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Best Practices For Advertisers and Affiliates

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Latest, breaking news and updates on legal issues and trends affecting affiliate industry.

Latest, breaking news and updates on legal issues and trends affecting affiliate industry.

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  • This is Missy Ward, Director of Public Relations for Media Breakaway – home of CPAEmpire.com and I’m excited to have you all here today for the next in our series of Webinars for our Affiliates and Advertisers, entitled Advertising Best Practices. Joining me today is our Guest Speaker, Steven Richter, President and General Counsel for Media Breakaway. Many of you may have had the opportunity to meet Steven at various industry events, but for those of you that have not, I’ll give you a little background on him. Steven is a highly recognized Internet Law Attorney and has served as General Counsel to many Internet-based businesses. He frequently speaks at various industry events and has published articles pertaining to Internet law and litigation. Steven received his undergraduate degree in Business Administration from Pace University and graduated from Newport University Law School. He obtained his Certified Public Accountant license and began work for Peat, Marwick & Mitchell, CPA's, where he was a tax supervisor specializing in assisting attorneys involved in civil and criminal tax controversy and litigation. In 2001, Mr. Richter made his move to the Internet and has subsequently found his permanent home here at Media Breakaway. We’re thrilled to have him here today to speak on a topic that he knows so well. This Webinar will focus on how advertisers and affiliates can limit their legal risks associated with advertisements and still effectively market online. At the close of this presentation we’ll open it up to a brief Q&A session. You can submit questions throughout the webinar, using the form shown on your screen. A replay of this presentation will also be available after the webcast. So without further ado, I’d like to introduce Steven Richter who is going to get into today’s Discussion Topics.
  • Steve presents and talks about slide. End of Slide: [Missy]: I know something that you’re always drilling into our heads here at Media Breakaway is for us to make sure that we’re complying with all of the regulations surrounding the word “Free”. Can you give us the scoop on how that word can be used and what the ramifications are if they’re not used right…
  • Steve presents and talks about slide. End of Slide: [Missy]: I know something that you’re always drilling into our heads here at Media Breakaway is for us to make sure that we’re complying with all of the regulations surrounding the word “Free”. Can you give us the scoop on how that word can be used and what the ramifications are if they’re not used right…
  • Steve Presents and Talks about slide
  • Steve presents and talks about slide. End of Slide: [Missy]: This is a lot of information Steve. Is there any place that our advertisers and affiliates might be able to get more information on how to comply with best practices today?
  • &
  • Steve presents and talks about slide. End of Slide: [Missy]: I know our Compliance Department kicks back creatives to our advertisers and makes additional suggestions to our affiliates regarding hyperlinks to disclosures all the time. Can you talk about that a little for us today.
  • Steve presents and talks about slide.
  • Steve presents and talks about slide.
  • Steve presents and talks about slide.
  • Steve presents and talks about slide.
  • Steve presents and talks about slide.
  • Steve presents and talks about slide.
  • Steve presents and talks about slide.
  • Steve presents and talks about slide.
  • Steve presents and talks about slide.
  • Steve presents and talks about slide.
  • This is a lot of stuff. Again, I assume you are going to explain with examples.
  • This is a lot of stuff. Again, I assume you are going to explain with examples.
  • Transcript

    • 1. Best Practices for Advertisers and Affiliates A View from the Regulators, ISPs, and Industry Steven Richter President and General Counsel, Media Breakaway, LLC Eileen Harrington Deputy Director, FTC's Bureau of Consumer Protection Bennet Kelley Assistant General Counsel, ValueClick, Inc. Aaron Kornblum Sr. Attorney, Worldwide Sales Group, Microsoft Corp. Pete Wellborn Attorney, Wellborn & Wallace, LLC
    • 2.
      • PART ONE
      • AVOIDING VICARIOUS LIABILITY
      • FOR THE WRONGFUL ACTS OF YOUR AFFILIATE
      Pete Wellborn Attorney-at-Law [email_address] WELLBORN & WALLACE, LLC Attorneys-at-Law
    • 3. AFFILIATE DRIVES TRAFFIC/SALES TO MERCHANT SITE AFFILIATE PROGRAMS 101
    • 4. WHEN IS LIABLE FOR ? AFFILIATE PROGRAMS 101
    • 5. LAW 101 Respondeat Superior (Employer liability for employee) Q: Is the Affiliate an “employee” ? A: Control Test: Time & Manner ALMOST CERTAINLY NOT
    • 6. LAW 101 Independent Contractors Principal liable for contractor acts only under limited circumstances
    • 7. LAW 101 Liability For Contractors’ Acts (Affiliates’)  Participation  Ratification/Adoption  Willful Ignorance  Negligent Hiring
    • 8. What will your answer be when you receive a demand letter or lawsuit seeking to hold you responsible for the misconduct of your affiliate?
