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Oprah Flogs and the FTC: Hot Legal Topics 2010
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Oprah Flogs and the FTC: Hot Legal Topics 2010

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Presentation by Pete Wellborn and Bennet Kelley at Affiliate Summit West.

Presentation by Pete Wellborn and Bennet Kelley at Affiliate Summit West.

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Oprah Flogs and the FTC: Hot Legal Topics 2010 Oprah Flogs and the FTC: Hot Legal Topics 2010 Presentation Transcript

  • OPRAH, FLOGS & THE FTC
    HOT TOPICS 2010
    Pete Wellborn
    Wellborn, Wallace & Woodard, LLC
    www.wellbornlaw.com
    Bennet Kelley
    Internet Law Center
    www.internetlawcenter.net
  • AFFILIATE SUMMIT WEST 2010 LAS VEGAS, NEVADA
    OPRAH, FLOGS & THE FTC: HOT TOPICS 2010
    Affiliate Programs
  • AD CONTENT
    TRUTH, PROOF & FAIRNESS
  • TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    PROHIBITS
    “DECEPTIVE” ADS
    AND
    “UNFAIR” ADS
    F T C
  • TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    BRICKS & MORTAR = .COM
    F T C
  • 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
  • TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    “MISLEADING”
    • Relevant info left out OR
    • False claims OR
    • Unsubstantiated claims.
    F T C
  • TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    “MISLEADING”
    COMMON VIOLATIONS
    • Disclaimers & Disclosures
    • Demonstrations
    • Refund Policies
    • Ads Directed at Children
    • Environmental Claims
    • “Free” Stuff
    • Jewelry-Related Claims
    F T C
  • TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    “UNFAIR” AD
    Causes, or is likely to cause, injury that is:
    • Substantial AND
    • Not outweighed by
    other benefits AND
    • Not reasonably avoidable.
    F T C
  • TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    WHO IS LIABLE?
    • Seller (Manufacturer or Provider)
    • Ad Agencies (Negligence Standard)
    • Site Designers (Negligence Standard)
    • Affiliates (Negligence Standard)
    • Individuals (Personally Involved)
    “Negligence Standard” = knew or should have known that the ad included false or deceptive claims.
    F T C
  • TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    OTHER FTC-ENFORCED LAWS
    • Franchise & Business Opportunity Rule
    • MLM/Pyramid Scheme Rules/Laws
    • Truth in Lending Act
    • Fair Credit Billing Act
    • Fair Credit Reporting Act
    • Equal Credit Opportunity Act
    • Electronic Fund Transfer Act
    • Consumer Leasing Act
    • Mail/Telephone Order Merchandise Rule
    • Negative Option Rule
    • 900-Number Rule
    • Telemarketing Sales Rule
    • Written Warranty Rule
    • Etc. Etc. Etc.
    F T C
  • TRUTH IN ADVERTISING
    * * * GENERALLY * * *
    RULES OF THUMB
    • Truth
    • Consumer Point-of-View
    • Proof
    • Careful: Disclaimers/ Disclosures
    • Careful: Endorsement Claims
    F T C
  • OUR FOCUS TODAY
    Testimonials &
    Endorsements
    “Free” Stuff
    “Flogs”
    (Fake Blogs)
    Proof of
    Claims
  • TESTIMONIALS &
    ENDORSEMENTS
  • TESTIMONIALS &
    ENDORSEMENTS
    FIRST RULE:
    Accurate
    SECOND RULE:
    With Permission
    (“Right of Publicity”)
  • TESTIMONIALS &
    ENDORSEMENTS
    GENERAL CONSIDERATIONS
    • Honest Opinion/Belief of Endorser
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • TESTIMONIALS &
    ENDORSEMENTS
    GENERAL CONSIDERATIONS
    • Honest Opinion/Belief of Endorser
    • Same Claim-Standard as Seller
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • TESTIMONIALS &
    ENDORSEMENTS
    GENERAL CONSIDERATIONS
    • Honest Opinion/Belief of Endorser
    • Same Claim-Standard as Seller
    • Endorsers Must Continue in Belief
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • TESTIMONIALS &
    ENDORSEMENTS
    GENERAL CONSIDERATIONS
    • Honest Opinion/Belief of Endorser
    • Same Claim-Standard as Seller
    • Endorsers Must Continue in Belief
    • Statements Presented in Context
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • TESTIMONIALS &
    ENDORSEMENTS
    GENERAL CONSIDERATIONS
    • Honest Opinion/Belief of Endorser
    • Same Claim-Standard as Seller
    • Endorsers Must Continue in Belief
    • Statements Presented in Context
    • Claimed Use: Bona Fide and Ongoing
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • TESTIMONIALS &
    ENDORSEMENTS
    CONSUMER ENDORSEMENTS
    • Claims Must Be Representative
    • Claims Must Be Substantiated
    OR
    • Claims Can Be Disclaimed (MAYBE)
    • Same Claim-Standard as Seller
    • “Actual Consumer” Must Be Just That
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • TESTIMONIALS &
    ENDORSEMENTS
    EXPERT ENDORSEMENTS
    • “Expert” Must Be Just That
    • Actual Exercise of Expertise/Opinion
    • Claims Must Be True As Stated
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • TESTIMONIALS &
    ENDORSEMENTS
    ORGANIZATION ENDORSEMENTS
    • True Collective Judgment/Opinion
    • Must Be True “Expert” Opinion
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • TESTIMONIALS &
    ENDORSEMENTS
    MATERIAL CONNECTIONS
    • Connection Between Endorser and Seller That Might Materially Affect the Weight or Credibility of The Endorsement Must Be Fully Disclosed.
    • Rule Often Applies Where Endorser Is Not Celebrity or Well-Known Expert.
    • “Connection” May Be Money or Publicity.
    Guides Concerning the Use of Endorsements
    and Testimonials in Advertising (16 CFR Part 255 )
  • “FLOGS”
    (FAKE BLOGS)
    MATERIAL CONNECTIONS RULE APPLIES TO BLOGS AND FLOGS
    (EXAMPLES)
  • “FREE” STUFF
    • “Free” means free.
    • “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.
    • Ad must be clear. All obligations and conditions set forth at the outset (not the end).
    • Seller must “cut off” deceptive resellers.
    • State laws may apply !
  • PROOF OF CLAIMS
    REQUIRED PROOF OF AD CLAIMS
    • “Reasonable basis” for All Express and Implied Claims.
    • “Reasonable” = Content + Presentation + Context + Qualification
    • 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
  • PROOF OF CLAIMS
    WHEN SCIENTIFIC EVIDENCE IS
    USED OR REQUIRED
    • Prove Stated Level of Support (“4 out of 5 dentists agree . . .”)
    • Amount and Type of Proof Varies (“Anecdotes not enough”)
    • Quality of Evidence (“Competent and reliable”)
    • Totality of Evidence (“Can’t ignore unfavorable”)
    • Relevance of Studies to Claim (“Study matches claim”)
  • QUESTIONS?
    Bennet Kelley
    bennet@bennetkelley.com
    www.internetlawcenter.net
    Pete Wellborn
    pete@wellbornlaw.com
    www.wellbornlaw.com