No one wants to open their mailbox and get a notice that they’re being sued. No one. It doesn’t matter if you’re an affiliate marketer or business owner of any other type. Lawsuits are bad news. They can set your business back alot or even shut you down.
What many people don’t know when they get into affiliate marketing is that there’s legal risk just like what’s present in any other business. It’s best to know what the possibilities are so you’re not caught off guard.
Why Legal is Important to Affiliate Marketing
Disclaimer: I am not a lawyer and this article should not be substituted as legal advice. If you want custom legal advice, I recommend you seek a lawyer.
Over the last two years since I’ve gotten started in affiliate marketing, I’ve seen affiliate marketers who are threatened with lawsuits, those who get sued, and those who prevail past lawsuits. These types of events can be very scary especially if you don’t have knowledge when you run into a legal problem. It’s best to treat legal like you would preventative medicine checkups, make sure you have a lawyer point of contact, and a plan for how you respond if a legal problem was to arise.
I hope you never run into any legal issues with your business, but it’s always best to prepare a plan rather than to be optimistic, consider yourself exempt from legal problems, and run into a problem you’re not ready for.
Regardless of business model or type, it’s best to have three points of contact that you can call your “power team” or your “business advisors”: an accounting contact, a marketing contact, and a legal contact. Your business advisors can help you to make critical finance, marketing, and legal decisions in your business, and help you to grow.
I wrote this article to inform you of the importance of being knowledgeable about legal issues that can arise in affiliate marketing, and to encourage you to have a legal point of contact as an affiliate marketer, merchant or business that participates in affiliate marketing business.
The legal service I recommend for consultations and referrals is Rocket Lawyer. They will review documents and consult with you if you need legal guidance.
- 0 to $1000/mo with Affiliate Marketing
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How Affiliate Marketers Get In Trouble
The affiliate marketers I’ve seen that get into legal trouble fall into problems because they:
- Don’t understand legal pitfalls
- They follow advice of others and it backfires
- Or, they simply don’t follow the affiliate marketing best practices I’ll be sharing with you in this article
To be honest, I thank God that I haven’t been sued because I’ve fallen into some of the pitfalls before, and I didn’t even know! Some of the things that can get you sued are quite common in the affiliate marketing industry, but it doesn”t mean it’s something you should follow or overlook.
After reading this, you might be more prone to notice legal violations. Some people are just lucky that nothing has happened to them yet!
12 Common Issues in Affiliate Marketing That Can Get You Sued
These are 15 common violations that can get you sued as an affiliate marketer:
1. FTC NonCompliance
The Federal Trade Commission (FTC) has been cracking down on quite a few practices within the affiliate marketing industry. Scammers were really getting out of control, and if you ask me, they still are!
The internet didn’t start out with a police system like what’s available offline, and scammers use the lack of rules or regulation to their advantage. People will:
- manipulate income claims
- buy fake testimonials
- Or outright sell a service they have no plans to deliver
There are lots of corrupt people out there! Unfortunately, if you’re in business, you’re also subject to more of the public eye. You can be reported by readers, viewers, or others for something you did unknowingly. While it might not be fun, it’s important to at least read over the FTC guidelines for doing business online to make sure you adhere to the rules as much as possible.
2. Giving the Illusion that Testimonials Disclosed are “Average” Results
I know you’ve probably seen websites that post glowing testimonials and don’t talk about what “average people” are able to do. It can be very misleading if viewers or readers read a blog post of yours that says you make $10,000/mo doing surveys, and you don’t disclose that the results are abnormal.
If someone perceives that they can earn $10,000/mo from surveys based on what you wrote, it can cause them to want to jump into something without making a well-informed decision. In a statement by Kendra Stephen, ESQ. on the HuffPost, she mentioned that the FTC guidelines apply to how you present testimonials on your website.
It’s important when you write testimonials that you disclose results and you also place a statement that says “results vary” or “this doesn’t represent an average of those who do [whatever activity you’re writing about]”.
