Exactly what is an affiliate compensation disclosure?
It’s language you use to let readers of your website, blog, and commercial emails know that you’re an affiliate for a product or service that you’re promoting directly or indirectly in your content. Its very different from an affiliate program agreement (don’t confuse the two!).
For example, if you write a blog post about Widget X Software, and use your affiliate hyperlink in the post, you should disclose that you have what the U.S. Federal Trade Commission (FTC) calls a “material connection” to what’s being promoted.
Why does the FTC want you to make this affiliate compensation disclosure?
So the reader can make an informed decision that includes the key fact that you may be biased because you get paid an affiliate commission on each sale. Without knowing you are an affiliate for the software you’re promoting, the reader might mistake your promotion of it as an unbiased reporting of the software’s merits.
Of course, that’s been a big problem on the Internet because some affiliates are creating fake review sites that are nothing more than sales pitches.
Types of Material Connections You Should Disclose
Now, it’s important to note that material connections you should disclose include more than just your affiliate status.
For example, if Internet Lawyer Mike Young promoted Website Legal Forms Generator software as an easy and affordable do-it-yourself solution, he would disclose that there’s a material connection to the company.
In this example, Attorney Young co-owns the software company and this law firm owns the copyrights to the website legal documents created by the software.
Of course, if he were just an affiliate for the software instead, he would still need to make a disclosure because of that material connection. And if a relative or friend owned the software company, it would be necessary to disclose the existence of a material connection too.
By the way, the first place to start if you have any questions about affiliate compensation disclosures is to speak with an experienced Internet lawyer.