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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