scrutiny if their built-in disclosure tools are insufficient, or if they permit deceptive practices. Federal Trade Commission+1
This shift signals that responsibility is shared across the marketing ecosystem.
3. Penalties, Fines & Enforcement Mechanisms
The new crackdown also comes with sharpened tools for enforcement, heavier penalties, and a more robust posture toward deterrence.
Penalty Offense Authority & Civil Fines
One of the stronger enforcement tools in recent years has been the FTC’s revived Penalty Offense Authority (POA), reactivated around 2021. Under POA:
- The FTC can issue Notices of Penalty Offenses, putting firms “on notice” that certain conduct (like undisclosed endorsements) is subject to civil penalty. Perkins Coie+1
- If notified parties later engage in the prohibited conduct, they may face direct civil fines (without needing lengthy administrative proceedings). Perkins Coie
In the context of endorsements and affiliate marketing, this means that failing to comply with disclosure requirements may now carry monetary penalties per violation, especially for businesses that have previously been alerted. Federal Trade Commission+3Perkins Coie+3Federal Trade Commission+3
The proposed rule accompanying the 2023 updates indicates fines of up to $50,120 per violation under some circumstances. JD Supra+2Federal Trade Commission+2
Proposed Rulemaking on Reviews & Testimonials
A distinguishing new enforcement mechanism is the FTC’s proposed rule addressing consumer reviews and testimonials. If adopted, this rule would:
- Prohibit fake reviews — e.g. reviews by nonexistent persons or misrepresentations of a reviewer’s experience. JD Supra+3DLA Piper+3Federal Trade Commission+3
- Ban conditional incentives tied to particular sentiment (i.e. paying for positive reviews). JD Supra+2DLA Piper+2
- Forbid review hijacking (using reviews across products). JD Supra+2Federal Trade Commission+2
If finalized, violations of this rule could also carry civil penalties under the FTC Act. Federal Trade Commission+2Federal Trade Commission+2
Corrective Orders & Reputation Risk
Beyond fines, enforcement often results in injunctions, corrective orders, and disgorgement of ill-gotten gains. Defendants may be required to:
- Issue corrective advertising
- Stop deceptive practices
- Submit to periodic compliance reporting and audits
Moreover, the FTC now publicly discloses many warning letters, generating reputational consequences that amplify deterrence.
Escalation in Enforcement
The FTC has signaled that it is shifting from a posture of passive guidance toward proactive enforcement. Examples include:
- Public warning letters to influencers or firms not adhering to disclosure rules. www.hoganlovells.com+2Perkins Coie+2
- Publishing the names of noncompliant parties to amplify public accountability.
- Use of algorithmic or automated tools (or third‑party monitoring) to detect undisclosed endorsements or review manipulation (though these efforts are still evolving).
The combined effect is a credible threat: noncompliance can result in financial, legal, and reputational harm.
4. Monitoring, Audits & Compliance Expectations
To operationalize enforcement, the FTC expects firms and marketers to adopt robust compliance systems, including monitoring, audits, and proactive oversight.
Training & Pre‑Approval
Brands and agencies are expected to train influencers, affiliates, and content creators in disclosure rules, and ideally pre-approve content before publication. Perkins Coie+2Federal Trade Commission+2
Training should cover:
- Which product claims are permitted
- How disclosures should be made
- What topics or claims to avoid
Pre-approval helps catch errors before they go live.
Ongoing Monitoring & Audits
FTC guidance stresses that merely issuing guidelines is insufficient. A reasonable monitoring program is expected:
- Periodic spot-checking or sampling of content produced by affiliates/influencers. Federal Trade Commission+2Perkins Coie+2
- Use of monitoring software or social listening tools (if feasible) to flag undisclosed posts. Federal Trade Commission+1
- Reviewing the use of disclosure tools or tags to ensure compliance.
If noncompliance is detected, brands should take corrective action — e.g. removing or revising posts, retraining creators, or terminating relationships. Perkins Coie+2Federal Trade Commission+2
Recordkeeping & Audit Trails
Firms should maintain documentation to show they acted diligently:
- Contracts with influencers specifying disclosure responsibilities
- Records of training, guidelines, and communications
- Logs of audits, monitoring results, and remedial actions
These records may prove crucial in defending against enforcement actions.