3. Not Disclosing “Average” Results
Adding to that, it’s also important to say the average results that people who try what you’re talking about may get. For example, I write alot about affiliate marketing, but I know that most people who try affiliate marketing fail, so it’s important for me to disclose this fact in a prompt way, so people will not perceive it as an easy thing to do, or a “get rich quick” scheme
4. Not Disclosing Affiliate Relationships
Many things are written or recorded by affiliate marketers may be sales material. Similar to a salesmen for cars or cable, affiliate marketers are paid commissions for sales. As a result, if this is the monetization method that’s in use, they’re likely to write sales material.
Sometimes, the sales material isn’t clearly “sales material”. It could be a review, buyer’s guide, or tutorial, but in the content, the affiliate marketer is recommending a purchase. The affiliate relationship may cause the reader to weigh the recommendation differently if it was disclosed, so when it’s not openly disclosed, it doesn’t give the reader the ability to weigh your recommendation appropriately. If the reader or viewer isn’t aware of the affiliate relationship, it can come off as being “deceitful” or “lack integrity”.
As a result, it’s important to have an affiliate disclosure on your website to comply with FTC guidelines.
5. GDPR Non-Compliance
GDPR stands for General Data Protection Regulation. It’s basically the biggest law for how to deal with protection and security online. GDPR originated in the European Union, but considering how the internet is global, website owners across the world are impacted by the regulation.
GDPR was a response to the growth of the internet and the security breaches that came along with it. Banks, legal firms, accounting firms, and other companies that deal with very private information are now operating online, so GDPR was put in place to regulate how personal information is shared safely.
The guidelines apply most to those who do business with people from the European Union or those who live in the EU, but considering that website traffic can come from different directions, it’s important to know what GDPR is to avoid fees or penalties from violating it. Penalties max out at $20 million plus suits for damages caused to recipients, so this one can be an EXPENSIVE legal problem to be slapped with. Read more on GDPR here.
6. Not Properly Reporting Income to Tax Officials
For many affiliate marketers, they get into affiliate marketing to earn extra money. They might have financial constraints in their personal life, so they get into affiliate marketing for a way out.
Unfortunately, as the income starts growing, they may not know when it the appropriate time to:
- Report taxes
- Record income
- Hire an accountant and lawyer
- and, Separate personal income from business income
As a result, they end with a disaster on their hands! I’ve heard of many online entrepreneurs who say they “didn’t know” they were supposed to be paying taxes, or they “didn’t know” what transactions are business and what are personal, so they end up with fines and penalties from the IRS or tax officials.
It can be a disaster! Make sure to learn what you need to do to be compliant with your tax officials beforehand. If you’re a US citizen, this article by the IRS can be helpful.
Additional Resources for Tax Compliance:
- A Full Quickbooks Online Course (Available at Udemy)
- Quickbooks Full Payroll Course (Available at Udemy)
7. Slander, Dafamation of Character, or Libel
The internet has been a very welcoming place for people who don’t normally have a voice to be heard. Sites like Facebook, Instagram, Youtube, or Pinterest don’t require you to be a celebrity or to be an “expert” to have an opinion about things–this can be good or bad. Sometimes, affiliate marketers can speak opinions too loosely, and be sued for defaming someone else’s character, slander, or libel.
You have to be very careful in your product reviews, buyer’s guides, or other articles!
- Make sure that you support statements with facts.
- Don’t make negative comments that aren’t warranted.
- Site sources
- and, Don’t make assumptions about what someone meant to do, what they did, or anything else
Comments like “They’ve priced this product way too high. I would bet their trying to rip people off”, could be taken like slander or defamation of character. Be careful.
- Important Legal Stuff All Affiliates Should Know
- Libel, Plagiarism, and Lawsuits. Oh My! A Warning for Bloggers
- We Were Sued. We Stood Up. We Prevailed
8. Trademark or Copyright Infringement
It’s most common for affiliate marketers to choose a niche then pick a domain name. Normally, there’s nothing wrong with choosing a niche and picking a domain name, but in a small percentage of cases, the domain name that’s selected is a trademark owned by someone else.
