#1: What Is The FTC, Exactly? A Government Agency or An Independent Commission That Works Closely With The Government?
The Federal Trade Commission is an independent agency of the United States government. Independent agencies operate separately from the other branches of government and aren’t headed by a Cabinet secretary. They’re also independent of Presidential control, though the incumbent selects members and must pick a near-equal amount of Democrats and Republicans. And yes, the commission does wield the “power of federal law” via the Federal Trade Commission Act.
What is the FTC’s main responsibility? Keeping an eye out for “unfair and deceptive” business activity — including marketing. Essentially, they’re the nation’s “consumer watchdog” agency. For more details about the FTC, mosey on over here.
#2: The 2009 “Self-Regulatory Principles For online Behavioral Advertising”
In 2009, the FTC released a set of guidelines concerning “proper” advertising tactics. “Self-Regulatory Principles for Online Behavioral Advertising,” is a 55 page report that covers the four principles of acceptable online marketing:
- Transparency & Consumer Control: Businesses are expected to let consumers know when and how they’re participating in target marketing and provide an opt-out mechanism.
- Reasonable Security and Limited Data Retention: Companies that choose to collect personal data should only keep data for as long as necessary and only as it pertains to a specific transaction. Also, the FTC advises that “reasonable measures” should be taken to ensure data security. (Yeah, no; the FTC is not known for being precise. That’s why it’s a good idea to get a lawyer if you’re in trouble with the FTC, for he or she will know the exact case law to pull to challenge vague rules.)
- Sensitive Data: Companies can’t use sensitive information about a consumer’s financial status, health status, or information pertaining to children for target marketing purposes.
# 3: Cookies & Consumer Privacy Controls
Cookies help online advertisers track consumer behavior in ways far beyond the capability of traditional advertising. A few morsels of text can tell you thousands of different things about a user’s web habits.
Personal data related to the online activity of children, financial data, or health status are subject to federal online privacy laws.
Not long after the unveiling of the FTC privacy guidelines in 2009, Yahoo! and Google created a method for users to opt out of having behavioral advertising appear on their web browser. In 2014, however, Yahoo! announced that they would no longer honor “browser do not track” signals. The future of online privacy is very much up in the air.
#4: Disclaimers Are A Must
To limit liability, it isn’t enough to throw a general disclaimer on your website. The product or service being advertised must be marketed in a way to demonstrate use under ordinary circumstances. Moreover, if you have an e-commerce site, payment and refund details must be laid out in full.
#5: Material Compensation = Paid Endorser = Mandatory Disclosure
Anyone materially compensated to blog, tweet, or endorse a product must disclose the fact that he or she is paid. The disclosure statement must be put in a prominent place on the website. Read more here.
#6: Special Rules For Online Jewelry Sales
Online Jewelry Sellers must adhere to the 2008 FTC Guides for the Jewelry, Precious Metals, and Pewter Industries. If you sell gems online — fake or real — make sure you “polish up” on the rules.
#7: Multi-Level Marketing (MLM) Lowdown
Even though the guidelines the FTC issued in 2009 do not expressly address affiliate marketing, the FTC is against matrix or multi-level marketing schemes. These kinds of schemes also sell products and services through website networks. Matrix or multi-level marketing schemes are treated by the FTC like pyramid schemes — i.e., they’re illegal.
#8: Dot Com Disclosures
The Bible of all things online marketing is the Federal Trade Commission’s Dot Com Disclosures. Grab a coffee and cozy up with the DCD here (we tried to make our Dot Com Disclosure summary a bit less boring than the FTC’s).
#9: Internet Businesses Need Internet Attorneys
An experienced online marketing lawyer can help keep the FTC at bay. Get in touch today to get on track.
FTC Guidelines and Internet Marketing 101
Here at Kelly / Warner Law, we field a lot of questions about Federal Trade Commission Guidelines pertaining to blogging and Internet marketing. The two most common queries:
Are bloggers and marketers required to disclose certain types of information on their websites?
If so, how must the disclaimers be presented?
In this article, we’ll discuss the latest FTC guidelines and disclosure requirements.
The FTC Acai Berry Scandal: A Lesson On Weight Loss False Advertising
A couple of years back, the FTC came down hard on Acai Berry advertisers. In online ads, many weight loss marketers used headlines like: “New Diet Pill Helps you Lose 50 pounds in 4 weeks” to describe the supposed miracle product. This alluring diddy also caught the FTC’s eye:
WARNING! AcaiPure Is Fast Weight Loss That Works. It Was Not Created For Those People Who Only Want To Lose A Few Measly Pounds. AcaiPure was created to help you achieve the incredible body you have always wanted …USE WITH CAUTION! Major weight loss in short periods of time may occur.
These headlines and blurbs caught the attention of the FTC because they make bold claims — claims that sound too good to be true. And when asked for evidence to support these claims, the marketers couldn’t hand-over satisfactory studies. (No, not all white papers and studies are created equal.) The commission deemed the headlines “false advertising” and a hulk-sized fine was levied.
False advertising isn’t the only thing at issue here. though. The FTC is also concerned about “re-bills.” In the Acai crackdown, the commission reasoned that not only did the advertisement lead customers to believe they would experience dramatic weight loss, but the advertisement also indicated that there was no financial risk. Yet, Acai Berry clients were billed for the product without their knowledge – sometimes thousands of dollars – for something they were led to believe was “Risk Free.”
The FTC has and will continue to clamp down on false advertising claims as a way to curb unfair and deceptive marketing. And remember, they have to keep busting people in order to keep existing. So, watch your back and make sure you have the proper disclosures. If you do, the FTC can’t come after you.
Blogging FTC Guidelines
The FTC isn’t only concerned with false advertising (blatant or otherwise). They’re also concerned with persons who endorse products and fail to disclose that he or she is a compensated endorser.
Bloggers and affiliate marketers who are receiving payment from websites engaged in false advertising should also beware. According to FTC Guidelines, bloggers must post a disclaimer or make a disclosure regarding a “sponsored communication.” There is no such thing as a one-size-fits-all “sponsored communication” disclaimer, however, the FTC does provide a few guidelines:
- Only “material connections” must be disclosed.
- Connections are material if the reviewer received some consideration for the review (e.g., cash, merchandise, etc.).
