Oprah, Flogs and FTC: Hot Topics 2010
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Oprah, Flogs and FTC: Hot Topics 2010

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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.

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.

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Oprah, Flogs and FTC: Hot Topics 2010 Presentation Transcript

  • 1. OPRAH, FLOGS & THE FTC
    HOT TOPICS 2010
    Pete Wellborn
    Wellborn, Wallace & Woodard, LLC
    www.wellbornlaw.com
  • 2. AFFILIATE SUMMIT WEST 2010 LAS VEGAS, NEVADA
    OPRAH, FLOGS & THE FTC: HOT TOPICS 2010
    Affiliate Programs
  • 3. AD CONTENT
    TRUTH, PROOF & FAIRNESS
  • 4. TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    PROHIBITS
    “DECEPTIVE” ADS
    AND
    “UNFAIR” ADS
    F T C
  • 5. TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    BRICKS & MORTAR = .COM
    F T C
  • 6. TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    “DECEPTIVE” AD
    • Likely to mislead consumer
    and
    • Likely to affect consumer’s
    behavior or decision about
    the product or service
    F T C
  • 7. TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    “MISLEADING”
    • Relevant info left out OR
    • 8. False claims OR
    • 9. Unsubstantiated claims.
    F T C
  • 10. TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    “MISLEADING”
    COMMON VIOLATIONS
    • Disclaimers & Disclosures
    • 11. Demonstrations
    • 12. Refund Policies
    • 13. Ads Directed at Children
    • 14. Environmental Claims
    • 15. “Free” Stuff
    • 16. Jewelry-Related Claims
    F T C
  • 17. TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    “UNFAIR” AD
    Causes, or is likely to cause, injury that is:
    • Substantial AND
    • 18. Not outweighed by
    other benefits AND
    • Not reasonably avoidable.
    F T C
  • 19. TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    WHO IS LIABLE?
    • Seller (Manufacturer or Provider)
    • 20. Ad Agencies (Negligence Standard)
    • 21. Site Designers (Negligence Standard)
    • 22. Affiliates (Negligence Standard)
    • 23. Individuals (Personally Involved)
    “Negligence Standard” = knew or should have known that the ad included false or deceptive claims.
    F T C
  • 24. TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    OTHER FTC-ENFORCED LAWS
    • Franchise & Business Opportunity Rule
    • 25. MLM/Pyramid Scheme Rules/Laws
    • 26. Truth in Lending Act
    • 27. Fair Credit Billing Act
    • 28. Fair Credit Reporting Act
    • 29. Equal Credit Opportunity Act
    • 30. Electronic Fund Transfer Act
    • 31. Consumer Leasing Act
    • 32. Mail/Telephone Order Merchandise Rule
    • 33. Negative Option Rule
    • 34. 900-Number Rule
    • 35. Telemarketing Sales Rule
    • 36. Written Warranty Rule
    • 37. Etc. Etc. Etc.
    F T C
  • 38. TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    RULES OF THUMB
    • Truth
    • 39. Consumer Point-of-View
    • 40. Proof
    • 41. Careful: Disclaimers/ Disclosures
    • 42. Careful: Endorsement Claims
    F T C
  • 43. OUR FOCUS TODAY
    Testimonials &
    Endorsements
    “Free” Stuff
    “Flogs”
    (Fake Blogs)
    Proof of
    Claims
  • 44. TESTIMONIALS &
    ENDORSEMENTS
  • 45. TESTIMONIALS &
    ENDORSEMENTS
    FIRST RULE:
    Accurate
    SECOND RULE:
    With Permission
    (“Right of Publicity”)
  • 46. TESTIMONIALS &
    ENDORSEMENTS
    GENERAL CONSIDERATIONS
    • Honest Opinion/Belief of Endorser
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • 47. TESTIMONIALS &
    ENDORSEMENTS
