Hot Topics in Marketing Compliance and Enforcement

Welcome back from lunch! I have a feeling this session is going to be a little heated. Or at least, I’m hoping it will. We’re jumping right into this. Not time for small talk.

Speaking we have Jeffrey Greenbaum, Leonard Gordon, David Graff, and Peter Marinello. With me? Okay!

Up first is David. There’s been a real emphasis on health and beauty campaigns. The business model that supports them is a continuity program.  There are a lot of issues with these types of campaigns.

  1. Disclosure of the terms of purchase: Are they approximate? Will consumers see and understand them?
  2. Use of consumer endorsements and testimonials
  3. Claims that are made about some of the health/beauty products: Are the claims too aggressive or outlandish.
  4. Use of celebrity photos, endorsements, trademarks.

How do you address these issues?

With respect to consumer endorsements, they require signed affidavits that the pictures are legit, that people weren’t paid to say something, etc. There’s no magic bullet. You need to do your homework.  He reviews all ad copy very carefully. They have rules about where material terms that they offer need to be disclosed. You can’t have the Terms of the offer or endorsement hidden on the page.  They need to be disclosed properly.

When affiliates get into trouble it’s more because of a lack of attention to detail than any other malicious intent.

People think that if you use a celebrity in advertising in a truthful manner, that it’s okay. It’s not okay. You need permission.

Next up is Jeffrey.

What is advertising?  It’s almost every conversation with consumers. It’s traditional media, Web sites, public relations, spokespeople, branded content, viral videos, product placement, review sites, Facebook pages, blogs, tweets, etc.  You should treat every consumer conversation like you would traditional advertising media.

Consumers have a right to know they’re being advertised to. That’s the only way they can judge the claims people are making.

What rules apply? Federal, state and local law, as well as self-regulatory standards.

FTC Act

Section 5 prohibits “unfair or deceptive acts or practices”.

Deception: Tell the truth and don’t mislead. Keep your promises. You are responsible for express and implied claims. You must have a way to back up with your saying.

FTC vs CVS : February 2009

CVS promised that nothing was more important to them than consumer privacy. But then they threw away trash with personal info into open dumpsters. There was an alleged misrepresentation.

Disclosures: Is qualifying information necessary to prevent claim from being misleading? Disclosure must be clean and conspicuous. Mouse type probably won’t do the trick. The disclosure needs to be near the claim.

Florida vs Wireless: Free ring tone offers.

Consent order, with numerous requirements such as:

  • Free must include the pricing information ["free ringtone with paid monthly subscription of $9.99 month"]
  • Web advertising must follow certain design requirements
  • Other required disclosures
  • Include in contracts with advertisers and others.

FTC vs Sears

You were joining an online community. Sears said they would track their online browsing when they actually tracked EVERYTHING you did online. The full details of the community were only disclosed during the registration process. License agreement viewable ten lines at a time in a scroll box on  the 75th line.  FTC disclosure must be separate. No pre-checked boxes.

Endorsements

They must be real. They have to be honest and unbiased. You must disclose material connections.  You have to accurately reflect performance. You can’t use an endorser to make a claim that you couldn’t make yourself.   If the results for a product aren’t typical, you have to disclose that.  The FTC is looking hard at blogger and celebrity endorsements right now.

He brings up the Lifestyle Lift case where they were astroturfing by publishing anonymous fake and positive reviews and created fake consumer Web sites. The reviews appeared to from actual consumers. They were douchebags and caught. New York state ruled it deceptive.

Unfairness: It’s about harming consumers, not deceiving them. Don’t engage in marketing practices which are harmful to consumers.

FTC vs D-Squared

D-Squared used Windows Messenger to advertise on people’s computers, even when they weren’t online. The pop ups were, ironically, selling software to stop unwanted advertising. FTC alleged the injuries were “losing work productivity, having their computer screens freeze, suffering an increased level of frustration and annoyance”.

Next up is Peter.

Peter is the director of the Electronic Retailing Self-Regulation Program (ERSP).  They look at direct response advertising.

Goals:

  1. Restore consumer confidence in direct response advertising
  2. provide a quick mechanism for reviewing high profile ad campaigns
  3. get the bad claims off the air
  4. demonstrate to the FTC that they’re committed to self-regulation

He tries to show a bunch (a BUNCH) of videos…but there were some technical issues so they didn’t work.  But now people at home don’t have to feel left out because we didn’t get to see them either. [fist pump]

Evaluating “clinically proven claims”: There needs to be reliable and competent evidence.  There needs to be a “reasonable basis” that the claims being made are true. They’re looking for:

  • Independently conducted (double-blind; placebo controlled)
  • Adequate sample size
  • Conducted over a reasonable period of time
  • Statistically significant results
  • Claims = data

As an affiliate, if you promote and copy an unsubstantiated claim about a product, your neck is on the line. That can be scary. You need to know who you’re associated with.

Next up is Leonard. He’s from the FTC, which is also kind of scary if you think about it. I feel like I need to own up to all my tweets or something.

They have a new director and he’s really aggressive.  They looking heavily at advertising that’s looking to take advantage of people due to the current economic situation – stuff related to refinancing mortgages, credit cards and things of that nature.

They’re also looking hard at privacy issues. We’re headed towards a new paradigm, according to Leonard. Also on their list? Marketing towards kids and the information being collected from them.

Disclosures should be written with the same powerful terms and the same panache as the advertising. You can’t have catchy terms up front and then disclaim or disclose that several pages later.

If the collecting info on consumers and using it harms people, that’s considered unfair.  Harm may also include dignity violations.  Just like you would find it harmful if someone followed you around the mall and made note of everything you did, it may be just as offensive for advertisers to do it by following you around the Web. And people may have a problem with it if they understood what was happening. But most don’t.

Earlier this year, there were new principles for behavioral advertising. The Commission hasn’t really responded yet. It’s not clear what the new privacy framework should look like.

They’re looking really hard at green advertising.  They’re launching complaints against products that claim to be green but which really aren’t. If you’re doing affiliate marketing on green products, watch who you’re doing business with.

Advertisers should also be wary before making claims for “free stuff”. If you say it’s “free”, it better be free.

Endorsement guidelines have gotten a lot of attention.

  • Typicality: If you’re selling a weight loss drug, the results you tout must be typical. Otherwise, it’s false.
  • Paid endorsements: Mommybloggers are upset we’re taking away their supply of free diapers (zing!). It’s important that people know that someone was paid to say something. And it should be provided in a meaningful way.

And the next session starts in about 4 minutes.  [runs]

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About the Author

Lisa Barone

Lisa Barone co-founded Outspoken Media in 2009 and served as Chief Branding Officer until April 2012.

Get social with Lisa at Twitter

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