- Guidelines impose liability on: (1) advertisers, (2) advertising agencies, and (3) endorsers (including celebrity endorsers).
- The “results may vary” safe harbor is gone – advertisers are responsible for the claims made by endorsers.
Must I Have a disclosure or disclaimer on my Blog?
If you’re a paid blogger, affiliate marketer, or any entity receiving pay for advertising you must use disclaimers on your site.
“What kind of disclaimer is needed on your website or blog?”
The answer isn’t clear cut. Different strokes for different apps. That said, as long as the disclaimer is “clearly and conspicuously” placed according to the FTC Guidelines, then your site should be in the clear. Having a link in small type — which just so happens to be the same color as the background color of your page — won’t do because the disclaimer must be “clearly and conspicuously” placed.
There’ isn’t a list of “FTC approved” methods for disclosing certain information. The guidelines simply say that the disclaimer must be “clear and conspicuous” when disclosing the material relationships between endorsers and sellers – especially when such relationships aren’t otherwise clear to people visiting the website.
For bloggers, it’s important for the disclaimer to follow every blog post. Why? Because if the disclaimer is only in one spot, there is no guarantee that a reader will see it. A good method is having a link in your footer than appears on every page.
The FTC Guidelines govern advertising done on Twitter and other social media platforms, too. So, make sure to disclose material connections with every Tweet.
How you can comply with FTC Guidelines
The revised FTC Guidelines dictate that advertisements for services and products must not be misleading or false. Advertisers must disclose when the advertisement showcases atypical results. Furthermore, marketers using word of mouth or electronic media must disclose any material relationships between themselves and the advertisers they represent so consumers aren’t misled.
When online marketing guidelines are violated, the FTC will consider the “totality of the circumstances.” That means the FTC will take a look at:
- The advertised product,
- The advertisement claims, and
- Whether or not a “reasonable consumer” would be able to determine (from the disclaimer) if there is a material connection between the advertiser and the marketer.
Be careful out there, bloggers and online affiliate marketers. Even though the truth can hurt…the truth doesn’t hurt as bad as the FTC crashing down on you.
Is it illegal for online and affiliate marketers to create fake review websites?
The FTC can go Ramsay Snow on deceptive marketers (financially speaking, of course) — so no, it isn’t at all wise to operate fake review and consumer report websites. BUT, the issue isn’t black and white. Proper disclosures and a trickery-free user interface will most likely keep you in the legal clear.
Basically, the key to staying on the right side of online marketing law is honesty. If something is an advertisement, label it as such. If you have a business or personal relationship with a product or service you promote – disclose it.
List of review website affiliate marketing “techniques” that could get you in trouble with the law
Review websites are a popular form of affiliate marketing. But are they legal? Here’s a handy list.
- Paying a person or using a service to “get” reviews is against regulation.
- Writing a review for a product you’ve never used is against regulation.
- Creating a website that presents itself as an unbiased consumer review portal, when in reality its main purpose is to sell one brand, is against regulation.
- Failing to disclose a material relationship between a review website and parent company, or some other association that could bias the “reviews,” is against regulation.
I’m an affiliate marketer. What laws and government guidelines should I know?
Anybody involved in online marketing – whether they be an affiliate marketer or business owner with an online presence – should be intimately familiar with the Federal Trade Commission’s DOT COM DISCLOSURES. To read the blow-by-blow government guide on what is and is not acceptable when it comes to online advertisements and marketing campaigns, go here.
Warning: For the non-legal-geek, the DCD is crushingly boring. As such, you may just want to check out our summary here. We can’t promise it’s any less boring than the FTC’s version, but it’s a heck of a lot shorter.
The Dot Com Disclosures can be vague in areas. If you are unsure if one of your techniques could get you in trouble, contact an attorney who has helped online business owners with FTC cases in the past.
Also, all businesspeople should understand the Lanham Act, specifically what it says about false advertising and unfair competition. And lastly, it’s a good idea to follow the California State online privacy laws – as the Internet cares not for state boundaries, and if people in California can use and interact with your site, then your best bet is to adhere to California law.
Can I Make Up Testimonials and Reviews? After All, How Is Anybody Really Going To Know If They Are Fake Or Not!?
We understand. It’s tempting. How is anybody going to find out if your testimonials are real or fake? For starters, if you use stock photography for the testimonial pictures, that’s a pretty good indicator of the reviews’ falsity. Also, the FTC can audit your site, and if you don’t have actual people to match up with the testimonials, you could find yourself looking down the barrel of a hefty FTC fine.
The Bottom Line When It Comes To Marketing With Fake Review Websites
If you don’t want to risk being sucker-punched by the FTC, follow the Dot Com Disclosures to the letter. If you are even the least bit unsure if your website passes legal muster, get in touch with an online marketing attorney to conduct an audit of your site and business. It’s a lot less than you may think, and it will probably save you money and headaches down the road.
To speak with an online affiliate marketing attorney, get in touch with Kelly / Warner Law today. We’re not just lawyers, we’re also affiliate marketers.
A doozy of a celebrity defamation lawsuit is taking shape. To be clear, this libel lawsuit will not get far; it will not pass GO, nor will the plaintiff collect any money.
But when the Queen of Soul – (Millennial Decoder: Aretha Franklin) — drops a $10 million defamation lawsuit against geek-centric satire site The News Nerd, the moment cannot pass without acknowledgment.
In a way, the debacle is more than just a celebrity defamation of character suit; it’s a generational libel clash of the entertainment titans. Call it, Old School Crooner v. New School Satire.
The Satirical Article That Resulted In A Defamation Lawsuit
So what was the “article” that shook Franklin’s r-e-s-p-e-c-t? Try:
“Patti LaBelle Arrested After Fist Fight with Aretha Franklin”
The story went viral and at last count was viewed by over 40,000 eyeballs.
“Get a sense of humor, Aretha,” right? Sure. But, let’s, for a second, try to look at things through Ms. Franklin’s eyes – her 72-year-old eyes.
Satire & Defamation: What Counts As “Reasonable” In The Age Of Subtle Memes and “Barely There” Satire
Skepticism is a mainstay of of the Gen-X, -Y and Millennial personality. And that’s not an repudiation; hey, when you’ve been around the Internet the majority of your life, you tend not to believe everything you read online; you quickly develop a sixth sense for what is and what is not a satire website.
But not everyone does – and “barely there” Internet satire is not something “a reasonable” 60- or 70-year-old may immediately recognize as such.
Human Guinea Pig Experiment on In-Law: Can A Sexagenarian Spot The Online Satire?
To test my generational satire theory, I decided to conduct an imperfect experiment with a sexagenarian relative. Without explanation, I showed her the article in question. Predictably, her eyes widened, her jaw dropped, and after she had devoured the last morsel of “news,” breathlessly, she turned to me and said, “Wow! Who knew Aretha was so violent!”
And who could blame my unwitting human guinea pig? To the untrained eye, The News Nerd looks a whole lot like a legitimate news site. And even though the website dons a disclaimer declaring it a work of fiction, the notice is on the far right bottom of the page – where the average reader may never look. Moreover, the piece is written like a straight news piece. Not a hint of sarcasm is present. The lack of tongue-in-cheek is so glaring, it makes one wonder: what, exactly, was the author satirizing or parodying?
(Actually, the more I think about it, this silly suit may cause NewsNerd a teeny bit of heartburn if it ends up in front of the “wrong” judge. Franklin, most likely, will never win, but a judge with certain leanings may let it play out for a bit to prove a point.)
Franklin’s publicist, Gwendolyn Quinn, released a statement regarding the celebrity defamation of character suit. Quinn explained that the Queen of Soul did not get the joke. “It was presented as a serious news story intended to depict [Aretha] in a slanderous and derogatory way,” lamented Team Franklin.
Satire or Defamation? In This Case Satire Will Most Probably Prevail
Again, the chances of Franklin winning this satire defamation suit are between slim and none. After all, a disclaimer on every page of the News Nerd reads, “The stories posted on TheNewsNerd are for entertainment purposes only. The stories may mimic articles found in the headlines, but rest assured they are purely satirical.”
That said, the case does raise a pair of questions:
- With satire becoming more and more mainstream, subtle, and arguably a valid form of news delivery (see The Colbert Report), can it (satire) ever be defamatory despite culturally engrained Constitutional protections?
- What are the legal implications if “a reasonable person” can’t distinguish fact from satire?
Perhaps these are questions the courts will have to re-visit for the Internet Age.
Speak With A Satire Defamation Attorney
Are you considering suing for satire defamation and wondering if you have a case or not? If yes, get in touch with Kelly / Warner Law soon. The statute of limitations is not that long when it comes to defamation, so the longer you wait, the less chance you have of having a viable case.
The Canadian Competition Bureau is an Independent law enforcement agency that monitors Canadian online marketing regulations. The Competition Bureau is responsible for the administration and enforcement of:
- Competition Act
- Consumer Packaging and Labeling Act
- Textile Labeling Act
- Precious Metals Marketing Act
What law governs Canadian online marketing regulations?
Canada’s Competition Act — commonly called C-34 — is the law governing business conduct in Canada including online marketing. C-34 covers both civil and criminal actions.
In general, what does C-34 say about false and misleading advertising online?
C-34 asserts that “any representation in any form, which is false or misleading in a material aspect, is prohibited.” It also states, “A representation is material if it could lead a person to a course of conduct that, on the basis the representation, he or she believes to be advantageous.”
What Canadian online marketing regulations does C-34 address?
The Competition Act addresses issues related to “commercial” websites and email. Though, depending on the circumstances, statements made in chat rooms, news groups and message boards can also fall under the act.
What actions does C-34 prohibit?
Among other things, C-34 prohibits:
- Deceptive telemarketing;
- Pyramid schemes;
- Advertising at bargain price a product not available in reasonable quantities;
- Selling a product at a price above the advertised price;
- Conducting contests, lotteries or games of chance or skill without making fair and adequate disclosure of, among other things, material facts that could affect winning potential.
Canada’s online marketing law also sets parameters for multilevel marketing plans.
What if I put a disclaimer about a product or service on another page of the website? Will that satisfy Canadian online marketing regulations?
C-34 addresses Internet user behavior. In doing so, the law requires that any disclosure information must appear in close proximity to the thing it is annotating. In the language of the Canadian government:
“Businesses should not assume that consumers read an entire website, just as they do not read every word on a printed page. Accordingly, information required to be communicated to consumers to ensure that a representation does not create a false or misleading impression should be presented in such a fashion to make it noticeable and likely to be read.”
Under Canadian online marketing regulations, who is responsible for an advertisement or website in violation of C-34?
According to Canadian law, “The person who has caused the [false or misleading] representation to be made” can be charged under C-34. While everyone involved in a marketing campaign may not be responsible for an ad violation, officials may consider the roles of:
- Ad agencies
- Selling Company
- Media outlets
Officials look at facts on a “case-by-case basis” when determining causation. Ultimately, courts pin the penalty on the entity that controlled the project. For example, if a company hires an advertising agency to create material, the contracting company has the ultimate say on “whether [or not] the campaign proceeds.” As such, the contracting company would be responsible. Hosts and ISPs would not be held responsible under similar circumstances.
What is the Canadian online marketing regulation “publisher’s defense” rule?
Section 74.07 of Canada’s Competition Act outlines the “publisher’s defense.” It states that anybody who “prints or publishes or otherwise disseminates a representation, including an advertisement, on behalf or another person in Canada” is not responsible for any marketing violations. But there is a hitch. In order to successfully evoke the publisher’s defense, an entity must have its client’s address to ensure that the publisher is not simply “acting as a conduit” for the business.
C-34 has a section called “Applying the Competition Act On-Line.” What are the main points?
- General impression and literal meaning are both considered when reviewing an ad for legal action.
- Asterisks are a universally well-known signal of a disclaimer and should be used when possible.
- “A disclaimer can only qualify a representation; it cannot give or retract a false or misleading representation.”
- Ideally, a disclaimer should appear on the same screen and close to the statement it references.
- Writing “see below for eligibility restrictions” is an acceptable way to alert consumers of a related disclaimer; “See below for details” is an unacceptable disclaimer alert.
- Consistency with hyperlinks is important.
- Pop-ups and links to other pages can be used, but each case is examined individually. Basically, don’t be tricky.
- “Hyperlinking a single word or phrase in an advertisement may not be adequate.”
- If you use “attention grabbing tools” for disclaimers you can’t use the same tools in the ad, so as not to distract.