    • 9. “ NO PROBLEM!” (. . . if you follow this advice . . .)
    • 10. WHO  WHAT  WHERE WHO WHOM ARE YOU DEALING WITH? (WHO IS YOUR AFFILIATE?)
    • 11. WHO  WHAT  WHERE WHAT WHAT TERMS AND GUARANTEES WILL YOU REQUIRE FROM YOUR AFFILIATE?  Eligibility  Copyright Acknowledgments  Compliance (CAN-SPAM)  Compliance (ISP AUP/CEP)  Sub-Affiliate Voucher  Indemnify, Defend & Hold Harmless  Consent to Release Info  Boilerplate
    • 12. WHO  WHAT  WHERE WHERE WRITTEN AGREEMENT EXECUTED BY BOTH PARTIES
    • 13. WHO  WHAT  WHERE Seed suppression lists
    • 14. Bennet Kelley Assistant General Counsel Director of Govt’l Affairs & Privacy ValueClick, Inc. Westlake Village, CA [email_address] PART TWO ADVERTISING BEST PRACTICES Steven Richter President and General Counsel Media Breakaway, LLC Westminister, CO [email_address]
    • 15. These materials have been prepared for informational purposes only and are not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship. Internet subscribers, listeners and online readers should not act upon this information without seeking professional counsel. The information contained in this presentation and/or web site is provided only as general information which may or may not reflect the most current legal developments. This information is not provided in the course of an attorney-client relationship and is not intended to constitute legal advice or to substitute for obtaining legal advice from an attorney licensed in your state. This web site is not intended to be advertising and neither Media Breakaway, LLC nor its officers, members, employees, or agents wish to represent anyone desiring representation. Privacy Concerns & Advertising Content Regulations Three letters you want to avoid : FTC, FDA, DOJ, FBI DISCUSSION TOPICS
    • 16. PRIVACY CONCERNS
      • Hot, Hot, Hot Topic for FTC, DOJ, AND FBI
      • Have your Privacy Policy updated at least quarterly.
      • Make sure counsel considers Federal and state laws.
      • Collegenet v. XAP Corporation (Federal Case)
      • Disclaimer to Privacy Policy through
      • a pop up may not work
    • 17. FTC Privacy Enforcement Accuracy & Fairness
      • “ In our investigations, we look at the overall security
      • system that the firm has implemented and its
      • reasonableness in light of the size and nature of the
      • business, the nature of the information it maintains,
      • the security tools that are available, and the security
      • risks it faces. I emphasize that the standard is
      • ‘ reasonableness,’ not perfection . . . .
      • [T]his is not a game of ‘ cybersecurity gotcha ’ – we are not trying to catch companies with their digital pants down;
      • rather, we are trying to encourage companies to put
      • their data security defenses up.”
      • – FTC Chairman Deborah Platt Majoras (May 10, 2006)
    • 18. The Wares
      • Adware
      • Software bundled with ad service software
      • Notice & consent issues
      • Spyware
      • Gathers information on user without knowledge
        • Email addresses
        • Passwords
        • Credit Card Information
      • Keystroke Logging
      • Alters default settings
      • Malware
      • Software designed specifically to damage or disrupt a system, such as a virus or a Trojan horse.
      • Scareware
      • “ Faux Spyware”, i.e., benign applications falsely labeled as Spyware
      • Warez
      • Term used by software "pirates" to describe software that has been stripped of its copy-protection and made available on the Internet for downloading. .
    • 19. Spyware
      • 15 States with Spyware Laws
      • California law is model
        • Prohibits deceptive downloading and/or collection of information
        • Prohibits taking over third party computer or altering default settings
      • No Federal Law
      • 108th & 109 th Congress:
        • Passed House & Senate Commerce Committee
        • No Senate Vote
      • FTC Position – already have sufficient authority
        • Enforcement actions against Digital Enterprises; Seismic Entertainment Productions; Max Theater; TrustSoft; Advertising.com; Odysseus Marketing; Enternet Media
    • 20. Enforcement
    • 21. The FTC Act
      • Under the FTC Act:
      • advertising must be truthful and non-deceptive;
      • advertisers must have evidence to back up their claims; and
      • advertisements cannot be unfair.