Tailored Risk Approach
The FTC recognizes that not all endorsements carry equal risk. Hence, the level of compliance oversight should be proportionate to the potential consumer harm. For example, products relating to health, finance, or weight loss may warrant stricter monitoring. Federal Trade Commission+3Federal Trade Commission+3Federal Trade Commission+3
Responsibility Across the Chain
The FTC expects that all participants in the chain—brands, agencies, intermediaries, and influencers—take shared responsibility:
- Brands should set clear expectations and enforce compliance
- Agencies should build compliance into contracts and workflows
- Influencers and affiliates must understand and adhere to disclosure obligations
Failure by one link in the chain may expose others to liability under the new enforcement regime.
Case Studies & Enforcement Actions
Notable FTC Actions
1. Warner Bros. — Middle Earth: Shadow of Mordor Influencer Campaign (2016)
- What happened: Warner Bros., via its agency, hired influencers (including PewDiePie) to produce gameplay/promotion videos for Middle Earth: Shadow of Mordor.Federal Trade Commission They paid them (money, free advance game copies), and required the influencers to promote the game positively, hiding bugs/glitches.Federal Trade Commission
- Disclosure failures: The influencers were not required to disclose the sponsorship in ways clearly visible. Disclosures were placed in video descriptions (“below the fold”) so many users would not see them unless they clicked “show more.” On social media cross‑posts the disclosures were often absent.Federal Trade Commission
- FTC action & settlement: FTC filed a complaint. The settlement order requires Warner Bros. to clearly and conspicuously disclose material connections to influencers in future, ensure disclosures are visible, train and monitor influencers, and permit payment withholding or termination for non‑compliance.Federal Trade Commission
2. CSGO Lotto — Trevor Martin & Thomas Cassell (2017)
- What happened: Influencers Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell ran a gambling service called CSGO Lotto. They posted videos and owned the service themselves, but promoted it without disclosing their ownership. They also paid other influencers to promote CSGO Lotto, without requiring disclosures of material connections.Loeb+24As+2
- Disclosure issues: The disclosures that existed (e.g. “This video is sponsored by CSGO Lotto!”) were placed in description boxes below the fold, so users had to click to see them, meaning many would not notice. On social media posts, no adequate disclosure.Loeb+1
- Enforcement & settlement: FTC’s first case targeting individual influencers (in addition to the company). They entered into a settlement that requires clear, conspicuous disclosures in future campaigns, prohibits misrepresenting that the endorsers are ordinary users, and imposes ongoing obligations to monitor compliance.4As+2Loeb+2
3. Lord & Taylor (Design Lab Campaign) and Machinima, Inc. (2015–2016)
- What happened (Lord & Taylor): The retailer paid about 50 fashion influencers to post images of themselves wearing a specific dress (#DesignLab) by Lord & Taylor. The influencers received the dress (a gift) and some got payment, but the posts did not properly disclose that this was paid/gifted content.American Bar Association+1
- What happened (Machinima): Machinima, an entertainment network, was paid by Microsoft / gaming companies to promote Xbox One consoles and games. Influencers got free pre‑release versions of consoles/games, payments; but Machinima did not require them to disclose the payments or sponsorship in their content.American Bar Association+1
- Disclosure failures: Using hashtags or tags or identifiers like “#DesignLab” or mentioning the brand but not making the material connection clear; relying on the fact that some relationship may be “implicit.”American Bar Association+1
- FTC actions / outcomes: Both cases led to consent orders. Lord & Taylor was required to educate its influencers, review the content, monitor posts for compliance, and ensure proper disclosure in future. Machinima similarly had to correct its practices.American Bar Association
4. Devumi, LLC — Fake Social Media Metrics (2019)
- What happened: Devumi sold fake social media followers, likes, views, subscribers, etc., to individuals and businesses seeking to inflate their influence online.Federal Trade Commission+1
- Misrepresentations and deception: These metrics themselves are a deceptive practice: if someone uses fake followers or fake views to boost their perceived credibility, that misleads consumers or potential business partners.Federal Trade Commission