- Disclaimers must not use similar colors as foregrounds and backgrounds.
- Consider how people view and navigate a page and put disclaimers in appropriate places. When fitting, businesses should make clicking through to a disclaimer compulsory.
What disclosures are required according to Canadian online marketing regulations?
Canada’s competition law does not outline each and every disclosure that needs to be made. In some ways the Canadian government expects folks to practice common sense. But C-34 does highlight two types of disclosures that MUST be made:
- Section 55 addresses Multi-level Marketing – Multilevel marketing plans must include disclosures regarding earning potentials.
- Section 74.06 Contests – Entities must disclose “facts which materially affect the chance of winning.” Additionally, “Notice of a contest should not require an extra step, such as sending an email or placing a phone call.” According to the law, clicking on a hyperlink is not considered an “extra step.” “
Do businesses based in other countries have to adhere to Canadian online marketing regulations?
If a website can be accessed in Canada and/or Canadians can purchase the goods on a given website, then said website must adhere to Canadian law. C-34 states: “The [Competition] Bureau will assert Canadian jurisdiction over foreign entities to the fullest extent authorized by law whenever necessary to protect the Canadian market from false or misleading representations and deceptive marketing practices.”
“Since the Internet can’t decipher nation-state borders, must I adhere to Internet law standards in other countries?” It’s an oft-asked question and the answer is “yes”. To tweak a cliche: When in the UK, do as the British. And since national boundaries are non-existent online, your website is, technically, “in the UK,” which means you should take time to review UK online marketing compliance standards. To help you out, below is a list of frequently asked UK online marketing compliance questions — and answers.
What agency monitors UK online marketing compliance?
UK online marketing compliance standards are monitored by a self-regulatory organization called the Advertising Standards Authority (ASA). The group’s stated duty is to “Regulate the content of advertisements, sales promotions and direct marketing in the UK” by investigating “complaints made about ads, sales promotion or direct marketing.” Guy Parker has been the ASA’s chief executive since 2009.
Is the UK ASA a government agency?
No. The ASA cannot interpret or enforce legislation, but the group’s “Code of Advertising Practice” is reflective of UK legislation. However, the ASA is funded by an “advertising tax.”
If a claim is made in an advertisement, what level of proof is necessary to verify the claim’s accuracy?
Like in the United States, claims made in UK advertisements must be accurate and verifiable. UK online marketing compliance rules state that “before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove all claims, whether direct or implied, that are capable of objective substantiation.”
Is “puffery” or exaggeration allowed under UK online marketing compliance rules?
Puffery and exaggeration are unacceptable according to UK online marketing compliance standards. Official rules state: “No marketing communication should mislead, or be likely to mislead, by inaccuracy, ambiguity, exaggeration, omission or otherwise.”
Does the ASA have authority over online marketing compliance in the United Kingdom?
Since 2011, the ASA has held domain over the following UK online marketing compliance issues:
- Advertisements on websites;
- Paid-for ads on the Internet, including pop-ups, banners and sponsored links;
- Online sales promotion that appears in “British Web Space”;
- Email marketing.
Does the ASA have authority over marketing claims made in personal e-mail messages?
Private electronic correspondences do not fall under the purview of the UK Advertising Standards Authority. Though, some confusion exists as to whether or not the ASA can take action on SMS messages. It’s best to consult an attorney who can review your exact campaign and determine if it crosses a legal line.
Do any other agencies monitor aspects of UK online marketing compliance?
Yes, several. Most online advertisers, however, should concern themselves mainly with the Institute of Sales Promotion and the ASA. The Institute of Sales Promotion follows the same rules as the ASA and alerts the ASA when it believes a breach of sales promotion law has occurred. Examples of sales promotions include:
- By One Get One Free;
- 25% Extra For Free;
- Loyalty Rewards;
- Lotto, scratch cards, prize drawings.
If I want to make a UK online marketing compliance complaint to the ASA, will my identity be kept confidential?
When the ASA receives a grievance, it is required to keep the complainants’ personally identifiable information (PII) private, unless specifically given permission by the claimant. If, however, the complainant is a competitor of, or has a vested interest in, the subject of the complaint, the claimant must agree to be named. This is done to cut down on petty complaints.
What does the ASA do after it receives a complaint?
When the ASA receives a complaint, it immediately informs the entity being investigated. Then, industry experts investigate the claims and ask for substantiation of any questionable assertions in the marketing material. For example, if you are promoting a weight loss product and promise potential customers that they are “Guaranteed To Lose 20 Pounds in 3 Days!” then you’ll have to provide scientific proof to the ASA that your product consistently results in users losing 20 pounds in 3 days.
When the agency completes its investigation, a summary of findings and recommendations is compiled and sent to the advertiser and complainant. A copy of the report is then submitted to the ASA adjudication council, who votes on the issue and posts its decision online.
What if I do not agree with the ASA’s decision? Are appeals possible?
Appeals are possible. A formal request for one must be made within 21 days of the adjudication and can only be requested by the advertiser or complainant. Moreover, appeals can only be sought when:
- New evidence is available;
- One of the parties can elucidate a substantial flaw in ASA adjudication or investigation process during their case.
In the case of an appeal, an independent reviewer often enters the fray. The independent reviewer has final say on whether or not an appeal is accepted.
What actual power does the UK Advertising Standards Authority hold?
Though the ASA is not a part of the government, it does wield certain powers like:
- Bad publicity;
- Copy Control – The ASA can order a brand to have all ads reviewed by CAP (the Copy Advice Team) before publishing;
- CAP Compliance Team Intervention – The CAP compliance team administers ASA mandates. The government department performs various tasks to keep the system moving along smoothly. The CAP compliance team will call media owners and instruct them not to accept certain ads.
- Direct line to Broadcasting Licensing Authorities and the Office of Fair Trading – The Office of Fair Trading has the power to fine businesses and bring lawsuits. The department works closely with the ASA and comes down hard on repeat offenders if the ASA gives the signal. The Office of Fair Trading derives its authority under the 1998 Control of Misleading Advertising Regulations Act.
What are some notable UK marketing compliance cases?
- A 2004 ad for the Apple Power Mac G5 used the phrase “the world’s fastest personal computer.” Since it is a claim that can be proved empirically, the ASA launched an investigation.
