When Do You Need an Earnings Disclaimer?

James Chiodo, Certified Information Privacy Professional CIPP/US

Anyone serious about business knows that having a website is a must. However, having a website carries more responsibility than many realize. Putting yourself on the Internet opens you up to new liabilities. Dissatisfied customers, copyright infringement, and fraud claims are not uncommon. Taking every step you can to protect yourself and your business is important.

In addition to protecting yourself from consumer disputes, you must keep in compliance with the Federal Trade Commission (FTC). This agency oversees business on the Internet, and they take their job seriously.

While every business owner on the web needs a privacy policy and a terms-of-use provision, not everyone will require an earnings disclaimer. A disclaimer is a policy statement that is designed to limit the scope of your responsibilities and define the rights between you, your visitors, and your customers.

An earnings disclaimer is usually mandatory when you are selling a product or service that is designed to generate income for your customers. An earnings disclaimer can help protect you from certain liabilities if an unhappy customer claims that their expectations were not fulfilled after purchasing your service or product.

Get-rich-quick schemes, sales letters, and business opportunities are abundant on the Internet. Any claims made on these types of websites must not mislead the public in any way. According to the FTC’s Rules of Franchises and Business Opportunities, you are required to provide certain documentation and disclosures and prove any earnings claims.

The FTC is constantly on the lookout for advertising that is deceptive or potentially fraudulent. According to FTC guidelines, an advertisement is considered deceptive if it either contains or omits information that is likely to mislead consumers and the deception is deemed “material.”

If your website is promoting any type of business opportunity, you need an earnings disclosure to provide you with a measure of legal protection and inform your customers what they can reasonably expect when purchasing a product or service from you.

According to the FTC, penalties for a deceptive ad can include a cease and desist order, which would require you to immediately stop using the advertisement. Failure to do so could result in fines that can run to thousands of dollars per advertisement for each day the advertisement is used. Civil penalties are also possible, which can run to millions of dollars depending on the nature of the violation.

Protect your online business and limiting liability whenever possible is essential.

Having an earnings disclosure not only helps you keep compliant with FTC regulations, but it also lets your customers know that there are no guaranteed methods of making money.

Our Earnings disclaimer statement was drafted by a licensed Internet attorney and can help provide your online business with an added measure of protection.

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