- Enforcement & penalty: FTC banned Devumi from selling or assisting others in selling fake metrics. Monetary judgment of about $2.5 million was filed against the CEO. Part of the judgment was suspended contingent on certain conditions.Federal Trade Commission+1
5. Teami, LLC — Undisclosed Influencer Promotions & Health Claims (2020)
- What happened: Teami marketed health and wellness teas. It made unsubstantiated claims (for example, weight loss) and enlisted influencers to promote these products. Some influencer posts lacked proper disclosure of the material connection.inBeat
- Enforcement action: The FTC required Teami to refund consumers—ordered a monetary redress of over $930,000. Also imposed obligations to ensure future compliance, making sure influencers disclose payment or other benefit.inBeat
6. Real Estate Training Program Case — Nudge LLC and Celebrity Endorsers (2023)
- What happened: Nudge LLC, along with celebrity endorsers Dean Graziosi and Scott Yancey, promoted expensive real estate investment training programs. The FTC alleged misrepresentations about earnings and success of consumers, and deceptive marketing via social media and infomercials.Holland & Knight
- Enforcement & penalties: The company (Nudge LLC) banned from selling “wealth creation” products; required to provide redress of $15 million. Graziosi paid $1.25 million, Yancey $450,000. They are also permanently banned from making or assisting in misrepresentations about products or earnings.Holland & Knight
Lessons from These Cases
From these cases, several important patterns and lessons emerge for brands, influencers, affiliates, and marketers.
- Material connections must be disclosed clearly and conspicuously
- It is not sufficient to hide disclosures in description boxes, below the fold, in small text, in hashtags alone, or in un‑visible places. The disclosure must appear where the audience is likely to see it without extra effort. (Warner Bros., CSGO Lotto)
- Merely tagging or giving the brand name doesn’t satisfy the requirement if the audience doesn’t understand the connection. (Lord & Taylor, Machinima)
- Ownership and financial interest must be disclosed
- If an influencer owns or has equity in a product, platform, or company being promoted, that must be disclosed. (CSGO Lotto)
- Paying influencers while also being the business owner is especially sensitive because it creates conflict of interest.
- Brands are held responsible
- Even when influencers do the posting, brands or companies that hire influencers (or benefit from their posts) are responsible to ensure compliance. They can’t simply say “it wasn’t me, I hired them.” (Warner Bros., Lord & Taylor)
- They must have monitoring, training, and compliance systems in place.
- Influencers themselves can be held liable
- Over time, FTC has shifted toward holding not just brands but individual influencers accountable. (CSGO Lotto)
- Enforcement is real, with financial consequences
- Settlements have included monetary payments, required refunds or redress to consumers, and penalties. (Teami LLC, Real Estate Training Program case)
- Even relatively well‑known companies or personalities face stiff penalties when disclosure or misrepresentation rules are violated.
- False reviews / fake metrics are also problematic
- It’s not just about undisclosed sponsorships: selling fake influence or misrepresenting reviews or metrics is deceptive too. (Devumi)
- FTC expectations include ongoing monitoring and compliance programs
- Consent orders typically require brands to implement procedures to train influencers, to review content before posting or spot check, to monitor compliance, and to withhold payment or take action if disclosures are not properly made. (Warner Bros., Lord & Taylor)
What Made These Cases Significant
- Setting precedents: Cases like CSGO Lotto were among the first targeting individual influencers. That signals that influencers cannot hide behind the brand—they too are subject to FTC rules.
- Clarity in disclosure practices: The Warner Bros. case established greater clarity around when and how disclosures must be made (e.g. before‑the‑fold, visible, not buried in description).
- Scope of misrepresentations expanded: From not disclosing paid endorsements alone, to misleading claims about earnings, ownership, fake reviews, etc.
- Cross‑agency or state partnership: Some cases (Real Estate Training / Nudge LLC) show cooperation between FTC and state consumer protection authorities, increasing resources and reach.
Potential Risks & Avoidable Missteps
From the above, what kinds of missteps have repeatedly triggered FTC action?