- In 2008, the ASA banned an Apple iPhone ad that promised the phone could “access all of the Internet.” Since iPhone did not support Flash — and a host of other major plugins – the ASA forbade Apple from using the terminology.
- The ASA made the Israeli Tourism Board remove ads that contained a map of the country that included the West Bank, Gaza Strip and Golan Heights.
- L’Oreal was forced to stop running ads that included Penelope Cruz, Julia Roberts and Christy Turlington under the premise that the three women were not representative of actual results. Additionally, the ASA decided the ads contained misleading before and after pics.
- Brennan was banned from running an ad for the JB7 music player because the copy supposedly “glorified illegal downloading.” In its report, the ASA reasoned that Brennan “repeatedly made reference to the benefits of the product being able to copy music but did not make it clear that it was illegal to do so without permission of the copyright owner.” Another time Brennan was sanctioned for not making clear that a docking station didn’t come with the device.
- A local furniture store in Northampton couldn’t use the catch phrase, “Sofa King Low” because the line would likely cause “serious widespread offense.”
Do online marketers in the United States have to worry about the UK Advertising Standards Authority?
Yes! If your ads are accessible in “British web space” it’s under the purview of the ASA.
If you need to speak with a U.S. lawyer well-versed in UK online marketing compliance standards, contact us today.
Multi Level marketing companies are Making Headlines, Again
Recently, a well-signed letter requesting a formal inquiry into multi level marketing companies like Herbalife, Amway and Avon landed in the lap of the Federal Trade Commission. The signatories urged commissioners to explore the allegedly predatory nature of MLM companies and review ongoing accusations that MLM programs are elaborate pyramid schemes.
Not only did the letter outline grievances, but it also included some suggestions for increased regulation of multi level marketing companies. Specifically, the MLM detractors suggested that the FTC create rules which require MLM companies to disclose past earnings in addition to attrition rates of salespeople.
How Does Multi Level Marketing Work?
Multi level marketing is when salespeople are paid based on their own product sales, in addition to the sales of any new salesperson recruited through their “line”. While some people swear by multi level marketing, other folks feel MLM schemes are a dangerous cauldron of false hope.
MLM’s Loudest Detractor
Hedge fund manager – and Herbalife heckler – Bill Ackman has long aired his distrust of MLM companies, claiming many are simply giant pyramid schemes. In fact, he put his money where his mouth is and bet $1 billion against Herbalife. Ackman once ranted, “The MLM industry has proved incapable of regulating itself, is rife with fraudulent and deceptive earnings claims and has caused — and will continue to cause — untold financial harm and misery to the poorest and most vulnerable of the consumers whom the commission was formed to protect.” (NOTE: Ackman’s since scaled back his hedge because of strong figures posted by Herbalife in subsequent quarters.)
What Should You Do to Prepare For Possible MLM Crackdown?
OK, so what should you do if you operate a multi level marketing company – or one that has considerable similarities to an MLM setup? If you have an attorney, give them a call and ask for a review. The couple of hundred dollars it will cost to make sure you’re operating on the right side of the law is worth it. Just think: you’ll have to lay out a lot more if you get busted by the FTC.
Don’t Panic, Nothing May Come Of This
The most important thing to remember about this letter, though, is just that – it’s only a letter. That said, multi level marketing rules already exist – so make sure you’re following those. As for further crackdowns, we’ll be keeping an eye out.
Attention affiliate marketers: it’s safe to head back to Illinois. The state’s Supreme Court overturned the controversial “Amazon tax”. The court decided the law that birthed the online sales tax was superseded by the federal Internet Tax Freedom Act, and was therefore unconstitutional.
So, let’s take a minute to review the Internet Tax Freedom Act and the Amazon tax. Then we’ll discuss the logic road the Illinois justices traveled to reach their decision – a decision that is sure to delight the affiliate marketing community.
Internet Tax Freedom Act
Lawmakers singed the Internet Tax Freedom Act into law on October 21, 1998. It’s meant to preserve the educational, commercial and informational potential of the Internet by banning Web taxes. Specifically, the ITFA prohibits “Internet-only” levies like bit, email and bandwidth taxes. It does not, however, exempt states from establishing an online sales tax.
Officials have updated the Internet Tax Freedom Act three times – mostly for small definition changes and provision extensions. The last amendment extended the law till Nov. 1, 2014, at which time politicians will decide whether or not to keep it as is or change it.
Proponents of the ITFA argue the law is necessary for innovation, as burdening Internet development with taxes will hurt the potential benefits of the Web. Opponents of the ITFA say that all it does is unnecessarily cut a potentially valuable revenue stream for states.
Illinois Repealed The Amazon Tax
In 2011, Illinois passed the Main Street Fairness Act, which imposed an online sales tax for Internet retailers, with annual Illinois-generated revenues of over $10,000, regardless of whether or not the retailer had a physical presence in the state. Dubbed the “Amazon tax,” Illinois’ Main Street Fairness Act did not go over well, and large online retailers like Amazon and Overstock severed ties with Illinois affiliates to avoid the cost.
In fact, the new tax was so unpopular that the Los Angeles-based Performance Marketing Association sued the Illinois Department of Revenue, arguing the Amazon tax was unconstitutional and discriminated against “Internet-based performance marketers.” According to PMA’s research, after the MSFA passed, 1/3 of the state’s 9,000 affiliate marketers, who generated over $700 million in advertising revenue in 2010, left Illinois in 2011, and the other 2/3 either downsized or went belly up.
In a six-to-one ruling, the Illinois Supreme Court sided with the PMA, and by extension Illinois’ affiliates. Ultimately, the state’s highest court reasoned that the Internet Tax Freedom Act superseded the Main Street Fairness Act. Even though the ITFA does allow for online sales’ taxes, the bench decided that affiliate links were equivalent to radio and newspaper promotional codes, and since out-of-state retailers didn’t have to pay a tax on those sales, placing a tax burden on Internet affiliates would be “discriminatory.” The one dissenting judge argued that the MSFA “does not impose any new taxes or increase any existing taxes.”
The Future of Online Taxes
On November 1, 2014 the Internet Tax Freedom Act will expire. Some states, like Arizona, are already making moves to prepare for a possible change in law. It will be interesting to see what happens with the ITFA in 2014. Politicians eager to close the deficit gap may see Internet taxes as a juicy revenue pork chop just waiting to be devoured.
