OPRAH, FLOGS & THE FTC <br />HOT TOPICS 2010<br />Pete Wellborn<br />Wellborn, Wallace & Woodard, LLC<br />www.wellbornlaw...
AFFILIATE SUMMIT WEST 2010     LAS VEGAS, NEVADA<br />OPRAH, FLOGS & THE FTC: HOT TOPICS 2010<br />Affiliate Programs<br />
AD CONTENT<br />TRUTH, PROOF & FAIRNESS<br />
TRUTH IN ADVERTISING<br />* * * GENERALLY * * * <br />PROHIBITS<br />“DECEPTIVE”  ADS<br />AND<br /> “UNFAIR” ADS<br />F  ...
TRUTH IN ADVERTISING<br />* * * GENERALLY * * * <br />BRICKS & MORTAR = .COM<br />F  T C<br />
TRUTH IN ADVERTISING<br />* * * GENERALLY * * * <br />“DECEPTIVE”  AD<br /><ul><li>  Likely to mislead consumer</li></ul> ...
TRUTH IN ADVERTISING<br />* * * GENERALLY * * * <br />“MISLEADING”<br /><ul><li>  Relevant info left out   OR
  False claims   OR
  Unsubstantiated claims.</li></ul>F  T C<br />
TRUTH IN ADVERTISING<br />* * * GENERALLY * * * <br />“MISLEADING”<br />COMMON VIOLATIONS<br /><ul><li>  Disclaimers & Dis...
  Demonstrations
  Refund Policies
  Ads Directed at Children
  Environmental Claims
  “Free” Stuff
  Jewelry-Related Claims</li></ul>F  T C<br />
TRUTH IN ADVERTISING<br />* * * GENERALLY * * * <br />“UNFAIR”  AD<br />Causes, or is likely to cause,   injury that is:<b...
  Not outweighed by </li></ul>   other benefits   AND<br /><ul><li>  Not reasonably avoidable.</li></ul>F  T C<br />
TRUTH IN ADVERTISING<br />* * * GENERALLY * * * <br />WHO IS LIABLE?<br /><ul><li>  Seller          (Manufacturer or Provi...
  Ad Agencies    (Negligence Standard)
  Site Designers  (Negligence Standard)
  Affiliates           (Negligence Standard)
  Individuals         (Personally Involved) </li></ul>“Negligence Standard”  =  knew or should have known that the ad incl...
TRUTH IN ADVERTISING<br />* * * GENERALLY * * * <br />OTHER FTC-ENFORCED LAWS<br /><ul><li>  Franchise & Business Opportun...
  MLM/Pyramid Scheme Rules/Laws
  Truth in Lending Act
  Fair Credit Billing Act
  Fair Credit Reporting Act
  Equal Credit Opportunity Act
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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.

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Oprah Flogs and the FTC: Hot Legal Topics 2010

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

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