- Relying on vague or unclear disclosures (e.g. “#ad” only in tiny text, or only via a tag).
- Not disclosing material connections when required (payments, ownership, free products) especially when content is veiled as personal opinion.
- Using payment or incentive structures that require positivity or suppress negative feedback.
- Ignoring that multiple parties (brand, influencer, agency) may share liability.
- Failing to monitor the influencer’s or affiliate’s content, even after contract.
Impact on Content Creators / Influencers
Content creators—bloggers, vloggers, social media influencers, livestreamers—are among the most directly affected. The FTC’s stricter posture raises both challenges and imperatives.
Risks & Increased Responsibility
- Legal and Financial Exposure
- Influencers now face higher risk of being named in enforcement actions if they fail to disclose material connections clearly. In past cases, individuals were held liable (e.g. the CSGO Lotto case against TmarTn and Syndicate) for promoting a service they owned without disclosure. Axios+1
- Each non‑disclosure or misleading post could be treated as a separate violation, potentially triggering per‑post penalties. Under newer rules, fines can run into tens of thousands per infraction. inBeat+1
- Beyond fines, creators risk injunctions, forced corrective posts, or requirements to submit to FTC oversight.
- Reputational Risk and Loss of Trust
- Influencer success depends heavily on authenticity and audience trust. A disclosure failure or enforcement action can damage brand alignment and audience goodwill. The FTC emphasizes that undisclosed endorsements mislead consumers about the reviewer’s impartiality. Federal Trade Commission+1
- Because many audiences are sensitive to “hidden ads,” creators who adopt transparent practices early may gain a competitive edge. Some brands already report that clearer disclosures enhance credibility. Capterra+1
- Operational Overhead and Compliance Burden
- Creators must adapt workflows: writing disclosures, coordinating with brands, reviewing content before publishing, and sometimes tracking changes across platforms.
- Understanding the platform-specific requirements (e.g. how disclosures function on TikTok, stories, or audio) adds complexity. The FTC requires disclosures to be “clear and conspicuous” in the particular medium. Federal Trade Commission+2inBeat+2
- Barrier to Entry for Smaller Creators
- For micro‑influencers or newcomers, compliance can be burdensome. The extra work of disclosure, training, or legal review may deter smaller creators from monetizing content or accepting affiliate deals.
- Some may inadvertently remain noncompliant out of ignorance, exposing themselves to disproportionate risks relative to their size.
Opportunities and Adaptations
- Value in Transparency
- Creators who integrate truthful and clear disclosures may attract more trustworthy brand partnerships. Brands will prefer influencers who minimize compliance risk. Surveys suggest many marketers now see clearer disclosure as building authenticity. Capterra
- By being proactive, creators can position themselves as “compliant by design,” which could become a differentiator.
- Standardization and Tools
- As the rules settle, we can expect more platform-level disclosure tools (especially integrated “Paid Partnership” tags) and third‑party apps or plug-ins to help automate or standardize compliance.
- As best practices crystallize, templates, training modules, and compliance checkers will become more available.
- Greater Clarity on What “Material Connection” Means
- The updated FTC guidance helps clarify what kinds of incentives must be disclosed (commission, free products, early access). That clarity allows creators to better judge when to add disclosures. Federal Trade Commission+2Attorney Aaron Hall+2
- Potential for More Sustainable Partnerships
- Because brands will demand stricter compliance, creators may negotiate for more stable, long-term deals rather than one-off “sponsored posts,” favoring quality over quantity.
Impact on Affiliate Networks & Merchants
Affiliate networks, merchants, and brands that rely on affiliate or influencer-driven marketing are also strongly impacted. Their role is both upstream (designing the program) and downstream (ensuring compliance across affiliates).
Increased Liability and Oversight
- Joint Responsibility
- The FTC has clarified that brands and merchants are not safe merely by outsourcing or delegating promotional content. They are expected to guide, monitor, and enforce compliance within their network. Federal Trade Commission+2Attorney Aaron Hall+2
- Affiliates or influencers operating on their behalf may trigger liability for the brand if disclosures are inadequate or content is misleading.