In cases like this, you can be forced to transfer the domain to the trademark owner–this can cause you to waste all of the hard work you’ve done to build backlinks, get traffic, and attract an audience around your brand. What a disaster!
There are other scenarios where you can run into issues with trademark or copyright like:
- When you use images on your website
- When you use logos of others
- When your logo is too similar to others
- and the list can go on
It’s important to make sure the name your choosing for your business is available for use with the Trademark office. You can do a search of the name with the US Patent and Trademark Office or (governing authorities in your country).
It\’s also important that you\’re requesting permission before using someone else\’s content, you use stock images or your own photos, and you site sources rather than taking full credit for insight you\’re giving. You can also get help with a trademark search when you use a service like Rocket Lawyer.
Additional Resources for Copyright Law and Trademark Law:
- Trademark Law for Entrepreneurs (Available on Udemy)
- Copyright Protection for Entrepreneurs (Available on Udemy)
The internet looks like a place where information is being shared freely, so you can take what you want, and use it how you want, but this isn’t the case. Each image, article, video, or audio clip is someone else’s hard work and property. It’s important to get permission to use images or other content.
I’ve seen several cases where a person used a person’s image, testimonial, or photography without the permission of the author. In fact, a recent post that got alot of buzz within an affiliate marketing community I’m apart of was about how an affiliate marketer had their article completely copied from their site and placed on another website owner’s site. This is wrong!
Content that’s published online is considered intellectual property and you can be subject to lawsuits for using someone else’s property without their permission.
If your content has been stolen, you can create a Cease and Desist letter, and have it reviewed by an attorney at Rocket Lawyer. You can also get legal consultation very easily by using their app.
10. Paying Hirees as Contractors but Treating them as Employees
Employers have different compliance requirements for employees versus contractors. Independent contractors are supposed to be their own entities, with their own expertise, and their own tools and equipment.
Alot of times when affiliate marketers hire virtual assistants or others to help within their businesses, they’re giving directions, providing tools and equipment, or training the person to gain expertise–this is when it shouldn’t be categorized as a contractor. A contractor shouldn’t be given set hours, they shouldn’t be told “how” to do things, they shouldn’t be required to work exclusively, and they should be a standalone entity.
If you hire someone as a contractor, but treat them like an employee, you can be penalized, and held liable for back pay of employee taxes and penalties.
Additional Resources for Hiring and Outsourcing Appropriately:
11. Marketing to Kids Incorrectly
Kids are growing up using computers, smart phones, and other devices. Just a few years back, it was very easy for kids to access content they shouldn’t be able to. Complaints have led the FTC to create more regulation that prevents kids from getting access to things they shouldn’t.
Affiliate marketers have to be extra careful to comply with the regulations for kids advertising and other legal regulation to ensure:
- You don’t market to kids illegally
- You’re not persuading kids to do something that’s not age-appropriate
- and, Overall that kids can be safe to learn and browse online (as much as is within your ability)
As a result, it’s important to read the FTC’s guidelines for marketing to kids and their parents (especially if you know you’ll be marketing to kids or attracting kids).
12. Choosing Affiliate Partners with Bad Reputations or Bad Business Practices
In June 2018, a company named MOBE was shutdown for business practices that violated FTC regulation. When they were shut down, the affiliates of the company were put into investigation also. Some of the affiliates had earned millions of dollars selling this program, so since it was considered a scam by the FTC, the affiliates were also in violation.
It’s important to choose affiliate partners wisely because the reputation of the merchants you partner with can reflect positively or negatively on you.
These are some of the most common reasons for affiliate marketers to run into legal problems, so it’s important that you protect yourself from these things before a problem arises. Many people got into affiliate marketing without realizing that legal, accounting, and marketing needed to be done!
Affiliate marketing can turn into a real business. As a result, legal, accounting, and marketing is a requirement to make money and grow the business. If you have questions about any of this, please leave them below and I’ll do my best to help you out.
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