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Transparency in Your Business – Legal or Otherwise

By Valerie Young

If you have a small business, or are planning to start one, the Federal Trade Commission (FTC) has issued new regulations that could affect you.

The Consumer Protection Agency put out a series of super short videos on the new endorsement guidelines with titles like “What do the new Endorsement Guidelines mean to bloggers” and “Is the FTC planning to sue bloggers.”

Essentially the new regulations require bloggers, celebrities, book reviewers and anyone who endorses a product or service where there is also an exchange of money or goods to disclose the relationship.

For example, say you blog about urban chicken farms. An author sends you a free copy of his or her book on How to Perform CPR on Chickens. If you like the book — and you tell your readers so — then you need to disclose the fact that you did not pay for the book. In this case you might say, “The author sent me his book and this is what I think about it.”

Similarly, you need to disclose any affiliate relationships. For example, if your site features books about chickens with “buy” links to Amazon. If you signed up for Amazon’s affiliate program and therefore receive a small affiliate fee for any books purchased via your link, then you must disclose that as well.

Finally, say you created a course on how urban chicken farmers can make extra cash selling eggs in their own neighborhood. Some of your happy customers send you testimonials stating that they regularly earn an extra $1000 a month selling eggs.

In the past, you would have been able to say, “Results not typical” or “Individual results may vary” and the regulators were satisfied. Not any more.

Problem or Opportunity?

A lot of people are upset about the new regulations, crying big government is out to get us. I see it differently.

We all know Tiger Woods is paid to endorse Nike or American Express. But still, there are situations where, for example, I would like to know that the physician who appears in an ad for a pharmaceutical company is being paid for their endorsement.

Some of the new guidelines are still a little fuzzy to me.

For example, I recently recorded a call where one of the people who graduated from my Profiting From Your Passions coach training program talked about charging his clients $450 for a brainstorming session. Is that a “testimonial” or simply information about how one coach is setting his rates? Clearly I still have some homework of my own to do!

I do agree however, that if you’re going to tell your blog readers that Crazy Face Chicken Feed is the only food you recommend — and you have an ongoing financial arrangement with the feed makers — then your readers have a right to know.

You might add a line that says, “This blog is sponsored by Crazy Face Chicken Feed” or include a standard disclosure that says you receive a referral fee when someone purchases the product.

What does concern me is that a lot of people will instantly make the leap from, “Oh, they’re getting paid” to “So, therefore they say about the product or service must not be true.”

Maybe I’m naïve, but I like to think that most celebrities — or their agents — would not want to jeopardize their reputation to make a fast buck pitching a product. I assume Jamie Lee Curtis believes in Activia yogurt or that former Publisher’s Clearing House pitchman Ed McMahon was sufficiently satisfied that he was representing a reputable company.

I also happen to think consumers have a responsibility to do their due diligence before they make a purchase, especially a major one. Have people really won money with that sweepstakes? Are there statistics that support the claim that the product helps with digestive issues?

We’ve all seen the testimonials for business opportunities where a grinning person says, “I made $10,000 my first week stuffing envelopes from home.” That’s just bull.

And we’ve all seen paid actors “posing” as an actual customer and using made up numbers. That’s flat out misleading.

In both of these cases, I agree with the FTC. The consumer, i.e. you and me, need to know.

But there’s a more important lesson here.

I’ve been in the business of helping people to change course since 1995. So I know that whenever someone is making a LOT of money doing something, the results are never typical. Not because they are untrue.

The reason they’re not typical is because the people who use the product, the system, etc. are different.

An urban chicken farmer selling organic eggs who invests a mere 15 minutes a week into their business is going to make a lot less than someone who is out there every weekend at the local farmer’s market, invests time marketing their eggs, is crushing it on social media or otherwise treats it like a serious full or part-time business.

I do see where the FTC is coming from and how the abusers made some kind of regulations on stating earnings or weight loss or other results necessary.

However, when it comes to legitimate testimonials, personally, I like to know that it can be done. Because if it can, then I figure if I’m willing to put in the effort, then I have a shot at seeing similar results.

The Bottom Line

I get approached by companies wanting me to promote their products or services to my readers all the time. I pass on 80 percent because I don’t believe in them.

The ones I do endorse, I pass along to you.

If you are a blogger or have a website or a newsletter that includes affiliates links as mine does, first and foremost, make sure that whatever you recommend or otherwise endorse is something you personally stand behind. It’s not worth jeopardizing your reputation or legacy to promote crap, no matter how much money someone is paying you.

So be picky… very, very picky about who or what you endorse.

The true test: Ask yourself, “Would I recommend this even if no money exchanged hands?” If the answer is yes, then go ahead.

 

 

 

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