- Contracts and Enforcement Mechanisms
- Contracts with affiliates must now explicitly require compliant disclosures, define penalties for noncompliance (delayed payment, termination), and likely demand audit rights.
- Merchants must build compliance monitoring, audits, and content approval processes into campaign workflows.
- Higher Operating Costs
- Compliance adds cost: legal review, compliance teams, monitoring tools, training materials, audits, and possibly paying to retract or correct noncompliant posts.
- Smaller merchants may struggle to absorb these costs, especially in low-margin industries.
- Reputational and Liability Risk
- If consumers or regulators challenge deceptive or undisclosed promotions, brands risk public backlashes, loss of customer trust, and financial liability.
- Past cases (e.g. Warner Bros., Lord & Taylor) show that brands have been forced to adopt compliance programs, disclose faulty practices, and sometimes pay monetary redress. Federal Trade Commission+2Federal Trade Commission+2
- Greater Demand for Compliance from Network Platforms
- Affiliate networks (e.g. marketplaces, tracking platforms, ad networks) will face pressure to incorporate compliance monitoring tools—ensuring affiliates’ links or content carry proper disclosures or flagging missing ones.
Strategic Adjustments and Opportunities
- Selective Affiliate Recruitment
- Brands may favor affiliates with track records of compliance, or limit the number of affiliate partners to those they can monitor well.
- They may shift toward long-term partnerships rather than broad casting to anonymous “link mills.”
- Tiered Payment and Penalty Structures
- Merchants may include conditional bonuses for compliance or sanctions for noncompliance to incentivize correct behavior.
- Holding back part of commission until post performance and disclosure compliance are verified is becoming more common.
- Use of Audit and Monitoring Tools
- Platforms may use AI-based scanning, link analysis, or social listening to flag posts that lack disclosures.
- Some may rate affiliates by compliance “score” and cut or demote low-scoring ones.
- Education and Training Programs
- Brands must invest in training affiliates and influencers about disclosure rules, acceptable language, and platform‑specific nuances.
- They may provide compliance toolkits, checklists, and sample disclosures to reduce error.
- Brand Differentiation through Trust
- For merchants that commit publicly to transparent practices and compliance, marketing itself can emphasize authenticity, which may resonate with wary consumers.
Impact on Consumers
The ultimate goal of tightening disclosure requirements is to protect consumers by making endorsements and affiliate marketing more transparent. Consumers stand to benefit—but also face new dynamics.
Positive Impacts
- Improved Informed Decision‑Making
- Clear disclosures help consumers distinguish between unbiased reviews and sponsored content. As the FTC emphasizes, people would likely weigh recommendations differently if they knew a reviewer was paid or receiving benefits. Federal Trade Commission
- This transparency fosters trust and better alignment between consumer expectations and advertiser practices.
- Reduced Deceptive or Misleading Advertising
- Many influencers or affiliates exaggerated product benefits, hid side-effects, or cherry‑picked results. Stricter enforcement disincentivizes those practices.
- The new rule banning fake reviews and testimonial manipulation (effective as of 2024/2025) targets another layer of deception: fake reviews, paid reviews, suppression of negative feedback. inBeat+2luthor.ai+2
- More Trustworthy Ecosystem
- As more content creators and brands comply, consumers may regain trust in influencer marketing rather than assuming all partnerships are suspect.
- Brands and creators that consistently comply can build stronger, more authentic relationships with consumers.
Challenges and Risks to Consumers
- Disclosure Overload or Desensitization
- As disclosures proliferate, some consumers may grow numb—disregarding “#ad” labels or skimming over disclaimers. If disclosures become ubiquitous, their effectiveness could diminish.
- Poorly worded disclosures (too small, vague, or buried) may confuse more than clarify.
- Access & Equity Concerns
- Some small or niche creators may exit monetization because disclosure compliance is costly. This may reduce diversity of voices or content available to consumers.
- Misinterpretation of Disclosures
- Consumers may misinterpret simple disclosures. For example, an “affiliate link” label may not clearly communicate that the content creator earns commissions, unless explained. Studies have shown many disclosures are misunderstood or ignored. arXiv
- If disclosure language is too vague or technical, consumers may not glean the actual nature of the relationship.