As of this writing, the government is still shut down, and the Federal Trade Commission has temporarily ceased all consumer watchdogging – but that hasn’t stopped a stream of FTC-related news from hitting the wires. A tidbit that caught our eye is a meeting scheduled for December 4, 2013 where participants will explore “blending advertising with news, entertainment, and other content in digital media”.
The First Time The FTC Will Formally Address Native Advertising Issues
Assuming the feds are up and running again by December, the commission will hold a workshop on content marketing, specifically, native advertising. This gathering marks the first time the Federal Trade Commission will formally address the issue of native advertising – and it got some industry folks worried that the regulation-friendly agency will start throwing their sometimes counterproductive rules around the content marketing industry.
“Don’t Worry, A Workshop Doesn’t Always Mean Impending Regulations,” Says FTC
The FTC, however, seems to want to allay any regulation fears. A spokesperson for the department, Laura Sullivan, attempted to mitigate suspicions by reminding interested parties, “it’s premature to say there will be a next step” when asked if this meeting is the first step towards native advertising regulation.
What Aspects of Native Advertising Does The FTC Care About?
It sounds like the December 4th FTC workshop on native advertising will concentrate on best practices and labeling of sponsored articles. Presumably, if the advertising agency can convince the FTC that self-regulation is the best way when it comes to the content marketing field, the FTC will leave this corner of the online advertising world alone and not take any “next steps” as Sullivan suggested.
What Do The Marketing Associations Have To Say About The FTC’s New Found Interest In Content Marketing?
As you might expect, the Online Publisher’s association and the Interactive Advertising Bureau are pushing for industry self-regulation, as opposed to federal guidelines. And who can blame them? After all, native advertising works – and it a rare bird that can’t decipher a sponsored article – especially since the law already requires publishers to clearly and conspicuously label all sponsored stories.
If you are involved in the online marketing business at all, this is something to watch.
If you are in need of a lawyer who has successfully dealt with the FTC in the past, contact Kelly Warner Law.
What happens when you cross the advertising “puffery” line? Skechers shoe company recently found out. They had to fork over a cool $40 million thanks to a class-action lawsuit over some claims made in their ads.
A $40 million class-action settlement against Skechers shoes should serve as a cautionary tale to all online marketers. The warning: Don’t Make Incredible Claims if You Don’t Have the Proof! Not only could ignoring this warning result in a scuffle with the FTC, but customers – with visions of greenbacks dancing in their heads — could entangle you in a costly false advertising lawsuit.
Judge Thomas B. Russell, of the Kentucky Federal Court, affirmed a false advertising class-action against Skechers. A passel of lawyers, two primary plaintiffs and about 520,000 claimants cumulatively earned $40M – all because Skechers’ ads arguably crossed the truthiness line. In an effort to get people to plunk down cash for their sneakers, Skechers promised consumers their shoes would boost weight loss and sculpt stronger muscles. After some back and forth, Skechers denied allegations but settled to avoid costly, protracted litigation.
Be sure not to cross the Puffery line
We live in an advertising panopticon. At every turn, we’re bombarded with pleas to try this, buy that, and visit there. So, in order to stick out, advertisers strive to speak to our vulnerabilities and joys, in the hopes an emotional connection with a products’ promise will compel spending.
But you can’t say anything you want in advertisements. You can’t lie about your product or your competitors’ products, and you can’t use language that blatantly misleads the public. But you can exaggerate a bit, and, say, call the pizza made at your pizzeria, “The World’s Greatest Pizza!” This is called puffery.
To put it simply, puffery is effusive, unquantifiable, self-serving flattery. The jerk in the office who always brags about his latest gadget or girlfriend? He uses puffery. Legally speaking, the line between puffery and false advertising is thin, It’s also dependent on what type of product you marketing. For example, DSHEA rules govern dietary supplements, whereas people in the data broker business should make sure they’re familiar with the Fair Credit Reporting Act and its effect on allowable assertions in marketing material.
Where The Skechers Class-Action Lawsuit Money Goes
How did the $40 million award get divided? The lawyers who brought the case split $5 million; the two lead plaintiffs walked away with $2,500 and the approximately 520,000 eligible claimants are entitled to refunds for the following products:
- Shape-ups – $80
- Resistance Runners – $84
- Podded sole shoes – $54
- Tone Ups – $40
If any of the claimant money is left over, the FTC gets the remaining funds.
Laws Online Marketers Should Review To Ensure Compliance
If you want to make sure your online advertising efforts are compliant, review the Dot Com Disclosures. It’s the Federal Trade Commission’s Internet advertising bible. The document explains in detail what you can and cannot do when advertising online or via mobile devices and social media. Reading the Dot Com Disclosures – cover to cover – is essential for all online marketers. It covers questions like:
- How do advertisements need to be labeled?
- What types of ads need disclosures and what do those disclosures have to say?
- How must advertisements on social media sites, like Twitter and Facebook, be marked?
- Is it possible to hide disclosures?
- Will using lots of legalese in my advertising disclosures help me or hurt me?
If you advertise online and need a marketing compliance lawyer, get in touch. Kelly Warner is a full-service law firm with a dedicated digital advertising legal team. If you are ready to talk, you can either give us a ring at 1-866-570-8585 or find us on skype at aaronklaw. If email is your thing, shoot us a message at email@example.com or use this form. Talk to you soon.
Below is an in-depth review of the March 2013 Dot Com Disclosures update. Fair Warning: It is the opposite of short. We’ve done our best to use descriptive headlines to break the monotony and hopefully allow for easier navigation. If you need to speak with an attorney who deals with FTC and online advertising issues, get in touch. Kelly Warner is here to help any and all online marketers.
The Federal Trade Commission updated the Dot Com Disclosures. In April 2012, the nation’s consumer protection agency held workshops to discuss mobile devices and sales disclosures. Now, they’ve released a new set of guidelines. It’s supposed to act as a set of rules for how mobile and social media ads should be structured, but the 53-page Dot Com Disclosure update is actually a lengthy treatise filled with non-committal suggestions.
Regardless of the wishy-washy language, the Dot Com Disclosures are the closest thing we have to an online marketing law. Following the standards within could save you a costly legal battle with the FTC. Below is a rundown of the updated Dot Dom Disclosures. If you dabble in social media endorsements, geo-location or mobile advertising, the new FTC stance and recommendations will likely affect your current digital marketing campaign.
