Is Affiliate Marketing Illegal? (Affiliate Marketing Legal Requirements You Should Know)

January 19, 2024

Is affiliate marketing illegal? No, affiliate marketing is completely legal if you comply with local and international laws and regulations. Each country has its specific rules. For example, the U.S. has the Federal Trade Commission’s Guides Concerning the Use of Endorsements and Testimonials in Advertising. The European Union (EU) has the General Data Protection Regulation (GDPR). These laws aid online entrepreneurs, affiliate marketers, and customers transact safely online.

Affiliate marketing is a business model that entails promoting other business’s products. It provides an affiliate commission for every sale you forward to an affiliate partner or program. Additionally, affiliate marketing can be profitable. You can earn an average of $800-$4,000 monthly for an affiliate commission of about 10%-50%. However, increased illegal activity in affiliate marketing causes customers to be cautious when clicking affiliate links. They often ask, “Is affiliate marketing scam or legit?” In 2020, almost 10% of the affiliate marketing industry’s traffic proved to be fake or just bot traffic. This situation decreases an affiliate marketer’s potential affiliate sales.

An affiliate marketer can turn this around by following the legal requirements in affiliate marketing and researching the most common affiliate marketing scams. Alternatively, local lead generation is an online business model that is 100% legit. It focuses on organically ranking digital assets like websites to acquire high-value leads. Once you have local leads for niche services, you can forward them to business owners to make stable significant passive income monthly. You don’t have to deal with fake products since you’re not handling physical products.

What are the Legal Requirements for Affiliate Marketing?

Knowledge of local and international regulations, affiliate program guidelines, disclosures, affiliate notices, and customer consent are the legal requirements for affiliate marketing. You must consider these factors to avoid being tagged as a fraudster or scammer.

Affiliate Marketing Local/International Laws

Local and international laws and regulations are the most important legal considerations in affiliate marketing. If you miss even a single detail, you can be penalized, or worse, your affiliate marketing business will be closed. Remember that every country has its established set of protocols. For example, the EU’s GDPR differs from the FTC’s “Endorsement Guides”. You should read these regulations comprehensively to avoid legal drawbacks as a potential affiliate of various brands.

Affiliate Program Terms and Conditions

This set of rules varies from one company to another. For example, CJ Affiliate (formerly Commission Junction) requires potential affiliate marketers to have a website or social media account, while Amazon Associates don’t. Strictly following these terms will help you secure a long-term affiliate partner. This factor also applies to any affiliate network you join.

Affiliate Disclosures

Your affiliate website should have proper disclosures. These are essential information about your affiliate marketing business that should be accessible to the public or your potential customers. As a website owner, it is pivotal that you create thorough but straightforward policies. You need to create the following disclosures:

  • Disclaimer or Affiliate Disclosure of Material Connection - This affiliate disclaimer lets customers know what affiliate product you’re promoting and what affiliate marketing program you’re in. It also strengthens the trustworthiness of the affiliate link you’re advertising on your website or social media platform.
  • Privacy Policy - Each affiliate marketing business’s privacy policy is unique. It details the personal information that you collect and use. This policy is important to protect consumers from any fraudulent activity regarding their private personal information (PPI).
  • Terms and Conditions - These legal terms and conditions exist to set clear-cut rules between the affiliate product or service provider and the customer. It details the rights and responsibilities of both parties.
  • Return and Refund Policy - This is usually a reiteration of the return and refund policy of the affiliate marketing program you’re in.
  • Cookie Policy or Cookie Consent - A cookie consent is a policy that pops up when a potential customer visits your affiliate marketing website. It shows what cookies your site has, the data they track, and how you use the collected data.

Affiliate Link/Affiliate Marketer Transparency

Disclosing that you’re an affiliate marketer and that you gain commissions through your affiliate link is necessary. You can put this disclaimer within your social media post, website, or blog post. By being transparent about how you promote your affiliate product, you minimize the risk of being identified as an affiliate scam or fraud.

Affiliate Marketing Promotional Email Consent

Email marketing is a type of digital marketing strategy where you send promotional emails to your customers. However, you need to have consent before sending these emails. It can be through an opt-in form or any other legal option. This is crucial to steer clear of legal hitches. It also saves your marketing efforts from being wasted.

Is Affiliate Marketing Illegal?

No, affiliate marketing isn’t illegal. However, some fraudsters engage in illegal activity through fake landing pages and click frauds. This situation causes misconceptions about the legitimacy of affiliate marketing to spread. In fact, the estimated total cost of damages from bot traffic and fraud clicks in 2022 is $3.4 billion.

Is affiliate marketing legit? Yes, it is. While affiliate marketing has downsides due to fraudulent activity, it is completely legal. ClickBank, Amazon Associate, and CJ Affiliate (formerly Commission Junction) are established companies in the affiliate marketing industry.

What are the Most Common Affiliate Marketing Scams?

Click fraud, get-rich-quick schemes, and affiliate marketing transaction fraud are the most common affiliate marketing scams. These illegal tactics damage the affiliate marketer’s and the affiliate partner’s reputation. Scammers engaging in fraudulent activity also cause you to make lesser affiliate sales. Thus, protecting your affiliate marketing website from such scams is pivotal.

Is Affiliate Marketing Legal?

Yes, affiliate marketing is legal, given that the affiliate marketer fully discloses his/her material connection to the affiliate product or affiliate marketing program. This disclosure should be “clear and conspicuous”, according to the Federal Trade Commission’s “Endorsement Guides”. An affiliate website owner must also publicize related legal policies and disclaimers in his/her social media posts or affiliate website.

