One of the main ways people earn money online is through referrals to products and services.

Often websites or blogs give opinions, reviews or endorsements of products because they are being paid to advertise the product or receive free samples.

Up until now you may have been under the impression that many of your favourite blogs are reviewing products simply because its what they do for fun and not because the companies selling products provide them with free samples or pay for advertising in return for a "review". You may even believe that when a blog expresses an opinion about something, this opinion is actually held by the reviewer. Unfortunately this is sometimes not true.

In the United States, a government body called the Federal Trade Commission (FTC) is charged with protecting consumers from “unfair and deceptive acts or practices" in commerce. This body has released a new set of guidelines about how it intends to seek to enforce United States fair trade laws. These guidelines come into effect today (ie. 1 December 2009) and can apply to online activity including:

• what you say on blogs
• information posted on a websites
• online forum and message board posts
• Twitter messages
• Private communications

The aim of this blog post is to provide information about the new guidelines, to put some of it into plain English for readers, many of whom I'm aware are affected by this. Read the full text for more.

Am I affected by this?

This affects you if you have any sort of online activity, and you write or talk about products or services related to:

• a company which is your employer
• an advertiser
• someone who pays a commission or referral bonuses
• Someone who provides you with samples or goods for review

-And-

Your activity has a connection with the United States - eg. your readers reside there, the product or service is from the US or your website is hosted in the US.

What do the New guidelines Mean?

The crux of the guidelines is two-fold:

1. You shouldn't express views about products and services that you don't actually hold or don't believe are true
2. If you get a benefit that may influence your opinion which isn't obvious to readers, you have to disclose the benefit

What do I need to do?

The first part you probably should be doing already - basically it means be honest with your readers. If you thing a particular product is worthless, don't tell your readers its fantastic just because they advertise on your site.

The second part is a little more complicated. If its not clear to your readers that you're getting a product or benefit for expressing your opinion or recommending a product, spell it out. For example - a photographer uses a camera and recommends that camera on message boards to purchasers. That photographer receives free equipment from the camera manufacturer, but doesn't disclose this fact in the posts or at all. Such conduct would be against the guidelines.

Example: Microstock

Many readers of this website participate in microstock referral programs. These programs are one of the income sources for this website - hence I disclose this fact both in my disclosure and advertising page and in the text of any pages that have referral links. I'd suggest that other users adopt similar practices if they don't already do so.

If you give information about microstock agencies or products, it would also be wise not to be dishonest about your experiences. Eg. if you post: "I make $1000 per month" from agency X, when in fact you only earn $100 per month, so that more people sign up under your referral programs this would be contrary to the guidelines.

Example: Blog Income

Many travel blogs earn referral income through product endorsements such as insurance. I've signed up to such programs in the past, but have currently removed such referral links from this site and don't at this stage intend to include any in the future. If I did, I'd need to disclose any benefit from that referral program. I would do so both on pages where the referral links were placed and on my disclosure page.

Blogs frequently get emails from potential advertisers along the lines of "I'll advertise on your site if you write a review of my product." This is a potentially dangerous offer to accept - to comply with the guidelines you'd have to both disclose the advertising relationship, and express your true opinions rather than put the product in the best light.

If a website were to for example have an "editorial" about how insurance company X was the cheapest and best - and it was in fact twice the price of a competitor and was known not to pay on claims, that website could well be in breach of the guidelines and the underlying act.

What if I'm not in the US?

Even if you are not physically in the US and not a resident, these laws may still apply to you, especially if your audience is based in the US. Whether and how they can be enforced against you becomes much more complicated, but is really beyond the scope of this article. My view is that it would be unwise to assume that because you're not in the US, you can just ignore the guidelines.

The other point to note is that these laws are not inconsistent with the law in many other countries. For example some of the issues covered by the FTC guidelines could be misleading and deceptive conduct under consumer protection laws in countries such as Australia or the UK or in extreme cases could even constitute secret commissions covered by the Australian Crimes Act.

Should the FTC be intruding in online activities?

In talking about this topic to other bloggers, the issue is frequently met with hostility. My personal view is that being honest and upfront about product endorsements is good practice and something I recommend even in absence of these laws.

Maybe the real question is whether such online activity should it be the subject of laws at all? While many legislators may be well intentioned, a good number would have trouble identifying what the internet even is, let alone working out how best to legislate for it. I welcome your thoughts!