Here’s what the FTC says you can do:

What can my company do if a competitor is running an ad that I think is deceptive?
You can:

• Explore your legal options under federal and state statutes that protect businesses from unfair competition. For example, the Lanham Act gives companies the right to sue their competitors for making deceptive claims in ads.
• File a complaint with the National Advertising Division (NAD) of the Council of Better Business Bureaus, if your competitor’s ad is running nationally or regionally. The NAD is a private, self-regulatory group affiliated with the BBB. It investigates allegations of deceptive advertising and gives advertisers a mechanism for resolving disputes voluntarily.
• Call your local BBB or file an online complaint with the Better Business Bureau if the ad is local. Many BBBs have procedures for resolving disputes between businesses.
• Contact the radio station, television station, or publication where the ad ran. Let them know that they’re running an ad you think may be deceptive.
• Contact your state Attorney General’s Office or your city, county, or state Office of Consumer Affairs. To get their phone numbers, check your telephone directory.
• Contact the FTC. By mail: Federal Trade Commission, Consumer Response Center, 600 Pennsylvania Avenue, NW, Washington, DC 20580; by telephone: toll-free 1-877-FTC-HELP. https://www.ftccomplaintassistant.gov/

If my company files a complaint about a competitor with the FTC, will the FTC resolve the dispute?

The FTC is authorized to act when it appears that a company’s advertising is deceptive and when FTC action is in the public interest. Although the FTC cannot intervene in an individual dispute between two companies, the agency relies on many sources – including complaints from consumers and competitors – to find out about ads that may be deceptive. To file a complaint against a competitor who you believe has engaged in false advertising, contact:

Federal Trade Commission
Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, DC 20580
Toll-free 1-877-FTC-HELP (382-4357)
Online Complaint Form
If my company files a complaint against a competitor with the FTC, will we be kept informed about the status of any investigation?

No. The FTC keeps investigations confidential. Matters become public only after the FTC reaches a settlement with a company or files a lawsuit. However, you can be assured that complaints received from companies alleging that competitors are advertising deceptively are reviewed carefully.
Can I find out if the FTC already has an investigation against a company?

The FTC can tell you if it has already taken formal action (e.g., filed or settled a lawsuit) against a particular company or against similar kinds of advertisements or products. But the FTC cannot disclose whether an investigation is going on. To find out if a company or product has been the subject of a recent FTC action, search the FTC’s website.

In the case of the issue I discussed in my earlier posts, Internet Marketing Ethics – Is this Ethical? and Is this Legal? FTC Internet Marketing Guidelines, there were several actions I took.

First I contacted the marketers directly. All they did was justify why they were right in using their unethical tactics.

The second thing I did was to alert the company with which the internet marketers had a relationship, Infusionsoft, because they were using that relationship with Infusionsoft to create credibility for their unethical campaign. My correspondence here took a while. In the end the company thanked me and told me that they had had a conversation with the unethical marketers and had asked them to stop their practices. Unfortunately, it was the last day of their campaign, so it had virtually no impact.

The third thing is I followed the FTC’s suggestions and filed an online complaint. The problem is that they just log it in their database and don’t follow up.

There were two other avenues that I could have pursued but didn’t because of time.

I could have contact my local or state law enforcement office and report the offense to them.

Second, I could have consulted my attorney to learn if they had indeed violated any local, state or federal laws. This can be costly, however, I have a Prepaid Legal membership which gives me access to ask questions of an attorney for a very low monthly fee. I just wasn’t prepared to take the time to pursue this further.

Had this been an issue of someone sending me an unsolicited SPAM email, one reader suggested reporting it to the web hosting company from which the email generated. In my case, I was an opt-in on their list, so this was not truly SPAM.

Are you aware of any other methods to report internet marketing ethical or legal violations?

The problem arose when, after I signed up, I was then presented with a screen and an email that told me I had to pay a $97 refundable deposit to get the information to attend the “FREE Live Sneak Peek Event” and thus “To Learn How I Can Win The $30,000 Cash“.

As I wrote in my last post, I found this to be unethical and asked for your opinions. While some wonderful discussion transpired on the ethics, one person who responded in email to me suggested it was not illegal. Having curiosity, I explored this further. Here’s what I found…

On the Federal Trade Commission‘s web site I discovered several documents that apply to internet marketing. Here’s a summary:

Is advertising on the Internet subject to the same laws as other advertising?