- Enforcement Gaps & False Sense of Security
- Not all noncompliance will be detected or penalized. Some misleading or hidden endorsements may persist, especially in less monitored corners of the internet.
- Thus, consumers still need media literacy to question recommendations.
- Potential for Overcorrection
- Some creators or brands may avoid disclosures or monetized content entirely to mitigate risk, reducing helpful sponsored content or legitimate reviews.
Balancing Stakeholder Interests: Summary & Outlook
The FTC’s stricter enforcement climate is reshaping the affiliate/influencer ecosystem. Each stakeholder must adjust:
- Creators/influencers must adopt rigorous compliance practices, internal workflows, and transparent disclosure habits—or risk legal, financial, and reputation consequences.
- Merchants and affiliate networks must integrate control, oversight, and compliance in partner programs, enforce contracts, monitor content, and build accountability in their pipelines.
- Consumers gain better tools for assessing endorsements and reducing deception, though they must remain vigilant—disclosures are only as useful as their clarity and the consumer’s understanding.
In the coming years, we can expect:
- More sophisticated compliance tooling (automated scanning, AI detection of missing disclosures, platform‑level enforcement).
- Greater collaboration between platforms, affiliates, and regulators to embed transparency features directly in apps.
- Evolving interpretation of disclosure norms as new formats (e.g. AR, VR, AI influencers) emerge.
- A market shift where businesses and creators that cannot adapt may be marginalized, and those that transparently embed ethical marketing will be rewarded with consumer trust.
Compliance Strategies & Best Practices: Crafting Clear, Conspicuous Disclosures
In today’s highly regulated and consumer-aware business environment, compliance is not just a legal obligation—it’s a trust-building tool. At the heart of regulatory compliance in advertising, marketing, finance, data privacy, and consumer protection lies one common element: clear and conspicuous disclosures. Whether you’re a marketer creating a social media ad, a fintech company handling customer data, or a retailer offering promotions, your ability to craft and manage proper disclosures can protect your business from legal penalties and reputational damage.
This guide explores strategies and best practices for crafting effective disclosures, offering actionable insights into placement, wording, and formatting, as well as auditing, oversight, and risk mitigation.
Why Clear and Conspicuous Disclosures Matter
Disclosures serve to inform consumers about essential terms, conditions, limitations, or risks related to a product or service. Regulatory bodies such as the Federal Trade Commission (FTC) in the U.S., the General Data Protection Regulation (GDPR) in the EU, and financial authorities like the SEC and FINRA have strict rules on disclosure requirements.
Failure to make proper disclosures can lead to:
- Fines and legal action
- Loss of consumer trust
- Class-action lawsuits
- Reputational harm
The key is not just to provide disclosures but to make sure they are “clear and conspicuous,” meaning that a reasonable consumer would notice, read, and understand them before making a decision.
Crafting Clear, Conspicuous Disclosures
To create disclosures that meet legal and ethical standards, businesses must focus on three critical factors: placement, wording, and formatting.
1. Placement: Where You Put It Matters
Disclosures must be positioned so that they are unavoidable and prominent. This applies across all mediums—digital, print, television, or in-person.
Best Practices for Placement:
- Proximity: Place the disclosure close to the claim it qualifies. For example, if you’re offering a “free trial,” the terms about automatic renewal or fees should be immediately visible.
- Scrolling and Clicks: On digital platforms, avoid requiring excessive scrolling or clicks to access the disclosure. The FTC advises that disclosures should not be “buried” in footnotes or hyperlinks.
- Above-the-fold visibility: Keep disclosures within the initial viewable area on websites or apps without the need to scroll.
- Responsive Design: Ensure disclosures are visible on all device types, including smartphones and tablets.
Examples:
- In an Instagram post, a disclosure like “#Ad” should be placed at the beginning of the caption, not buried in a list of hashtags.
- In video ads, required disclosures must be displayed long enough to be read and should be placed on-screen, not only in a video description.