Part Rehash of the Original Dot Com Disclosures
The majority of the newest Dot Com Disclosures is a regurgitation of the previous document. It warns against the evils of “deceptive marketing,” and explains that good marketing is marketing which is truthful, substantiated and fair. The drafters of the document also spend time explaining why both consumers and sellers have a right to an honest marketplace.
While the latest version of the online marketing guide excessively explains the importance of proximity, repetition and prominence when it comes to advertisement disclosures, it does little in terms of presenting definitive answers as to the exact parameters of what will and will not be tolerated by the commission. Despite an abundance of words, few definitive rules are laid out.
And believe it or not, the FTC is not shy about admitting their non-committal nature. In the new version of the Dot Com Disclosures, it clearly states that the document “is intended only to provide guidance.”
“The ultimate test is not the size of the font or the location of the disclosure, although they are important considerations,” reads the online marketing guidelines, “the ultimate test is whether the information intended to be disclosed is actually conveyed to consumers.”
Justification Against & Repeated Warnings About “Unfair & Deceptive Marketing Practices”
The charge of the Federal Trade Commission is protecting consumers from “unfair and deceptive marketing practices.” As such, they dedicate several paragraphs in the Dot Com Disclosures discussing why fraudulent online ads hurt buyers and sellers. “[Sellers]…expect and deserve the opportunity to compete in a marketplace free of deception and unfair practices” and consumers deserve to “understand what they are paying for” and that “deception can damper consumer confidence” explains the FTC.
In addition to rehashing the perils of questionable marketing tactics, the new Dot Com Disclosures also make clear that the guidelines apply to ads of all types – audio, video, digital, small, large, mobile, Internet. They didn’t bother naming all the possibilities, instead opting for the all-encompassing “not limited to any particular medium used to disseminate claims or advertising.”
General Look & Feel
The new Dot Com Disclosures address how online and mobile ads must be marked, so as to be easily distinguishable as promotional material. Similar to the older version, the new Dot Com Disclosures make clear that the “overall net impression of [an] ad” is more important than then individual aspects. The updated version also warns marketers not to “let other parts of the ad get in the way” of an advertising disclosure. Commissioners specifically mention buy now buttons and flashy shopping carts as potential distraction culprits. The Dot Com Disclosures stress that any disclosures need to be made before the “the decision to buy” is made. Disclosures should also be “displayed early in the decision-making process.” Therefore, the guidelines seem to suggest that disclosures and other advertorial assets (i.e., a shopping cart or glossy graphic) should be of equal prominence.
The primary point the FTC hammers home: Disclosures should be obvious and unavoidable.
Proximity, Pop-Ups and White Spaces
Proximity is a big deal in the Dot Com Disclosures. The document mentions proximity more than a cookbook mentions eggs. The proximity gist is this: make darn sure any disclosures are near the ad it modifies. The guidelines urge that, when possible, the ads themselves should include relevant limitations within the ad, rather than a separate disclosure.
In this iteration of the Dot Com Disclosures, pop-up disclosures are called out by name. Specifically, the commission warns not to use “blockable pop-up disclosures.” So, if you’ve been using standard pop-ups to satisfy disclosure requirements, it may be time to change your methods.
The issue of “blank white space” is also specifically addressed in the latest version of the Dot Com Disclosures. The new guidelines make note of the deceptive nature of blank white spaces on lengthy sites; the rules urge marketers to repeat claims multiple times on a long website (see below for specifics about scrolling); the new online marketing document also directs advertisers to be mindful of the “multiple routes through a website” and urges marketers to make sure that disclosures are easily seen – no matter where or how a user happens upon an ad.
What should you do if you dabble in teaser ads? The FTC has this to offer:
“[In instances of teaser ads] when the advertised product is only sold through advertisers’ own website and the consumer must click through in order to take any action…a space-constrained ad can direct consumers to a website for more information[where the disclosure must be conspicuous].”
The FTC Thinks Hyperlinks Are Very Important
Hyperlinks to detailed disclosures are a popular method. As such, this version of the Dot Com Disclosures painstakingly addresses a myriad of issues related to hyperlinking. The FTC’s message concerning hyperlinks is this: make sure any disclosure links are noticeable, uniform and take users directly to the information they need to make an informed decision. According to the new Dot Com Disclosures, hyperlinks should be recognizable as links and not hidden by other elements on the page or device.
The appropriate anchor text is also discussed in detail in the new online marketing guidelines. In short, advertisers are advised not to use generic, non-descript words for disclosure hyperlinks. The document specifically says that “hyperlinking a single word or phrase in the text of an ad is not likely to be effective.” It goes on to explain: “hyperlinks that simply say ‘disclaimer,’ ‘more information,’ ‘details,’ ‘terms and conditions’ or ‘fine print’ do not convey the importance, nature and relevance of the information…” In a rare moment of clarity, the Dot Com Disclosures suggest the following as the ideal hyperlink verbiage:
Scrolling Seems To Be Of the Utmost Concern
During the Dot Com Disclosure workshops, participants must have spent a considerable amount of time debating the finer points of scrolling, because the latest version of the online marketing guidelines are filled with scrolling tips and standards.
Below is a list of how the FTC feels about scrolling when it comes to online and mobile advertisements:
- Whenever possible, avoid ads that require scrolling in any direction.
- Make every attempt to ensure “that scrolling is not necessary in order to find a disclosure.”
- “When scrolling is necessary, use text or visual cues to encourage consumers to scroll to view the disclosure.”
- The presence of “scroll bars along the edges of a screen are not sufficiently effective visual cue.”
To drive home their anti-scrolling preference, the Dot Com Disclosures also warn advertisers to “keep in mind that having to scroll increases the risk that consumers will miss a disclosure.”
The FTC Essentially says that It’s Your Responsibility to Keep up with the Latest User Behavior Statistics
In addition to making sure that all advertisements and promotional material is clear and conspicuous, the new Dot Com Disclosures also suggest that digital marketers must stay current when it comes to the latest and greatest user behavior studies. Items commissioners recommend advertisers keep abreast of include:
- Empirical research about where consumers do and do not look on a screen;
- Standard size and color studies regarding readability;
- Studies regarding reading habits of users;
Throughout the new online marketing guide, users’ tendency to scan pages instead of reading them is mentioned several times. The point the FTC is making by reiterating our shared tendency to not “read an entire website or online screen” is that advertising disclosures should be so clear that an illiterate individual would be able to tell what it is.