      • From: FTC Frequently Asked Advertising Questions: A Guide for Small Business
      • Rule of Thumb: Would your grandmother understand the ad?
      You don’t want to mess with me
    • 22. What makes an advertisement deceptive or unfair?
      • What makes an
      • advertisement deceptive?
      • According to the FTC's Deception Policy Statement, an ad is deceptive if it contains a statement - or omits information - that:
        • is likely to mislead consumers acting reasonably under the circumstances; and
        • is "material" - that is, important to a consumer's decision to buy or use the product.
      • What makes an advertisement
      • unfair?
      • According to the Federal Trade Commission Act and the FTC's Unfairness Policy Statement, an ad or business practice is unfair if:
        • it causes or is likely to cause substantial consumer injury which a consumer could not reasonably avoid; and
        • it is not outweighed by the benefit to consumers
    • 23. ADVERTISING CONTENT
      • (1) SIZE
      • Terms, conditions and obligations of the offer must be printed in a type size at least half as large as the word "free” AND
      • (2) PROXIMITY
      • All of the terms, conditions and obligations should appear in close proximity with the offer of "free" goods or services; AND
      Use of the word “FREE” EXAMPLE One Ohio lawyer (also a Plaintiff in several lawsuits) believes that Ohio law requires that, when the word "FREE" is used: (3) NO ASTERISK Disclosure of offer terms set forth in a footnote of an advertisement, to which reference is made by an asterisk or other symbol placed next to the offer, does not constitute “disclosure at the outset.”
    • 24. ADVERTISING CONTENT Disclaiming “FREE”
      • All terms not required to be included.
        • FTC has held that an advertisement shall have a clear and prominent statement “directing consumers to a location where the disclosure required herein will be available (e.g., "For conditions and membership details," followed by: "load up trial software" or "see registration process" or words of similar effect.)”
      • Ohio statute gives “great weight” to FTC rulings
      • In re American Online , 125 F.T.C. 403 (1998); Ohio R.C. § 1345.05(B) (2)
    • 25.
      • Michigan, Utah and more to come.
      • What is prohibited: if it is otherwise a crime for the minor to purchase, view, possess, participate in or otherwise receive the product or service.
      • No alcohol, tobacco, firearms, adult content (including sex for hire), gambling, illegal or prescription drugs.
      ADVERTISING CONTENT
    • 26. ADVERTISING CONTENT Example: Online Gambling
      • 2003 DOJ Letter to NAB: individuals that accept and run [online gambling ads] may be aiding and abetting these illegal activities.
      • Sporting News: $7.2MM settlement with DOJ
      • Discovery: Over $5MM Seized by US Marshalls
      • Esquire: Search warrant after running BoDog ads
    • 27.
      • FTC Rules and Acts http://www.ftc.gov/bcp/conline/edcams/spam/rules.htm
      • FTC Advertising on the Internet:
      • Rules of the Road: http://www.ftc.gov/bcp/conline/pubs/buspubs/ruleroad.pdf
      ADVERTISING CONTENT The government is here to help you
    • 28.
      • When Using Hyperlinks to Lead to Disclosures:
      ADVERTISING CONTENT FTC Dot Com Disclosures http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf
      • Make the link obvious.
      • OBVIOUS • LABEL • STYLE • LOCATION • STRAIGHT LINK • EFFECTIVENESS • INSTRUCTION • NOT SUBTLE • BANNER
    • 29. ADVERTISING CONTENT
      • When Using Hyperlinks to Lead to Disclosures:
      FTC Dot Com Disclosures http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf
        • Label the hyperlink appropriately to convey the importance, nature, and relevance of the linked-to information.
      • OBVIOUS • LABEL • STYLE • LOCATION • STRAIGHT LINK • EFFECTIVENESS • INSTRUCTION • NOT SUBTLE • BANNER
    • 30. ADVERTISING CONTENT
      • When Using Hyperlinks to Lead to Disclosures:
      FTC Dot Com Disclosures http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf
      • Use hyperlink styles consistently so that consumers know when a link is available. (“Don’t hide the link.”)
      • OBVIOUS • LABEL • STYLE • LOCATION • STRAIGHT LINK • EFFECTIVENESS • INSTRUCTION • NOT SUBTLE • BANNER
    • 31. ADVERTISING CONTENT
      • When Using Hyperlinks to Lead to Disclosures:
      FTC Dot Com Disclosures http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf
      • Place the hyperlink near relevant information and make it noticeable.
