Session Description: This session un-muddies the murky waters of the FTC’s ever-changing focus, the proliferation of IP-related lawsuits, and the legal ambiguity regarding many forms of Internet-based marketing. The panel consisted of:
- Bennet Kelley, Founder, Internet Law Center
- Pete Wellborn, Managing Member, Wellborn, Wallace, & Woodard, LLC
I did like this session more than the FTC related session I attended at the last affiliate summit. It was put together with the affiliate industry really in mind, though it captured my interest for being not entirely affiliate related.
Bullet Point Review!
- Truth, proof, & fairness – everything we talk about today can be summed up with this.
- Misleading – common violations, disclaimers, & disclosures, demonstrations, refund policies, ads directed at children, environmental claims.
- Unfair ads – causes or is likely to cause injury that is:
- substantial AND
- not outweighed by other benefits AND
- not reasonably avoidable
- Who is liable?
- Seller (manufacturer or provider)
- Ad Agencies
- Site Designers
- Affiliates
- Individuals (personally involved)
- “Negligence Standard” – knew or should have known that the ad included false or deceptive claims.
- Exert as much control over people as you possibly can because you don’t want to find yourself peripherally liable.
- Other FTC Enforced Laws
- Franchise & Business Opp Rule
- MLM Pyramid Scheme Rules Laws
- Truth in Lending Act
- Fair Credit Billing Act
- Fair Credit Reporting Act
- Equal Credit
- 900 #s
- Rules of Thumb
- Truth
- Consumer point-of-view
- Proof
- Careful: disclaimers/disclosures – rules have dramatically changed.
- Careful: endorsement claims
- Testimonials & Endorsements
- Celebrities
- 1st – Accurate
- 2nd – With Permission (“right of publicity”)
- General Considerations
- Honest opinion/belief of endorser
- Same claim-standard as seller
- Endorsers must continue in belief
- Statements must be presented in context
- Consumer Endorsements
- You cannot get away with “results not typical” anymore.
- Claims must be representative
- Claims must be substantial
- or Claims can be disclaimed (MAYBE)
- Same claim-standard as seller
- “Actual Consumer” must be just that
- Expert Endorsements
- Must be true
- Must be a real expert in the correct field
- Organization Endorsements
- True collective judgment opinion
- Must be true “expert” opinion
- Material Connections
- This is where the FTC is trying to go after the “mommy blogger” crowd
- Connection between endorser and seller that might materially affect the weight or credibility of the endorsement must be fully disclosed (very gray area in terms of HOW)
- Rule often applies where endorser is not celebrity or well-known expert
- “Connection” may be money or publicity
- Applies to blogs & flogs (fake blogs)
- Walmarting Across America was a fake blog made by Walmart to generate publicity.
- Absolutely forbidden by the rules of the FTC
- They don’t want to have a chilling effect on guerilla or creative marketing campaigns, but at some point it has to be disclosed that it’s marketing or advertising.
- Celebrities
- “Free” Stuff
- “Free” means free
- “Regular price” means same price, on the same quality, quantity, and service level at which the seller has sold the product in that geographic market or trade area for a reasonable substantial period of time
- Ad must be clean
Points brought up during the Q&A
In the context of an agency, how can you transfer liability of claims to the client?
- Have a bullet proof contract
- Make sure your agreement has a provision that you’ll periodically monitor any celebrity or expert endorsements to ensure accuracy
They read through the presentation rather fast so my notes are probably incomplete. Luckily, the presentation was made available! I had to leave during the Q&A portion to get back to the booth, so I probably missed some good stuff caught on video, so I’ll add that here in the next few weeks. Here’s the presentation:
