Online Affiliate Marketing and Liabilities

Traffic Sources

The main value driver behind a successful online businesses is its capacity to generate traffic for its websites. The volume of traffic, combined with the company’s ability to convert that traffic into sales, largely determines your company’s success. There are multiple sources of traffic to tap into: through SEO strategies you can generate organic traffic; influencers can assist you in generating traffic through social media outlets; ad networks allow you to purchase ad space through media buys or you can purchase affiliate traffic from affiliate networks.  

The Risks of Affiliate Marketing

No matter your particular source of traffic, it is paramount that the online advertisements applied to promote your products do not include any misleading statements. The one traffic source where there is an increased risk of misleading statements, is affiliate traffic. Affiliates are third parties (often mere individuals) who will promote your products for you against the payment of a fee. Since more often than not, they get paid if the advertisement actually leads to a sale, there is always the risk of affiliates making aggressive and daring statements that may not fully accord with reality. For instance, affiliates promoting a hotel chain may wrongfully claim that the hotel is frequented by celebrities to entice consumers to book a room there. Unless you (meaning the hotel chain) take the necessary measures, you can be held liable for such misleading statements.

Protecting your Brand from Affiliate Fraud

The extent of your liability for false statements about your products by your affiliates will depend on the local laws governing your company. However, without due care, online companies will generally be deemed liable for the statements of their affiliates who are promoting their products. To try to prevent such liability, it is necessary that you can demonstrably show you have taken reasonable measures to prevent the dissemination of false statements by your affiliates. There are various measures you can take in this regard. But it’s always a combination of informing your affiliates what they can and cannot say as well as monitoring that they are sticking to it. One hand washes the other. For more detailed information on how to protect your brand against affiliate malpractices, check out our legal dispatch on this very topic here.