Your Passive Income Could Actually Cost You If You Don’t Do THIS

May 9, 2023

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If you’re a business owner, you’re probably no stranger to the idea of passive income. It’s a hot topic on social media and has honestly become a bit of a buzzword that people either love or hate.

Because of this, let me first explain what I mean by “passive income” before I get into the nitty gritty of this blog post. 

When you hear me say “passive income” on Instagram, in my blog content or even in my product suite, I’m referring to the income you can earn as an affiliate or referral partner.

Affiliate marketing has become increasingly popular and almost all business owners are using it in one way or another. 

As a business owner myself, I’m a huge fan of affiliate marketing (both, as an owner with my own affiliate program and as an affiliate for other programs), but what I’m not a fan of is when people use affiliate marketing illegitimately. 

This type of marketing can be a great addition to your income and serve as a “passive” income stream, but if you don’t take the correct legal steps to protect yourself, it can actually do more harm than good. 

Before I get into that, let’s first take a closer look at affiliate marketing as a whole.

What Is Affiliate Marketing?

Affiliate marketing is a type of marketing strategy where a company or individual promotes another company’s products or services and earns a commission for those sales.

For example, think about your favorite lifestyle influencer on Instagram (mine is Jenna Kutcher).

It’s pretty well known that influencers like this earn a majority of their income through affiliate links, special discount codes and collaborations with brands. 

Now, I want you to think about your favorite business owner or service provider – one of mine is Your Social Team!

Business owners like this ALSO have the ability to earn passive income by becoming an affiliate for other products and services (ahem, Manu at Your Social Team is actually an affiliate of mine and I’m one of hers!).

So, when you see your favorite business owners or service providers sharing their favorite platforms or courses and providing you with a link to get a discount, there’s a HIGH chance they are an affiliate for that person. 

And hopefully, they are disclosing that!

Just like when I share about Your Template Club on Instagram, I make it clear that I can potentially earn income if/when you use my link or code.

This type of strategy generally works like this:

  1. An affiliate signs up to promote a company’s products or services through an affiliate program (I have one of these for my contract shop!)
  2. The affiliate receives a unique link or code to use in their marketing efforts.
  3. The affiliate promotes the company’s products or services through various channels, such as their website, social media, email marketing, or paid advertising.
  4. If a user clicks on the affiliate’s link or uses their code to make a purchase, the affiliate earns a commission.
  5. The affiliate is then paid commission based on their performance

It’s a simple and smart strategy that many businesses use in order to outsource some of their in house marketing efforts. 

Depending on the type of business you have, affiliate marketing can be a very effective way for your business to expand reach and promote your products or services to a wider audience, while also providing an opportunity for individuals or businesses to earn additional income through their marketing efforts.

As mentioned, I’m a huge proponent of this strategy, but only if you’re doing it in a way so that it doesn’t backfire!

Avoid This Mistake With Your Affiliate Marketing Programs

If you are an affiliate that’s promoting products or services for another company, you are legally required to disclose that information to your audience!

As a business owner, you could potentially face an enforcement action (aka get sued) under the Federal Trade Commission (FTC) for failing to disclose gifted, paid or sponsored collaborations with brands or influencers. 

The FTC requires that you disclose and make it obvious that you can earn income ANYTIME you post a commissionable link or code. 

Whether it’s done through Instagram stories, in an Instagram post, via email, through a blog post, etc. you must make sure you include an affiliate disclaimer.

Now, I’m sure you follow people who promote other products and services all the time and you might notice they don’t *always* disclose those partnerships, so you might be wondering if this is really necessary…

And while I can’t say for certain that an official will hunt down every single person that doesn’t disclose their affiliate efforts, I can say that those who don’t could receive some hefty fines for failing to do so. 

With that, wouldn’t you rather take the simple step to protect yourself instead of taking a chance to lose the passive income that you earned?

I don’t know about you, but I’d much rather take the extra 2 minutes to include copy (like below) on my landing page, blog post, email or social post to avoid that risk!

Copy and Paste Affiliate Disclaimer

This is probably one of the ONLY times I would tell you to copy and paste something… but that’s because I’m giving you written permission to do so!

To avoid potential fines on your passive income, make sure you include language like this the next time you’re promoting a product or service as an affiliate:

“Affiliate disclaimer: Some of the links in this [post/page] are affiliate links, which means that if you click on a link and make a purchase, I may receive a commission. This commission comes at no additional cost to you and helps to support my business. Please note that I only recommend products and services that I personally use and trust. I will always disclose when a link is an affiliate link, and I never recommend a product or service solely for the purpose of earning a commission.”

Yes, it’s really that simple! 

And if you’re a business owner who has an affiliate program, you want to make sure that you’re taking the necessary steps to protect yourself too. 

Two contracts that you *definitely* need as someone with an affiliate program are:

  1. Affiliate Program Terms and Conditions

This legally binding agreement between you and your affiliates allows you to ensure your affiliate knows how/when they will get paid, what they can and can’t do to promote your product or service and all the nitty gritty like percentages, code of conduct, payment terms, limitations of liability, their partnership disclosure obligations under the Federal Trade Commission, and more.  

This set of terms and conditions are what your affiliates will agree to upon signing up for your affiliate program.

  1. Affiliate Agreement 

This legally binding template is what your affiliates will actively sign to acknowledge the specifics of your unique affiliate program.

If you’re in need of both of these contracts, you can snag the discounted Affiliate Bundle so you can legally set up your affiliate program with ease!

Here’s to making more passive income… and actually being able to keep it. 💸

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