Business Bites Epi 93: 2 Quick Marketing Legalities to Keep You Out of Trouble

2 Quick Marketing Legalities to Keep You Out of Trouble

Episode 93 on the Business Bites Podcast

The Gist Of This Episode: Having reviews and referrals are important for our businesses…but if we utilize them incorrectly, we could end up in legal hot water. In this episode, Rachel talks about how and why you need to add disclosures to your testimonials and referrals and when they aren’t necessary.


What you will learn:

  • Why testimonials are important
  • Why you must disclose when reviews or referrals are asked for
  • How those disclosures can be made
  • Ways you can have testimonials and referral programs that don’t require disclosures
  • and more!

Expand To Read Episode Transcripts

Hey guys, Rachel again, and I just want to ask you, before we dig into today’s Bite, if you could leave a review on whatever podcast platform that you are listening on. It really does help the show. I try to keep these ad-free as much as possible, and I also don’t do a lot of selling of my own products and services, even though you guys know I have legal services, and also contract template forms. A little shameless plug.

But just know, the reviews do go to help support the podcast, so I can keep providing you guys with free legal information.

And on that note, let’s just right into the top legal marketing things that you need to know, that are legalities that you may not be aware of.

I want to first start off with testimonials, because reviews, testimonials, and all of that kind of stuff, everybody looks for. Now, you may not specifically land on a site and go, “Oh, let me go check the reviews first,” but if you see a review, you’re probably going to read it. And if you’re like me, when I’m shopping for furniture or other things online, maybe clothes, and they have reviews enabled, I like to look to see very similar feedback of people that either have a similar esthesic… maybe I’m looking at furniture, or like on Rent the Runway and places like that, find people that have the same body shape as me. It gives me a good frame of reference to know if that product is going to fit me, or my home, or my office, whatever I’m… what I’m purchasing for.

Now, another layer of testimonials is that it is social proof. And social proof is even more important these days than I think any other time in marketing history, because we are so reliant, whether you realize it or not, we are so reliant upon social media and opinions of others. Again, you may be somebody who’s sitting there thinking, “Oh, I don’t seek out reviews,” but you’re probably not going to close your eyes and keep scrolling if you do see a review or a testimonial on a website. Right? It’s at least going to give you a little bit of confidence, whether you actually read the whole review or testimonial, or not.

So just… I share that bit before I jump into the legalities of the testimonials, to understand that they are super important. And I am the first to admit, I probably don’t use social proof enough in my marketing, because there’s a part of me that doesn’t like when people talk about me, even though in a good way, right? It’s all this, like, “Oh, I just want people to look at my message of what I’m delivering, and who I am, and the product that I have.” But they’re not going to know how good it is, or how easy to use, and how it’s helped others, if I don’t utilize that social proof.

So I’m marking it now, today, that I’m going to be a bit better about utilizing social proof, and I want you guys to do it as well. But make sure you’re doing it legally. Because here’s the thing: When you are setting up to get social proof or these testimonials, and you’re soliciting them from your customers or your clients, it’s really important that you’re not truly incentivizing them in a way that could put you into hot legal water.

What do I mean by that? Any time that you provide something in exchange for a testimonial, technically you have to disclose that with the testimonial. For example, maybe you are a creative business, and you created a logo or a photography session, then when it’s all said and done, you say to them, “Oh, you know, I’ll do an extra print for you, or I’ll an extra add-on or elements that go with your branding logo, if you’ll give me a review in exchange.”

Well that’s technically something that you’re exchanging for. So that means every single time that you’re going to utilize the review, you’re supposed to put the disclaimer down that they received something in exchange. This also goes for… and I see this on sites all the time, especially clothing sites, and it absolutely drives me crazy because it’s incorrect, but when you are told, “Hey, review us and you can get a discount. Review us, and you can get a store credit.” That is also a testimonial that’s supposed to have the disclosure that something was given in exchange. All right?

This can even be as simple as… maybe it’s not a customer. Maybe you have a new book coming out, and you’re sending out author copies and soliciting of a review. Technically, under the law, you’re probably going to have to be disclosing that. A lot of people don’t do it, and we don’t really want to inundate our testimonial and social proof pages with this, right? We want to make sure that we are getting good quality reviews, authentic reviews, and we don’t also have to be burdened by this disclosure of saying… you know, having the social proof, saying that Sally in New Jersey absolutely loved your stuff, and then having fine print every single time you use it, saying, “Sally received X, Y, and Z in exchange for this review.”

So one of the ways you can get around this is just simply requesting reviews. Simply by asking your customers, or your peers, your colleagues… people are willing to leave reviews, even in exchange for nothing. They’re wanting to do it to help you out, right? Of course, we know incentives work the best, but you want to just ask, just ask, and you’re going to get more reviews than if you don’t ask at all, obviously, and it’s going to keep you from having to do this disclosure.

This… The second aspect of marketing legally, is also having to do with asking people to refer for you. So testimonials, we’ve just established that if I’m going to give someone something in exchange for their testimonial, I have to disclose that on the testimonial each time. That’s a pain. But also consider, if you’re asking for people to refer customers or people to you, it has to be disclosed. Another big thing that I don’t see happening. And it is frustrating, because you never have an issue until you have an issue, and then people do end up getting pinged for this kind of stuff.

The most classic example of this is when, maybe, you have a referral link or, like, a CRM, like for HoneyBook or… which is a customer management system. Or maybe simply like for Moo business cards, where you’re going to receive credit and such. Technically you, the person that is sharing the link, is supposed to be disclosing that, right?

Now here is another wrinkle to this. We’re actually talking about you, the business owner, and what you can do, marking legally. I understand that it’s the people that are referring to you are supposed to be disclosing if they’re going to receive something in exchange for the referral. And you can also take this brick and mortar. Maybe you make a business relationship with somebody in town, and they’re referring customers. Technically, it’s on the referring party to make the disclosure, but do you want to hang your hat on that? Probably not.

So here is my recommendation. Let’s say you have an affiliate program, and you’re having, you know, affiliates who are sharing about you. Set up custom landing page that explains, “Hey, welcome to such and such website. You’re here because somebody referred you, and if you purchase something, or you invest in my company, or, you know, you invest in protecting your business, then your referring person may receive a… compensation in return.”

Now you guys can make it more flowery than that, but that’s essentially the essence of what you’re trying to say. You’re just wanting to put the person that’s been referred on notice that they are going to be… that that recommendation, that referral, was part of a transaction that was agreed upon, such as in the context of affiliate programs.

Let’s look at it from a brick and mortar standpoint. Maybe you go to a local business, a spa in town, and you say, “Hey, Sally Spa, for every client you send to me, I’ll kick you $25.” Again, technically it’s supposed to be on Sally to disclose this, but nothing hurts for you mentioning when Jane, the person that Sally referred, saying, “Hey, we’re so glad that Sally referred you. She is a good partner of ours, and we have a good, formalized business relationship here.” And you can cover your bases there, to ensure that the disclosure to the referred party, the potential customer, was made.

Why is this important? Well, also, why is the testimonials disclosure important? It’s a consumer protection thing. The Federal Trade Commission is wanting to protect consumers. Right? The bar is elevated because we are the business owners. And so whether you’re looking at gathering testimonials, or you’re working to have a referral-type program with an incentive, you are going to make sure, because you guys have listened to this podcast… you are going to make sure that you’re abiding by all of these disclosure requirements, to be in line with the FTC regulations, because you don’t want to get pinged.

Now I’ve given you guys a little nuances, but I want to leave you with one last way you can kind of get around this. And I’m not saying legal loophole, get around it. And I’ve already touched on this a bit with the testimonials. But what I’m saying is, just ask people to give you a testimonial, without it being dependent upon any exchange for compensation, or product, or service, or discount.

In the same vein of referrals, you can just simply ask for Sally Spa to recommend people to you, without you telling Sally, “Well sure, I’ll give you $25.” It doesn’t stop you, though, from after Sally referring you people, for you to send her a thank you gift. That is kind of the different nuance around having to do the disclosure.

So you can always thank people for their testimonials or sending business. But once it flips over to they’re going to give… they’re going to receive something in exchange for either the testimonial or the referral, that’s when all this is triggered. And I just don’t want you guys to get in trouble.

Now, you guys have probably seen this hullabaloo a lot with bloggers. It really is super common in affiliate groups, and influencers who are not disclosing. I have another episode about that. You guys can check that show notes at, to give you a bit more information about disclosures when you receive free product as like in influencer, in posting, and all of that.

But this, I wanted to focus primarily on testimonials and the referral programs.

Just understand that FTC is trolling. They don’t care if you’re a small fish. It’s easier for them to catch a bunch of smaller fish than one large fish. Okay? So they are trolling out there.

And another level of this is, you never know if a problem’s going to arise. Who’s to say you don’t have an issue with a customer or a client? Well if they have a savvy attorney on the other side, raising my hand, such as myself, I’m going to look for these types of things. So if there is a problem, I’m going to look outside the scope of what the initial problem between the customer and the business is. I’m also going to be looking to see what marketing illegalities are happening, because that can always be used as leverage and/or it may then be reported to the FTC, and you guys could be fined, and you don’t want that to happen.

Now, I’m not on the lookout to do that to you all, because it’s not going to matter, because you guys are going to take an action. You’re going to set up to get testimonials to have social proof. You’re either going to just ask and thank afterwards, or if you’re going to give them something in exchange, you’re going to have a disclosure about that. And two, if you guys are going to have your referral programs, and it’s set up beforehand, you’re going to do the proper disclosure. Doesn’t have to be a crazy fanfare, written in stone. You can very easily convey this to customers, or you can just thank the referring party after the fact.

All right, guys, so that’s your quick Business Bite today of two marketing legalities that you need to be aware of, and hopefully it will inspire some planning into your marketing. Add these to your marketing. Don’t let this episode sway you away from doing it. It really is straightforward as what I have said.

And as always, feel free to jump into the Business Bites group on Facebook. We are going to have a great discussion about this, and talk about other marketing acts that we can do, to help further our business.

About the author

Hi, I’m Rachel Brenke

Rachel Brenke

I hope you are enjoying the Business Bites Podcast.

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