- January 11, 2011
- Posted by: Seth Heyman
- Category: Marketing & Advertising Law
On January 10, 2011, Dean Graybill, attorney for the Federal Trade Commission’s Western Regional Office, gave a presentation that highlighted the Commission’s current enforcement priorities. These are the types of offers that are currently under the regulatory microscope:
1. Financial Offers: Offers to resolve consumer financial issues, such as grants, biz op offers, loan modification services, debt settlement, debt consolidation, and tax settlement are number one on the list, because consumers who respond to these offers are often in such dire financial circumstances, and are hence more vulnerable to scams. Providers and sellers of these services must therefore establish and maintain vigilant compliance procedures.
2. Negative Option Plans, Discount Membership Clubs, and Upsells: The main issue with these products lies with the fact that consumers are not properly informed about the true nature of the offer. These arrangements can be complicated, and special attention should be taken to ensure that the material terms of the offer are spelled out in plain English.
3. Dietary Supplements: A perennial enforcement favorite, diet supplements always draw special attention because of the health benefit claims, which must be supported by demonstrable, objective evidence (i.e., blind clinical studies), if they are to withstand scrutiny. The old standby disclaimer, “results not typical,” will no longer suffice.
4. Free Trials: A “free trial” promotion is often an element of other types of offers, such as negative option billing plans. The issue here is disclosure, or rather lack thereof, along with confusing and contradictory cancellation policies. The watchword here is up front disclosure. Will anything show up on a credit card bill? If so, it’s not free.
5. Affiliate Deception: Merchants often look the other way when affiliates dance across the line when advertising their products. The FTC holds everyone in the chain of commerce responsible for any marketing violations, so merchants themselves cannot sit idly by with their proverbial heads in the sand. If you don’t have an effective affiliate compliance manager, hire one now.
6. CAN-SPAM: Spam numbers are way down, but that doesn’t mean that regulators are satisfied that the problem is under control. Keep a close eye on your e-mail marketing campaigns, and don’t let anything slip by.
7. Privacy: This is a topic that’s at the forefront of change. Major legal developments will be taking place over the course of the next few months in the privacy arena, which will doubtless enhance the FTC’s already significant enforcement jurisdiction. Stay tuned as those changes unfold, and count on the enforcement of privacy regulations to creep its way up the priority list.
8. Penny Auctions: This is a rapidly growing area of concern for regulators. Also known as a bidding fee auction, Penny Auction participants pay a non-refundable fee to place small bids for merchandise being sold. When the listing time expires, the last participant to have placed a bid wins the item, and pays the sale price. The good news is that the sale price is often lower than the retail price of the merchandise. The bad news is that consumers are paying fees regardless of whether they win or lose, and only one person can win at a time.