Why Financial Disclosure Matters on Your Website

Recently I received an email from a company I’d worked with in the past asking me to do another review for them. Because it was for a free service and not a product, I asked for compensation for my time while promising it would be an honest review. It’s unusual for me to ask for payment for a review. Usually I review physical products that have a tangible value.

I looked through my old emails (because I keep everything) to see what we’d agreed to last time. The money was acceptable. How I’d written the review had worked for both of us. Disclosure was there. “I’ll do the review. Same rules/requirements as the last one.”

Y’all, I didn’t even increase my price! (That was either kind of me or idiotic…I’m not really sure.)

The person came back with, “Sounds great. Is there any way we can remove the disclosure this time? We don’t really want people to know we paid you.”

First I laughed (to myself), then I explained my disclosure policy which basically says, “I disclose everything.” I reiterated I was happy to work with them, but disclosure was a requirement for access to my audience.

Why am I telling you this? Because not everyone discloses compensation, although they should. I also have no doubt that company found another blogger to do the review for them. It’s a bad move for a few reasons…

FTC Rules Require Disclosure

In the United States, the Federal Trade Commission (FTC) governs all advertisements including online advertising, influencer campaigns, and social media marketing. The rules require disclosure of compensation, partnerships, endorsements, and anything else that might create a relationship between you and a company. It doesn’t matter if you gave a negative review. When you accept compensation in return for “air time” (on your blog), you have to clearly disclose your connection.

• In sex toy or product reviews, I add “Received in exchange for an honest review” the first time I mention the product. And yes, receiving a product counts as receiving payment, according to the IRS.
• For paid advertisements, I use tags (on my blog) or hashtags (on social media) that say “advertisement” or “paid content” or “sponsored post.”
• With affiliate links, I say “This is an affiliate link. If you click this link and make a purchase, I make a small commission.”
• In podcasts, I say, “This episode is sponsored by…” whether I’m paid for the spot or promoting an affiliate partnership.

Using clear disclosures lets your listener or reader know that you have a relationship with the company or product. You received something or will receive something in exchange for talking about this company.  Your audience then gets to decide for themselves whether to use the service, buy the product, or click the link. But they’ve made a fully informed decision when they do.

And that’s the key. Your audience should be aware so they’re making fully informed decisions. Would they buy the product if you didn’t endorse it? Maybe, maybe not, but bloggers have more influence than they understand, and it’s something to be used wisely.

Disclosure Makes You Ethical

No one likes to be deceived. When you build an audience of readers or listeners, it’s done based on a certain amount of trust. Your audience will believe you when you say, “This is the best thing ever! You totally need one!” about a product or service. But your opinion could be colored by the compensation you receive – free access, free product, actual cash. While part of building trust requires admitting when you didn’t like a product, it also requires that you let your readers decide if they think your review was honest and know what your relationship is to the company.

I would never purposefully deceive my audience. The service I was being asked to review wasn’t something I would have considered without receiving compensation to do it. Not disclosing the relationship between myself and a company makes it look like I just stumbled across them and wanted to tell everyone how great they were. That does happen sometimes, and when I do, I make it clear there is no relationship.  But if I’d done it, and my readers found out later I’d been paid, they might have wondered if I’d duped them – especially if they tried that same thing and didn’t like it.

Ultimately, the relationship between you and your audience is about perception. Refuse to disclose one paid opportunity and get caught, you’ll lose your credibility. Your audience will erode until you can earn their trust again. If the FTC catches you, you could lose your livelihood when they fine the hell out of you.  Is the $50, $100, or even $1000 for a social media mention or blog post worth killing your entire business and rebuilding it from scratch? I don’t think so.

How do you handle disclosure on your website? Share in the comments below!