Marketers today face a constantly evolving landscape of laws and regulations affecting their businesses. In 2009, the Federal Trade Commission (FTC) published final guidelines affecting online marketing or direct website advertising. Subsequent to the implementation of these regulations, marketers have faced significant liability for non-compliance. The new regulations have had numerous workshops and modifications to provide clarifications and guidance. The FTC revised "Green Guides" in 2012, in order to help marketers avoid making misleading environmental claims, while in 2013; the FTC revised the online advertising disclosure guidelines for "Dot Com" disclosures, and hosted a workshop on updated privacy guidelines.
A slew of advertising laws were enacted that predate the FTC's guidelines, including the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act), the Children's Online Privacy & Protection Act (COPPA), and the Telemarking and Consumer Fraud and Abuse Prevention Act (TCPA). The FTC is deeply immersed in ensuring proper and non-misleading disclosures to ad viewers. Hence, it is imperative that marketers understand how to navigate their way around the complex and frequently nuanced requirements.
1. Claims Substantiation
Marketers and advertisers must be able to substantiate the claims they make about their products and services. The FTC enforces advertising standards under the Federal Trade Commission Act (FTC Act) which mandates that advertisements be fair, non-deceptive and that advertisers back-up their claims.
- Before a company runs an ad, the FTC requires the company to have a "reasonable basis" for the claims: objective evidence that supports the claim; reasonable basis varies depending on the type of product or service;
- Support for all claims must be provided by a reliable study, as opposed to anecdotal evidence;
- Marketers should forward support for all general and specific claims contained in the ad;
- Ensure substantiation of all express and implied claims;
- Make certain all disclosures are clearly readable and visible so viewers can read the entire disclaimer;
- Disclose any charges beyond the advertised purchase price (e.g., shipping and handling); and
- Claims must be substantiated before disseminated (utilizing expert testimony, extrinsic evidence, studies and tests is definitely a best practice).
2. What Deceptive Advertising May Mean
Deceptive advertising may mean more than "deceptive" in the conventional sense. On March 5, 2015, a major news story broke that a direct marketing company selling "as-seen-on-TV" products including Snuggies and the Magic Mesh door covers agreed to pay the FTC $7.5 million in consumer restitution in connection with its allegedly deceptive "buy-one-get-one-free" promotions. Allstar Marketing Group, LLC led consumer to believe if they just paid "processing and handling" fees, they would receive two $19.95 products for "less than $10 each." However, according to the complaint, when all costs were factored in, the total price jumped to $35.85. This case underscores the necessity for marketers to be completely truthful in their advertisements.
- No online advertisement or claim can be deceptive;
- Marketers must be careful not to be materially misleading, or else they will get into trouble with the FTC; and
- Clear and conspicuous disclosures either in your ad or on your website.
3. The CAN-SPAM Act
In 2004, the CAN-SPAM Act took effect. The law involves certain proscribed practices including fraudulent transmission data and harvesting of email addresses.
Some additional ways to avoid violating the Act include:
- Don't send messages through an open relay;
- Don't use misleading sender or subject lines;
- Add your postal address to an email;
- Include a clear and conspicuous unsubscribe mechanism in every email;
- Implement a process for handling unsubscribes, making sure to honor the request within 10 days; and
- Remove all sexually suggestive materials from your emails.
In 1998 Congress enacted COPPA. The goal is to place parents in control of what kind of information is collected from young children online. Marketers need to be fully cognizant of COPPA and how to stay in compliance with the Act.
- Provide direct notice to parents and obtain verifiable parental consent, with limited exceptions, before collecting personal information online from children;
- Give parents the choice of consenting to the operator's collection and internal use of a child's information, but prohibiting the operator from disclosing that information to third parties (unless disclosure is integral to the site or service, in which case, this must be made clear to parents);
- Provide parents access to their child's personal information to review and/or have the information deleted;
- Give parents the opportunity to prevent further use or online collection of a child's personal information;
- Maintain the confidentiality, security, and integrity of information they collect from children, including by taking reasonable steps to release such information only to parties capable of maintaining its confidentiality and security; and
- Retain personal information collected online from a child for only as long as is necessary to fulfill the purpose for which it was collected and delete the information using reasonable measures to protect against its unauthorized access or use.
5. The TCPA
The TCPA provides authorization for the FTC to enforce deceptive and abusive telemarketing practices, including:
- Prohibiting telemarketers from engaging in a pattern of unsolicited calls that a reasonable consumer would consider coercive or invasive;
- Restricting the hours of the day and night when unsolicited calls may be made; and
- Requiring disclosures of the nature of the call at the start when an unsolicited call is made in an attempt to sell goods or services
6. FTC Endorsement Guidelines
In November, 2014, the FTC filed charges against Deutsch LA—Sony's advertising agency—for urging employees to create awareness and excitement about the Sony PlayStation on Twitter, without instructing them to disclose their connections to the agency or Sony. As social media has become such a predominant factor in online advertising, the FTC has issued guidelines on how branded messaging can be communicated to consumers.
- Bloggers, talent and other consumers must disclose if they are receiving remuneration or are affiliated with the company when endorsing products or services
- Marketers need to monitor vendors' and influencers' social media activities to make certain they are making the necessary disclosures
- Following the appropriate aforementioned substantiation claims applies to social, as well as traditional media, and marketers need to ensure they are able to back up all claims.
Marketing and advertising is the key to a successful business. By being fully cognizant of the many laws and regulations, and applying these best practices, marketers can avoid many of the legal pitfalls that can get them into hot water.