By Erika Rykun

For years, marketers have had to adapt to how society and technology move. We’ve seen Marketing efforts grow from offline marketing to SMS and voice call marketing, to online and digital marketing. 

According to this study, it is expected that the daily average time spent on digital media in 2023 will be over eight hours in the United States, and thanks to this, digital marketing is continuing to grow in importance and relevance for businesses!

Among the many subsets of digital marketing that have proven their capacity to convert engagement and effective consumer marketing into sales is an area called affiliate marketing. In this article, we will answer the question “is affiliate marketing legal?” and delve into the legalities surrounding this popular marketing method!

What is affiliate marketing?

Derived from the term “affiliate,” affiliate marketing is an online marketing method that makes use of third-party entities, usually individuals, to promote and market the sale of a specific product to their own audience and earn a commission from those sales. 

Popularly, affiliates come in the form of content creators on social media sites like TikTok, Twitter, YouTube, Facebook, and Instagram; through paid advertising on those platforms; or through websites and blog posts with content featuring an affiliate product.

On their landing pages or blog posts, affiliates include a special tracking link to that specific product and encourage their audience to click the link and make a purchase. Every purchase from that link entitles the affiliate to a certain percentage or a certain commission from every successful sale!

Why should you venture into affiliate marketing?

For business owners

What makes affiliate marketing so attractive to other digital marketing methods is that, from the company’s end, nothing is paid until there is a favorable result from the affiliate—a sale.

Affiliate marketing is generally cost-effective in that you don’t incur skyrocket marketing costs with an unsure result and you don’t need to monitor each one of your affiliates, saving you time and effort. 

According to Ken Savage, Owner of Ken Savage:

“With affiliate marketing, your affiliates will be the ones who will brainstorm the ideas and the effort to make those sales for you in return for a commission on their end. With the use of social media, these affiliates will also help increase brand awareness for your business and products.”

For affiliates

With the use of some creative minds and smart internet and social media usage, affiliates can earn commissions from link sales, depending on how a platform calculates the commission received by its affiliates.

How much do affiliate marketers really earn? Generally, affiliates can earn 1 percent up to 20 percent commission on the product price, depending on the platform and product.

For example, Amazon, with one of the biggest affiliate marketing programs in the world, runs on stringent approval processes but at the same time helps affiliates earn up to 10 percent commission on sales. 

Of course, ClickBank is unique in this space, featuring affiliate products with commission rates of 50%, 70%, even 90%.

Is affiliate marketing legal?

Affiliate marketing is absolutely legal, as long as you comply with the terms, conditions, and disclosure required by the law of your country, the social platform you’re using, and the seller or product owner whose affiliate offer you’re promoting.

Important points to remember for legal affiliate marketing

As with anything else, affiliate marketers have to abide by a set of rules. It’s important to remember that affiliate marketing should be a win-win situation for both the affiliates and the product owners, while staying within the bounds of these rules.

Here’s a little more information on each of these categories.

1) Check government regulations

Marketing online for someone else in exchange for a commission still counts as digital marketing or advertising, and rules for such in every country must be observed even as a third-party marketer. 

According to the U.S. Federal Trade Commission, advertising must “tell the truth and not mislead customers,” in all aspects and manners of it. This means that affiliate marketers are bound to the laws enforced by the Commission on Internet marketing, including, but not limited to:

• Misrepresentation of environmental claims
• Truthful claims on free products and jewelry
• Substantiation of testimonials and endorsements
• Warranties and guarantees
• Other deceptive online advertising claims

According to Mark Pierce, CEO of Cloud Peak Law Group:

“While the product seller is the main perpetrator for any violation of the FTC-enforced laws, relevant third-party can also be in danger of being responsible for any case related to false advertising.”

In addition, the Federal Trade Commission released a guide on the use of endorsements and testimonials in advertising, which affects how affiliate marketers conduct and make their content.

To summarize, online endorsements and testimonials should:

• Reflect honest opinions, beliefs, findings, and experience of the endorser;
• Advertisers are liable for false and unsubstantiated statements made through their endorsements;
• Disclosure of the connection between the endorser and the product seller, if any.

2) Examine if you need to communicate with sellers and product creators

Some affiliate marketers do not necessarily need to communicate directly with the product creators to do affiliate marketing, as in the case of affiliate marketers who use Tiktok to sell third-party products on the TikTok marketplace for a commission.

Priyam Chawla, Marketing Manager at Jolly SEO says:

“Marketing through Tiktok has always worked wonders for businesses who want to reach a younger demographic and increase their sales through viral marketing.”

She adds:

“The platform also serves as a haven for young affiliate marketers who want to leverage content creation for commission sales.”

TikTok affiliate marketers usually make use of on-video links or bio links (or link trees) that lead you to online stores like Etsy, Amazon, or even the TikTok marketplace. When you are redirected to a store through the link, it means that the sellers have granted permission from the online store to have their products available for affiliate marketing.

Take for example Amazon Associates, Amazon’s own affiliate marketing program. In this program, content creators that garner huge traffic customize link-building tools to share Amazon products with their audience and earn as much as 10 percent commission in return on qualifying products. 

In this case, an affiliate marketer won’t need to communicate with the product creator themselves as Amazon has already screened and qualified certain products for affiliate marketing.

In some cases where an affiliate marketer wants to partner with a business without an online store or an affiliate marketing platform like Amazon, it is best to communicate with the business your intent to do affiliate marketing, agree with the terms, and draw up a contract for the agreement.

