May 27, 2018

When Terms of Service limit disclosure of affiliate marketing

By Arunesh Mathur, Arvind Narayanan and Marshini Chetty

In a recent paper, we analyzed affiliate marketing on YouTube and Pinterest. We found that on both platforms, only about 10% of all content with affiliate links is disclosed to users as required by the FTC’s endorsement guidelines.

One way to improve the situation is for affiliate marketing companies (and other “influencer” agencies) to hold their registered content creators to the FTC’s endorsement guidelines. To better understand affiliate marketing companies’ current practices, we examined the terms and conditions of eleven of the most common affiliate marketing companies in our dataset, and specifically noted whether they required content creators to disclose their affiliate content or whether they mentioned the FTC’s guidelines upon registration.

Affiliate program Requires disclosure?
AliExpress No
Amazon Yes
Apple No
Commission Junction No
Ebay Yes
Impact Radius No
Rakuten Marketing No
RewardStyle N/A
ShopStyle Yes
ShareASale No

The table above summarizes our findings. All the terms and conditions were accessed May 1, 2018 from the affiliate marketing companies’ websites. We did not hyperlink those terms and conditions that were not available publicly. All the companies that required disclosure also mentioned the FTC’s endorsement guidelines.

Out of the top 10 programs in our corpus, only 3 explicitly instructed their creators to disclose their affiliate links to their users. In all three cases (Amazon, Ebay, and ShopStyle), the companies called out the FTC’s endorsement guidelines. Of particular interest is Amazon’s affiliate marketing terms and conditions (Amazon was the largest affiliate marketing program in our dataset).

Amazon’s terms and conditions: When content creators sign up on Amazon’s website, they are bound by the programs terms and agreements Section 5 titled: “Identifying Yourself as an Associate”.

Figure 1: The disclosure requirement in Section 5 of Amazon’s terms and conditions document.

As seen in Figure 1, the terms of Section 5 do not explicitly mention the FTC’s endorsement guidelines but constrain participants to add only the following disclosure to their content: “As an Amazon Associate I earn from qualifying purchases”. In fact, the terms go so far as to warn users that “Except for this disclosure, you will not make any public communication with respect to this Agreement or your participation in the Associates Program”.

However, if participants click on the “Program Policies” link in the terms and conditions—which they are also bound to by virtue of agreeing to the terms and conditions—they are specifically asked to be responsible for the FTC’s endorsement guidelines (Figure 2): “For example, you will be solely responsible for… all applicable laws (including the US FTC Guides Concerning the Use of Endorsement and Testimonials in Advertising)…”. Here, Amazon asks the content creators to comply with the FTC’s guidelines, without exactly specifying how. It is important to note that the FTC’s guidelines themselves do not enforce any specific disclosure statement constraints on content creators, but rather suggest that content creators use clear and explanatory disclosures that convey the advertising relationship behind affiliate marketing to users.

Figure 2: The disclosure requirement from Amazon’s “Program Policies” page.

We learned about these clauses from the coverage of our paper on BBC’s You and Yours podcast (~ 16 mins in). A YouTuber on the show pointed out that he was constrained by the Amazon’s clause to not disclose anything about the affiliate program publicly.

Indeed, as we describe in the above sections, Amazon’s terms and conditions seem contradictory to their Program Policies. On the one hand, Amazon binds its participants to the FTC’s endorsement guidelines but on the other, Amazon severely constrains the disclosures content creators can make about their participation in the program.

Further, researchers are still figuring out which types of disclosures are effective from a user perspective. Content creators might want to adapt the form and content of disclosures based on the findings of such research and the affordances of the social platforms. For example, on YouTube, it might be best to call out the affiliate relationship in the video itself—when content creators urge participants to “check out the links in the description below”—rather than merely in the description. The rigid wording mandated by Amazon seemingly prevents such customization, and may not make the affiliate relationship adequately clear to users.

Affiliate marketing companies wield strong influence over the content creators that register with their programs, and can hold them accountable to ensure they disclose these advertising relationships in their content. At the very least, they should not make it harder to comply with applicable laws and regulations.