    GENERAL CONSIDERATIONS
    • Honest Opinion/Belief of Endorser
    • 48. Same Claim-Standard as Seller
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • 49. TESTIMONIALS &
    ENDORSEMENTS
    GENERAL CONSIDERATIONS
    • Honest Opinion/Belief of Endorser
    • 50. Same Claim-Standard as Seller
    • 51. Endorsers Must Continue in Belief
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • 52. TESTIMONIALS &
    ENDORSEMENTS
    GENERAL CONSIDERATIONS
    • Honest Opinion/Belief of Endorser
    • 53. Same Claim-Standard as Seller
    • 54. Endorsers Must Continue in Belief
    • 55. Statements Presented in Context
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • 56. TESTIMONIALS &
    ENDORSEMENTS
    GENERAL CONSIDERATIONS
    • Honest Opinion/Belief of Endorser
    • 57. Same Claim-Standard as Seller
    • 58. Endorsers Must Continue in Belief
    • 59. Statements Presented in Context
    • 60. Claimed Use: Bona Fide and Ongoing
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • 61. TESTIMONIALS &
    ENDORSEMENTS
    CONSUMER ENDORSEMENTS
    • Claims Must Be Representative
    • 62. Claims Must Be Substantiated
    OR
    • Claims Can Be Disclaimed (MAYBE)
    • 63. Same Claim-Standard as Seller
    • 64. “Actual Consumer” Must Be Just That
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • 65. TESTIMONIALS &
    ENDORSEMENTS
    EXPERT ENDORSEMENTS
    • “Expert” Must Be Just That
    • 66. Actual Exercise of Expertise/Opinion
    • 67. Claims Must Be True As Stated
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • 68. TESTIMONIALS &
    ENDORSEMENTS
    ORGANIZATION ENDORSEMENTS
    • True Collective Judgment/Opinion
    • 69. Must Be True “Expert” Opinion
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • 70. TESTIMONIALS &
    ENDORSEMENTS
    MATERIAL CONNECTIONS
    • Connection Between Endorser and Seller That Might Materially Affect the Weight or Credibility of The Endorsement Must Be Fully Disclosed.
    • 71. Rule Often Applies Where Endorser Is Not Celebrity or Well-Known Expert.
    • 72. “Connection” May Be Money or Publicity.
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • 73. “FLOGS”
    (FAKE BLOGS)
    MATERIAL CONNECTIONS RULE APPLIES TO BLOGS AND FLOGS
    (EXAMPLES)
  • 74. “FREE” STUFF
    • “Free” means free.
    • 75. “Regular Price” means same price, in the same quality, quantity, and service level at which the seller has sold the product in that geographic market or trade area for a reasonably substantial period of time.
    • 76. Ad must be clear. All obligations and conditions set forth at the outset (not the end).
    • 77. Seller must “cut off” deceptive resellers.
    • 78. State laws may apply !
  • PROOF OF CLAIMS
    REQUIRED PROOF OF AD CLAIMS
    • “Reasonable basis” for All Express and Implied Claims.
    • 79. “Reasonable” = Content + Presentation + Context + Qualification
    • 80. Amount and Type of Substantiation/Proof
    - Type of Product (Health Products = High Level)
    - Type of Claim
    - Benefit of Truthful Claim
    - Cost of Substantiation
    - Consequences of False Claim
    - What Experts in Field Say Is Reasonable
  • 81. PROOF OF CLAIMS
    WHEN SCIENTIFIC EVIDENCE IS
    USED OR REQUIRED
    • Prove Stated Level of Support (“4 out of 5 dentists agree . . .”)
    • 82. Amount and Type of Proof Varies (“Anecdotes not enough”)
    • 83. Quality of Evidence (“Competent and reliable”)
    • 84. Totality of Evidence (“Can’t ignore unfavorable”)
    • 85. Relevance of Studies to Claim (“Study matches claim”)
  • QUESTIONS?
    Pete Wellborn
    pete@wellbornlaw.com
    www.wellbornlaw.com