Is Affiliate Marketing Legal in Australia?

Yes, affiliate marketing is legal in Australia as long as affiliate marketers comply with Section 18 of the Australian Consumer Law (ACL). This section states that marketers must not engage in commerce or trade that deceives or misleads potential customers. You should also consider the Do Not Call Register Act and the Australian Spam Act before starting your affiliate marketing business in Australia.

Is Affiliate Marketing Legal in Canada?

Yes, affiliate marketing is legal in Canada. However, affiliate marketers must abide by the Competition Bureau of Canada’s Competition Act. This act outlaws deceptive marketing efforts to mislead customers into purchasing their advertised affiliate products. Besides the Competition Act, Canadian affiliate marketers promoting to the U.S. market must also comply with the FTC’s guidelines.

Is Affiliate Marketing Legal in UK?

Yes, affiliate marketing is legal in UK, given that you follow the UK Code of Non-Broadcast Advertising and Direct & Promotional Marketing (CAP Code). This set of rules covers advertisers and other marketing personnel and groups that promote specific products and services. It identifies affiliate marketers as secondary advertisers. An affiliate website owner must also follow FTC regulations when creating sites solely for promoting affiliate products.

Is Affiliate Marketing Legal in Singapore?

Yes, affiliate marketing is legal in Singapore. But, you should abide by the social media marketing laws and regulations of the Advertising Authority of Singapore (ASAS). Their policies highlight ethical advertising on social media platforms regarding affiliate marketing. This also entails influencer marketing through social media channels like Facebook, Instagram, and TikTok.

Is Affiliate Marketing Legal on Facebook?

Yes, affiliate marketing is legal on Facebook as long as you follow its Terms of Service (TOS) regarding affiliate marketing links and posts. You should have an affiliate disclaimer for every post you make that has an affiliate link. This prevents your posts or ads from getting rejected and your account from being banned.

Is Affiliate Marketing Like a Pyramid Scheme?

Affiliate marketing is not like a pyramid scheme. While both business models deal with advertising other people’s or business’s products, pyramid schemes engage in recruiting members to make money. Remember that a pyramid scheme has the same structure as a multi level marketing (MLM) or network marketing business model.

On the other hand, affiliate marketing is legal and free to join. You can earn significant affiliate commission by promoting your affiliate link. So when talking about affiliate marketing vs pyramid scheme, the key difference is legality and membership cost.

Is Affiliate Marketing Risky or Not?

Affiliate marketing can be risky, given the rise in illegal activity from fraudsters in recent years. The amount of fake traffic and affiliate fraud from 2020 to 2022 rose by 7%. And only 5-7% of affiliate marketers reach the $100K-$150K annual income threshold. These facts prove that affiliate marketers must have a dynamic affiliate marketing strategy and comply with the legal requirements to combat affiliate marketing fraud and scams. You would also need to join the best affiliate marketing courses to succeed in the affiliate marketing industry.

Is Affiliate Marketing Safe?

Affiliate marketing can be safe, given that you only transact with a reputable affiliate platform or affiliate network. This strategic move reduces your chances of exposure to an affiliate marketing scam or malicious fraudsters. You can also consider employing a digital marketing agency to help with developing creative, engaging, and legally approved digital marketing strategies and content.

Affiliate Marketing Related Articles

  • Is ClickBank Affiliate Marketing Legit? - Yes, ClickBank Affiliate Marketing is legit. While this global affiliate program has low-quality products, affiliate marketers can potentially earn up to 90% in commissions.
  • Affiliate Marketing vs Digital Marketing - This in-depth article tackles the 9 main differences of affiliate marketing and digital marketing. It also focuses on the ownership, reach, skill sets required, and components of each business model.
  • Affiliate Marketing Pros & Cons - A side-by-side comparison of affiliate marketing’s pros and cons. It explains the business model’s inception factors, income potential, and success and failure rates. Plus, the hidden truths about affiliate marketing.
  • Amazon FBA vs dropshipping vs affiliate marketing - This article shows you how affiliate marketing stacks up against two of the other most common online business models in Amazon FBA and dropshipping. 
  • 8 Reasons Affiliate Marketing is Best for Students - Unlimited passive income, enhanced networking skills, and a flexible business schedule are some reasons affiliate marketing is best for students. This article also features the best affiliate programs for student affiliate marketers and the step-by-step process of starting an affiliate marketing business.

Local Lead Generation is a Surefire Way To Make Money in 2024

Local lead generation is still the most surefire way to make money online in 2024. Unlike affiliate marketing, you have less competition because the local market is not saturated. Plus, your customers are ready to buy. These factors alone increase your potential monthly income.

While affiliate marketing can offer you $10K-$150K revenue yearly, the chances of attaining $80K or more are slim. Plus, you need to deal with a considerable amount of affiliate marketing fraud like fake products and bot traffic. This makes it difficult to earn a sizable affiliate commission and become a successful affiliate marketer.

Alternatively, the local lead generation business model is easier and more scalable. You get less stress because you’re not managing physical products. You just need to rank your niche sites organically using SEO to capture local leads. By selling these leads to local businesses, you earn 5 to 6 figures in passive income monthly. This allows you to improve your cash flow and grow your online business on your own terms.

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Ippei Kanehara

$52K per month providing lead generation services to small businesses is for digital hustlers, industry leaders and online business owners.

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