FTC disclosure examples for advisors who mention a referral program

Do you need an FTC disclosure when you mention a referral program?

Usually yes, if you publicly recommend the program and may be paid when someone uses it. The FTC's Endorsement Guides treat a payment or other benefit as a "material connection" that readers should be told about when it could affect how much weight they give your recommendation. Whether the rules reach a particular post, newsletter or talk depends on the facts, and this is general information, not legal, tax or financial advice.

The Guides are the FTC's interpretation of Section 5 of the FTC Act, not regulations in themselves, but the agency may investigate deceptive practices. They are published as 16 CFR Part 255, with section 255.5 covering disclosure of material connections. The FTC's staff Q&A, What People Are Asking, explains how the agency applies them in practice.

What the FTC guidance says, in plain terms

Paraphrasing the Guides and the staff FAQ, not quoting them:

• If there is a connection between you and the marketer that readers would not expect and that might affect how they value your endorsement, it should be disclosed.
• Payment is the obvious case, but free products, equity, family ties and employment can also count.
• A disclosure should be clear and noticeable to the people who will see the endorsement, not buried in a profile page or a long list of tags.
• The FTC staff FAQ discusses a connection that a significant minority of the audience would not expect; if that is the case, disclose it.

Read the sources directly. They are short, and your counsel will want to see the primary text.

Where disclosure applies and where it may not

If your recommendation includes a referral link, the FTC staff FAQ says the disclosure should sit close to the recommendation and not be buried in comments. Do not hide the link behind a shortener without disclosing it.

Plain disclosure lines you can adapt

Edit these with your own counsel. Replace placeholders with what your agreement actually says; never type the reward amount if you have not read the current terms.

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 cumulative per referred company. That sentence is the program fact; do not paraphrase it into a promise.

Good disclosure practice

1. Put the disclosure before or beside the recommendation, not after a click.
2. Use the same words your agreement uses for the relationship, such as "referral partner."
3. Repeat it each time you post or send, not only the first time.
4. Keep the claim accurate: no promised results, no guaranteed outcomes and no implied approval.
5. Keep a dated copy of what you published.
6. Do not describe anyone's confidential records or name a company without its permission.

A written agreement helps you keep the facts straight; see whether you need a written referral agreement and the qualified referral definitions to check.

Professional rules add to FTC rules

The FTC Guides are one layer. M&A advisors and other regulated professionals may have separate rules about disclosing referral fees to clients, firm approval of outside activities and the content of communications. Registered representatives, CPAs and lawyers should check their own rules before accepting a fee or posting about one. The M&A advisor page covers the context for sell-side practitioners, and the internal memo template helps you raise participation with your firm first.

Questions to ask your counsel

• Does my relationship with the program count as a material connection under the Guides?
• Where must the disclosure appear for each channel I use?
• Do my firm's or profession's rules require pre-approval of the post?
• Should clients sign an acknowledgment before an introduction?
• What do I need to keep as a record?

Confirm with your own counsel, tax adviser or professional body before acting.

Next step

Draft your disclosure line before you draft the post, then check it with counsel. When it is ready, register as a partner. Conversations with owners are easier with the discovery questions for advisors, and the introduction email builder prepares a message with your disclosure in mind. Confirm the company meets the baseline on who qualifies.