3) Carefully read the terms and conditions of affiliate programs

Whether you’re affiliate marketing using an affiliate marketing network, or through a drafted contract, terms and conditions are a vital part of any undertaking to make sure that an affiliate marketer is working within the bounds of what has been agreed upon between them and the network, or the product owners. 

For example, Amazon Associates discloses and includes the following in the Associate’s Program Operating Agreement:

• To receive a commission from qualifying purchases made by clicking on the special links provided by Amazon
• Making data, images, link formats, widgets, and such available for use to Amazon affiliate marketers
• Cessation of payment in the event of a violation of the terms and conditions
• Amazons customers are not affiliate marketer customers by virtue of the sale

These terms and conditions help the network and the affiliate marketer know their rights and bounds and act within these terms and demand compensation and liability within what is stipulated in these agreed terms and contracts.

According to Jerry Han, CMO at PrizeRebel, “The world has become so fast-paced that, whether we like it or not, nobody really ever reads terms and conditions anymore. We click on the “I agree.” button as quickly as a 5G internet connection, but these terms and conditions pose dire consequences in the worst situations and should not be taken lightly—whether as a businessman, a marketer, or a casual internet surfer.” 

4) Do thorough research on the products before marketing

In 2014, a cosmetics brand agreed to settle with the Federal Trade Commission under the charges of false and deceptive advertising for certain products that they claimed could “stimulate youth protein production” and give users visibly younger skin and that it was “clinically proven”. When asked, the company was not able to provide support for these claims.

As responsible users of the internet, it is important to scrutinize every bit of information we see and share on the web. In as much as data is available everywhere, it has become increasingly difficult to determine whether any information is true and reliable.

For affiliate marketers, the burden is heavy because you will be representing someone else’s brand and putting your name on the line for the products you choose to market. 

It is for this reason that, as content creators and influencers, affiliate marketers should make the extra effort of doing research on a product before encouraging other people to patronize a certain brand, product, or service.

Product research can be done through:

• Not relying on just one single source of information on the internet. Look for other sources that may support or refute the claims of your target products.
• Testing a product for a certain period.
• Finding reliable sources of information to support any claim you or the product might have.

“As an advertiser, not doing research or testing on your products is the fastest way to snowball into failure,” says Gerald Lombardo, Head of Growth at Popl. “Consumers should always exercise smart buying, but advertisers and influencers should also shoulder the burden of doing basic research on the products they advertise.”

5) Fully disclose that you are an affiliate marketer

In 2014, the Federal Trade Commission (FTC) launched Operation Full Disclosure which affected more than 60 national advertisers that failed to make full disclosures on their TV and print advertisements. 

What is full disclosure? 

According to the FTC, full disclosure in marketing and advertising means that marketing materials should be clear, and concise and should prevent advertisements from being deceptive or misleading to the public. 

In addition, full disclosure should conform to the 4Ps: 

• Prominence – Disclosures should be easily readable or loud enough to be heard.
• Presentation – Disclosures should be easily understandable.
• Placement – Disclosures should be placed where consumers are likely to hear or look.
• Proximity – Disclosures should be close to the main content and headline.

In affiliate marketing, affiliate marketers should always disclose that they are in no way connected or legally employed by the affiliate marketing network or the product seller, and only earns commissions from qualifying purchases. These disclosures on your website, link, or content should also conform with the 4Ps of the FTC.

While most people don’t go out of their way to look for disclosures, legal procedures (when necessary) may examine if your materials have made necessary disclosures on your affiliate marketing.

Linda Shaffer, Chief People Operations Officer at Checkr, says:

“Not just in advertising, full and adequate disclosure should be a practice for all business owners. While full disclosure can mean differently for every country and locality, businesses must take the necessary steps to disclose stakeholder-relevant business practices and financial information compliant with rules and regulations.”

Pitfalls in affiliate marketing

Affiliate marketing is a very attractive side-hustle and part-time source of income for aspiring content creators and creative minds. However, as with all things, affiliate marketing can be a challenge to pull off without the right resources. 

Here are some pitfalls and common mistakes affiliate marketers should watch out for in the course of business:

• Your platform of choice. Affiliate marketing can be a hit or a miss, depending on which platform you use to create your content and build an audience to click on your affiliate links. Depending on the product, go with a social platform that is used by the target demographic for your offer.

• Being too ‘market-y’. Believe it or not, the audience can tell if your content is geared towards being overly marketed, rather than persuasion. Affiliate marketing should gear toward persuading your audience to buy a product because ‘it helped you, so it should also help them’ rather than blindly selling a product merely for sales.

• Quality and quantity. While you don’t want to be too spammy, you really don’t want to gear towards making low-quality content just to hit an engagement and upload quota. Affiliate marketers should find the right balance between quality and quantity to produce high-quality and informative content, while also regularly creating content to keep your engagement metrics high.

• Ignoring SEO. If you’re engaged in building affiliate marketing blogs and publishing website content, ignoring SEO is a giant pitfall in your affiliate marketing career. Write SEO-friendly content with meta descriptions and title tags, write attractive affiliate marketing headlines, and keep your websites optimized, secure and speedy. When all SEO metrics run like a well-oiled machine, your SERP rankings will most likely rise as well.

Conclusion

Knowing the legal practices of affiliate marketing can help protect you and ensure you’re doing the right things. Along those same lines, being aware of the ethics of affiliate marketing can ensure you protect your reputation.