2. Wording: Say What You Mean Clearly
Legal jargon or vague language defeats the purpose of a disclosure. The language should be understandable to the average consumer and written in plain English (or the target language).
Best Practices for Wording:
- Use everyday language: Replace technical or legal terms with simple equivalents (e.g., “We collect data about your location” instead of “We engage in geolocation tracking”).
- Be specific and direct: Avoid ambiguity. For example, say “Your card will be charged $19.99 every month after the 7-day free trial” instead of “Standard billing rates may apply.”
- Tailor to the audience: Consider the literacy and language proficiency of your target demographic. Use translated disclosures when necessary.
- Avoid misleading modifiers: Words like “may,” “might,” or “could” can downplay obligations or risks and should be avoided when possible.
Examples:
- Bad: “We may share your data with partners.”
- Better: “We share your name, email, and purchase history with our marketing partners.”
3. Formatting: Make It Stand Out
Even the best wording can fail if the design elements don’t draw attention to the disclosure. Disclosures should not be camouflaged within a sea of fine print or flashy visuals.
Best Practices for Formatting:
- Font size and style: Disclosures should be at least the same size as the surrounding text, if not larger. Use contrasting colors to ensure readability.
- Timing: For video or audio content, ensure disclosures are presented long enough to be read or heard.
- Use headings or icons: These can visually cue users that important information follows (e.g., ⚠️ or “Important Info”).
- Accessibility: Ensure compliance with ADA (Americans with Disabilities Act) or WCAG standards by supporting screen readers, using alt-text, and avoiding text as images.
Examples:
- On e-commerce sites, present return policy disclosures in bold or boxed text next to the “Buy Now” button.
- Use hover-over popups or modals that must be acknowledged for particularly important terms, like cancellation policies or recurring billing.
Auditing, Oversight & Risk Mitigation
Even well-intentioned disclosures can fail if not properly monitored and enforced. An effective compliance program requires ongoing auditing, internal oversight, and mechanisms for mitigating risk.
1. Implement Regular Audits
Compliance should not be a “set-it-and-forget-it” function.
Best Practices:
- Quarterly compliance reviews of all customer-facing materials, including websites, mobile apps, emails, ads, and contracts.
- Third-party audits: External reviews can identify blind spots and demonstrate proactive compliance efforts.
- Testing disclosures: Use A/B testing, eye-tracking, or consumer surveys to confirm that disclosures are being seen and understood.
2. Establish Internal Oversight
Having clear governance and ownership is critical to maintaining consistent compliance.
Best Practices:
- Assign a compliance officer or team: This person/team should work cross-functionally with marketing, legal, IT, and product departments.
- Train all relevant employees: Marketers, designers, customer service reps, and developers should be trained in disclosure requirements and risk identification.
- Create checklists and approval workflows: Before launching any campaign or feature, require a sign-off on compliance items.
- Maintain a compliance playbook: Document disclosure templates, placement standards, approval protocols, and escalation procedures.
3. Mitigate Risks Proactively
Even with the best systems, errors may occur. Prepare to detect, respond to, and mitigate issues before they escalate.
Best Practices:
- Monitor regulatory updates: Keep up with changes from the FTC, SEC, GDPR regulators, etc. Subscribe to updates and advisories.
- Implement consumer complaint tracking: A spike in complaints could indicate a disclosure issue.
- Create a rapid response plan: Have protocols for issuing corrections, removing non-compliant material, and disclosing issues to regulators if necessary.
- Use legal counsel: Involve legal experts in the review of all high-risk disclosures, such as financial promotions or health-related claims.
Final Thought
Compliance is not just a legal checkbox—it’s a competitive advantage that fosters transparency, builds consumer trust, and mitigates risk. Clear, conspicuous disclosures are the cornerstone of ethical business practices and regulatory adherence.
By following best practices in placement, wording, and formatting, and by investing in robust oversight and auditing, organizations can stay ahead of regulatory scrutiny while delivering better, safer customer experiences.
Whether you’re a startup launching a new product or an enterprise revisiting your compliance strategy, now is the time to build strong disclosure practices that support long-term growth and integrity.