Screen Size & Device Specifications
When word first surfaced that the Federal Trade Commission was considering an update to the Dot Com Disclosures, their focus seemed to be mobile device marketing and social media ads. While the agency did not address all the questions originally asked during the Dot Com Disclosure 2012 workshops, the new version of the guidelines does address issues pertaining to smaller screen sizes and the proliferation of available devices.
General statements regarding screen sizes and device diversification in the 2013 update of the Dot Com Disclosures:
- Document states that guidelines are “device neutral” – meaning all the guidelines contained within apply to all electronic communication devices.
- “If a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.”
- Optimizing web pages for mobile devices “is important.”
You’re Responsible for Affiliate Sales People
Not only does the FTC want you to take extra steps to ensure your ads are sized properly for all delivery devices, but they also want you to educate affiliates promoting your product or service. The new Dot Com Disclosures state:
“Advertisers should employ best practices to make it less likely that disclosures will be deleted from space-constrained ads when they are republished by others.”
In other words, monitor everyone hawking your product via electronic means – you could be held responsible for their ineptitude. (Note: This should be taken seriously. After all, these days, the FTC is even going after people’s parents to recover funds.)
What To Do In Cases Where The Disclosure Is Long, But The Screen Size Is Small?
A frequently asked question regarding online advertising disclosures deals with screen size: What do you do if your disclosure is long, but the screen size is small – like on mobile phones?
The new Dot Com Disclosures addresses this question directly – but doesn’t answer it clearly:
“…if a product’s basic cost…is advertised on one page, but there are significant additional fees the consumer would not expect to incur in order to purchase the product or use it on an ongoing basis, the existence and nature of the those additional fees should be disclosed on the same page and immediately adjacent to the cost claim and with appropriate prominence.
However, if details about the additional fees are too complex to describe adjacent to the price claim, those details may be provided by using a hyperlink.”
In other words, you should make every effort to include limitations and disclosures within the ad itself. If, however, the limitations are too long to fit, you can direct users to a lengthy disclosure page via a hyperlink.
Language & Confirmations
As has been preferred for nearly two decades now, the new Dot Com Disclosures makes a point of praising “plain language.” Gone are the days when a good contract was one freighted with complex Latin phrases and superfluous qualifiers. These days, a contract like that could harm you instead of protecting you.
The new Dot Com Disclosures unambiguously state: “Use plain language and syntax so that consumers understand the disclosures.” The guidelines go on to assert that in order “for disclosures to be effective, consumers must be able to understand them.”
The FTC specifically mentions avoiding the following language pitfalls:
- Technical jargon
- Non-universal and little-known abbreviations (“other abbreviations or icons may or may not be adequate”)
- Extraneous language and material, which only serve to make things more confusing
In addition to the above four language points, the 2013 Dot Com Disclosures point blank state that advertisers should require “the consumer to take some affirmative action to proceed past the pop-up or interstitial [page].” It also lays out in black and white that disclosures must come before the “add to shopping cart” stage. More specifically, “disclosures must be effectively communicated to consumers before they make a purchase or incur a financial obligation.”
New Social Media Rules
Perhaps the most talked about aspect of the 2013 Dot Com Disclosure updates is the addition of social media-related standards. The most important new social media marketing rule is that the word “Ad:” or “Sponsor:” must be included in a tweet (or other short social media message).
From the Dot Com Disclosures:
“‘Ad:’ at the beginning of a tweet or similar shirt-form messages should inform consumers that the message is an advertisement…”
“the word ‘Sponsored’ likely informs consumers that the message was sponsored by an advertiser.”
“It is the advertiser’s responsibility to draw attention to the required disclosures.”
A few other notable points included in the newest version of the Dot Com Disclosures:
- Negative option trials are mentioned by name – and discouraged.
- The guidelines concerning the use of Endorsements and Testimonials in Advertising (“Endorsement Guidelines”) are still in effect.
- Disclosures must match the medium of the advertisement. So, if an ad is an online ad, the disclosure must be made online, too; if an ad is a radio ad, the disclosure must be auditory, as well.
If you need to speak with a lawyer who knows and understands the Dot Com Disclosures, get in touch today. Kelly Warner is an Internet law legal practice that has helped swarms of affiliate marketers, online businesses and startups with various FTC and online marketing issues. Hope to hear from you soon.
Attention Mobile Marketers: A new Android app called PrivacyStar alerts the Federal Trade Commission of questionable “text-vertising” campaigns. Yep, you read that right: the small but powerful program allows users to file a formal FTC complaint with the tap of a finger. So, if texting is one of your current mobile marketing methods, be aware that users can now easily alert officials if they think your advertising texts are unsolicited SPAM.
Bottom line: it’s a good time to review your mobile marketing process to make sure it doesn’t cross the legal line.
Fighting text spam got easier by leaps and bounds on Wednesday when Android app PrivacyStar added a free-to-use feature, which will help users file formal complaints with the Federal Trade Commission directly from their smartphones.
What Mobile Marketers Should Do To Evade The Federal Trade Commission’s Wrath:
- Read and follow all the rules outlined in the Dot Com Disclosures.
- Enlist an Internet law attorney to do an audit of your marketing plan to double check that you’re operating on the right side of the law.
- Read about recent FTC investigations to ensure you’re not engaging in the same activities that are landing others in the legal hot seat.
The Golden Rule For Mobile Marketing
These days, devices are a dime a dozen. They come in all shapes and sizes, colors and weights. The proliferation of hand-held computers and smartphones has also led to the proliferation of mobile marketing. But as we all know from personal experience, users don’t dig advertisements that pop-up, beep, shout and slow down a system; users especially dislike incessant mobile ads and SPAM. So, here’s the golden rule every mobile marketer should consider:
Try Not To Annoy, Don’t Trick People Into Signing Up and Don’t Lie!
If you follow these three simple rules, your advertising plan is probably on the right side of mobile marketing law. If you want to make sure, contact the online marketing lawyers at Kelly / Warner Law — we’ll do a comprehensive audit of your mobile marketing plan to make sure the FTC doesn’t come a-knocking.