Affiliate Legal Liability

Are we responsible for our recommendations?

[archie goodwin]

Here's our situation: we have a site that recommends different companies who provide a specific type of service to customers. We have articles that we've written as well as reviews of each company. We perform actual research on the companies and do our best to provide honest information. However, we don't exactly make clear the affiliate relationships we have with some of the companies on our site.

Now, here's the question. Are we liable if someone gets screwed over by a company that we have recommended? We have a disclaimer that says we're not responsible for those companies actions, but is that enough? (I'm in the US, so I'm referring to US liability laws)

Also, is it possible that we are not following advertising guidelines by saying that we offer "reviews of the top companies in the field" without fully disclosing the relationship?

We'll be talking to a lawyer soon to set our minds at ease and make any necessary changes, but I wanted to get other affiliates views on this matter. To what extent are we responsible for the companies that we recommend?

[hobbnet]

I highly doubt it...

Do you think that if someone got a faulty pair of Nike shoes that they saw an NBA player endorse on a TV commercial would make the NBA star liable? No way.

[1milehgh80210]

I doubt it too.

However, affiliates have to be careful not to make exaggerated or untrue claims about the product. Otherwise the merchant could be off the hook and the injured party might look for damages from the affiliate.

[paybacksa]

You'd better believe that NBA star has a very long legal contract with the manufacturer, not only specifically disclaiming liability, but also contractually obligating the manufacturer to assume all legal costs and all consequences should the disclaimer be breeched or should the star be sued in any way for any reason related to the endorsement. Usually there are provisions for if the manufacturer goes backrupt, acts of God, terrorism, and anything else that might be left as a loophole in the manufacturer's own insurance policy.

Big pockets == target, and if you're gonna be the target you need indemnity.

[archie goodwin]

Well, we now have some professional advice on this topic. We met with a lawyer this morning (specializing in internet technology law) who is of the opinion that we can be held liable for the products and services that we recommend. Apparently the Attorney General could construe our opinions and recommendations as "negligent referrals" to the companies.

There are changes that can be made to the site that will minimize our liability, but as it stands now *both* the company and us as individuals are potentially liable for our opinions and recommendations we make on the site.

Some of the proposed changes to the site were as follows:
1. State clearly that we are an advertising service, and that we are paid by some of the companies we review.
2. Change some of the verbiage in the reviews. (i.e. from "they can do X" to "they claim to be able to do X")
3. Place a link to the disclaimer above the fold on our page (it currently sits at the bottom of the homepage).
4. Provide more objective information, rather than our opinions about the service. This also involves distancing ourselves from the review process.

I had been of the opinion that we wouldn't have excess liability, but that's why people don't pay me for legal advice! : ) We'll be getting more info from our lawyer later in the week, so I'll post updates if it looks like anyone is interested.

AG

[mfishy]

If you are not promoting anything that could make you criminally liable, why not form an LLC or an s-corp to limit your liability? This way if you happen to lose a lawsuit, you take away any personal liability (some exceptions) because LLC owners stand to lose only the money that they have invested in the LLC.

This topic comes up about once per month. The fact is that anyone can sue for anything - google got sued for penalizing a a site once :). Also, any lawyer will tell you that there is a chance of liability (especially if it mean a chance at more fees). Of course you should put standard disclaimers on your site if you recommend services.

That being said, I have never once heard of a single affiliate in any area losing a lawsuit because the merchant provides a bad product or damaging product. Odds are the person would go after the actual company that processed and shipped the order or the manufacturer, rather than the review site. I would like to hear if anyone has EVER heard of an actual suit against an affiliate for reccomending a servcie or product in the history of the web.

Lastly, the possibility of being sued is simply the cost of doing business. Protect yourself as much as you can but that's about it...

[affgirl]

I agree with Mfishy. Technically you could be liable with the FTC if you give misleading or questionable advertising claims on your site, but the odds of someone going after you are very slim. Especially if you offer a disclaimer and don't make any outrageous claims. Make sure that the merchants you choose to advertise for are responsive and factual. Offer phone numbers on their site and have a good return policy and respond to emails within 24hrs and do not make any outrageous or questionable claims on their site. Their claims should sound believable and realistic and not promise too much. Not over the top hyperbole. In your disclaimer you might want to emphasis that everything you say about these companies or products on your site are personal opinions only and not claims. And that the opinions and claims on the site you are linking to do not reflect the opinions or endorsement of your own company, but are solely owned by the company you are linking to. Claims that involve safety, health or finances especially must be substantiated and backed up. If the site you promote makes those kinds of claims without backing them up with proof in their sales material, email them and ask them for material to back up their claims.

[chrisnrae]

I had thought about this, but tended to think along the lines of mfishy. I can't see it truly happening and even if it does, the business is an LLC.

But, I'm curious to know how many producing affiliates actually have disclaimer pages on their sites. It was honestly something I never really thought about until I saw it mentioned a while back.