Online affiliate marketing is big business now. Affiliate marketing, of course, has been around for a long time. Basically, a business or a person agrees to promote and recommend a product, a brand of products, or even a whole business in exchange for various things of value. Generally, the affiliate does not actually sell the product or have it available for sale. Rather, a link is provided and, often, a “promo code” that provides a discount for the affiliate’s followers/supporters. More vintage names for affiliates are things like “dealerships” and/or “service and repair providers” (although those types of businesses tended to actually sell the product or line of products).

In any event, it may not be commonly known, but there are some rules and regulations that online affiliates must follow. These mostly involve legal prohibitions against false advertising and unfair business practices. If you have questions or need more details, contact the Internet Attorneys here at Revisions Legal. We can help you understand your obligations if you are an affiliate, and what you need to know about affiliates if you plan on hiring them. In the meantime, here are some “dos” and “don’ts” for affiliate marketing.

DO fully disclose

It is important that an affiliate fully disclose the relationship with the business, company, or brand. This includes all of the possible connections, including any financial, business, and/or family relationships. To pretend that the affiliate is a neutral third party providing a positive review of a product, business, or brand is false advertising and a deceptive business practice. And, frankly, it is not necessary. Some affiliates think that their followers will not buy the product if they know the affiliate is being paid. But, often, the opposite is true. Followers will consider buying the product BECAUSE it is a method of helping an online person or business that they like and support.

DON’T actively conceal

If the above is true, then the opposite is also true. So, DO NOT actively conceal any material connection between an affiliate and the product, business, or brand that the affiliate is promoting. Even “small” things like a free sample product or early access to a game or video need to be disclosed.

DO ensure that the disclosure is prominent

When making disclosures, DO ensure that the disclosure is prominent and is located in the video or promotional material near the endorsement. That is, if the endorsement is near the four-minute mark of a video, then the disclosure should also be near the four-minute mark. If the endorsement is in a photo, then the disclosure should also be in or under the photo. Being prominent also means being visible and of an appropriate size. A microscopic endorsement will not be adequate.

DON’T ignore enforcement correspondence from regulators

If you receive correspondence or contact from regulators, do NOT ignore those contacts. Usually, regulatory enforcement begins with “warnings” and suggested changes to what is being presented by the affiliate. If you receive such correspondence, consult some experienced agency enforcement defense attorneys. Correspondence like this should be taken seriously.

Contact the Internet Law and Social Media Attorneys at Revision Legal

For more information, contact the experienced Internet Law and Social Media Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.

The FTC Endorsement Guides: The Legal Foundation

The Federal Trade Commission’s Guides Concerning Endorsements and Testimonials, 16 C.F.R. Part 255 (updated in 2023), are the primary source of law governing affiliate marketing disclosures. Any “material connection” between an endorser and the brand being promoted must be clearly and conspicuously disclosed. A “material connection” includes payment, free products, family relationships, employment, and any other arrangement that might affect the weight a consumer gives to an endorsement.

The FTC has pursued enforcement actions against both individual influencers and large brands. Penalties can include injunctive relief, civil money penalties, and disgorgement of profits. The Commission has made clear it will pursue not only the affiliate but also the brand that hired the affiliate if the brand knew or should have known about the non-disclosure.

What Counts as ‘Clear and Conspicuous’?

The FTC’s updated Guides impose specific standards for disclosure prominence:

• Placement — the disclosure must appear near the endorsement, not buried at the end of a video or in a caption requiring the viewer to click “more”
• Visibility — text must be large enough to read and must contrast visually with the background
• Timing — in video content, the disclosure should appear at the beginning AND be repeated if the endorsement occurs later in the video; a disclosure only in the video description does not satisfy the requirement
• Language — terms like “#partner” buried in a string of hashtags do not qualify; plain language like “#ad” or “Paid partnership with [Brand]” is preferred
• Platform tools — Instagram and TikTok paid partnership labels may not always satisfy the requirement on their own; additional disclosures may still be needed

Affiliate Program Agreements: What Must Be Included

If you are a brand building an affiliate program, the written affiliate agreement is a critical legal document. A well-drafted agreement should address:

• Commission structure — how and when affiliates are paid, and what actions (click, lead, or sale) trigger a commission
• Disclosure obligations — explicit language requiring the affiliate to comply with FTC Guides and applicable state law
• Prohibited conduct — no false claims, no impersonation of the brand, and no use of brand trademarks without prior written approval
• Intellectual property license — a limited, non-exclusive license for the affiliate to use brand assets in approved ways only
• Term and termination — conditions under which either party can end the relationship and what happens to pending commissions
• Indemnification — the affiliate indemnifies the brand for claims arising from non-compliant conduct

State Law and Tax Considerations

Beyond federal FTC rules, affiliate marketers must be aware of state law requirements. California’s False Advertising Law (Bus. & Prof. Code § 17500) and the Consumer Legal Remedies Act (Cal. Civ. Code § 1750) have been used in class-action litigation against brands that ran deceptive affiliate campaigns.

Some states also impose affiliate nexus taxes. Post-South Dakota v. Wayfair, 138 S. Ct. 2080 (2018), most states assert economic nexus over remote sellers above certain revenue or transaction thresholds. An affiliate generating significant sales to residents of a given state can establish tax nexus for the brand, triggering sales tax collection and remittance obligations.

Copyright and Trademark Risks in Affiliate Campaigns

Affiliates routinely use brand assets — logos, product photos, ad copy — in their promotions. Without a proper license, using brand assets constitutes trademark infringement and, potentially, copyright infringement. Brands must ensure their affiliate agreements grant a limited license for approved uses only. Affiliates must stay within the boundaries of that license and avoid reproducing third-party content — such as unlicensed music in a promotional video or a competitor’s copyrighted product photography — without authorization.

Contact the Attorneys at Revision Legal

If you have questions or need legal advice, contact the experienced attorneys at Revision Legal. Our team handles internet law matters for businesses and individuals nationwide. Call us at (855) 473-8474 or use the contact form on our website.