      • OBVIOUS • LABEL • STYLE • LOCATION • STRAIGHT LINK • EFFECTIVENESS • INSTRUCTION • NOT SUBTLE • BANNER LINK INFO
    • 32. ADVERTISING CONTENT
      • When Using Hyperlinks to Lead to Disclosures:
      FTC Dot Com Disclosures http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf Take consumers directly to the disclosure on the click-through page. • OBVIOUS • LABEL • STYLE • LOCATION • STRAIGHT LINK • EFFECTIVENESS • INSTRUCTION • NOT SUBTLE • BANNER
    • 33. ADVERTISING CONTENT
      • When Using Hyperlinks to Lead to Disclosures:
      FTC Dot Com Disclosures http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf Assess the effectiveness of the hyperlink by monitoring click-through rates and make changes accordingly. Be prepared to show the link is effective. • OBVIOUS • LABEL • STYLE • LOCATION • STRAIGHT LINK • EFFECTIVENESS • INSTRUCTION • NOT SUBTLE • BANNER
    • 34. ADVERTISING CONTENT
      • When Using Hyperlinks to Lead to Disclosures:
      FTC Dot Com Disclosures http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf
        • An explicit instruction like "see below for important information on diamond weights" will alert consumers to scroll and look for the information. The text prompt should be tied to the disclosure that it refers to. General or vague statements, such as " see below for details ," provide no indication about the subject matter or importance of the information that consumers will find and are not adequate cues .
      • OBVIOUS • LABEL • STYLE • LOCATION • STRAIGHT LINK • EFFECTIVENESS • INSTRUCTION • NOT SUBTLE • BANNER
    • 35. ADVERTISING CONTENT
      • When Using Hyperlinks to Lead to Disclosures:
      FTC Dot Com Disclosures http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf
        • Don’t be subtle. Asterisks or other symbols by themselves may not be effective. Typically, they provide no clues about why the claim is qualified or the nature of the disclosure.
      • OBVIOUS • LABEL • STYLE • LOCATION • STRAIGHT LINK • EFFECTIVENESS • INSTRUCTION • NOT SUBTLE • BANNER
    • 36. ADVERTISING CONTENT
      • When Using Hyperlinks to Lead to Disclosures:
      FTC Dot Com Disclosures http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf
        • Disclose required information in the banner itself or clearly and conspicuously on the Web site it links to . Advertisers should consider how important the information is to prevent deception.
      • OBVIOUS • LABEL • STYLE • LOCATION • STRAIGHT LINK • EFFECTIVENESS • INSTRUCTION • NOT SUBTLE • BANNER Important Stuff Goes Here
    • 37.
      • FTC Guide Concerning
      • Use of the Word “FREE'' http://www.ftc.gov/bcp/guides/free.htm
      ADVERTISING CONTENT At least 30 days should elapse before another such offer is promoted in the same trade area. No more than three such offers should be made in the same area in any 12-month period. A single size of a product or a single kind of service should not be advertised with a “Free'' offer in a trade area for more than 6 months in any 12-month period.
    • 38. CONCLUSION Never underestimate the value of giving your competition a bad client. Quarterly attorney review of Privacy Policy. Strict compliance of Privacy Policy. Awareness of current Federal and State law and regulations. The fact that “the competition is doing it” does not make it right.
    • 39.
      • PART THREE
      • THOUGHTS FROM AN ISP
      Pete Wellborn Attorney-at-Law [email_address] Aaron Kornblum Sr. Attorney, Worldwide Sales Group, Microsoft Corp.
    • 40. Secure platforms, products and services strengthened by safety innovations, user guidance and industry cooperation efforts to help keep customers safe
      • Excellence in fundamentals across platforms, products and services
      • Other security-enabling innovation
      • Educational content and tools
      • Authoritative incident response
      • Safety in user experience
      • Ecosystem
      • Awareness and education
      • Collaboration and partnership
      • Public policy and enforcement
      Microsoft’s Online Safety Strategy
    • 41. ISP Enforcement Strategies
      • Why?
      • How?
      • Where?
      • Who?
      • What?
      • @ Microsoft
      • Malicious Code: Viruses and Botnets
      • Phishing/ID Theft
      • Spam
      • Domain Defense: cybersquatting
      • Spyware
    • 42. QUESTIONS?