Yes. Ad claims on the Internet must be truthful and substantiated. Ask the FTC for a copy of Advertising and Marketing on the Internet: The Rules of the Road for more information. Dot Com Disclosures offers special guidance for online advertisers regarding how to make sure that any disclaimers and disclosures in online ads are clear and conspicuous. It addresses ‘Net specific issues such as banner ads, pop-up windows, scrolling, hyperlinks, etc. Internet marketers also should be aware that the FTC’s Mail or Telephone Order Merchandise Rule (“Mail Order Rule”) applies to online transactions. For specific guidance on complying with the Mail Order Rule online, ask the FTC for a copy of Selling on the Internet: Prompt Delivery Rules, as well as A Business Guide to the Federal Trade Commission’s Mail or Telephone Order Merchandise Rule.

My website is attracting visitors from outside the United States. What do I need to know?

Because the World Wide Web is, as its name implies, worldwide, even small online businesses can reach customers around the globe. Electronic Commerce: Selling Internationally – A Guide for Business discusses some online commerce guidelines endorsed by the United States government and 28 other countries.

What do I need to know about consumer privacy online?

Advertisers should be aware of the privacy issues raised by Internet marketing. For more information about recent FTC Reports to Congress on consumer privacy on the Internet, visit the FTC’s website (www.ftc.gov). Basically, the FTC strongly encourages companies to implement four fair information practices: giving consumers notice of a website’s information practices; offering consumers choice as to how their personally identifying information is used; providing consumers with access to the information collected about them; and ensuring the security of the information collected. In addition, companies need to know about the Children’s Online Privacy Protection Act and the rule that implements it. The law requires websites to obtain verifiable parental consent before collecting, using, or disclosing personal information from children, including their names, home addresses, email addresses, or hobbies. For more information, ask the FTC for How to Comply with the Children’s Online Privacy Protection Rule.

After skimming through these, I discovered that the sales solicitation I received could potentially be in violation of the following guidelines (I say potentially as I am not an attorney):

1. Are there any rules about ads for contests or sweepstakes? Sweepstakes-type promotions that require a purchase by participants are illegal in the United States. Other agencies, including the United States Postal Service (USPS) and the Federal Communications Commission (FCC), also enforce federal laws governing contests and prize promotions. And each state has laws that may require promoters to make disclosures, seek licensing, or post a bond. Since state laws vary, check with the Attorney General’s Office in the state(s) in which you plan to advertise. If a contest or promotion involves telephone calls, the FTC’s Telemarketing Sales Rule requires specific disclosures, such as the odds of winning a prize, how to participate without buying anything, and that no purchase or payment is required to win. If pay-per-call services are involved, the FTC’s 900 Number Rule requires certain disclosures. For more information, ask the FTC for the publications Complying with the Telemarketing Sales Rule and Complying with the 900 Number Rule.
2. FTC GUIDE CONCERNING USE OF THE WORD “FREE” AND SIMILAR REPRESENTATIONS, http://www.ftc.gov/bcp/guides/free.htm  –  §251.1 The guide. (c) Disclosure of conditions. When making “Free” or similar offers all the terms, conditions and obligations upon which receipt and retention of the “Free” item are contingent should be set forth clearly and conspicuously at the outset of the offer so as to leave no reasonable probability that the terms of the offer might be misunderstood. Stated differently, all of the terms, conditions and obligations should appear in close conjunction with the offer of “Free” merchandise or service. For example, disclosure of the terms of the offer set forth in a footnote of an advertisement to which reference is made by an asterisk or other symbol placed next to the offer, is not regarded as making disclosure at the outset. However, mere notice of the existence of a “Free” offer on the main display panel of a label or package is not precluded provided that (1) the notice does not constitute an offer or identify the item being offered “Free”, (2) the notice informs the customer of the location, elsewhere on the package or label, where the disclosures required by this section may be found, (3) no purchase or other such material affirmative act is required in order to discover the terms and conditions of the offer, and (4) the notice and the offer are not otherwise deceptive.
3. Dot Com Disclosures: Information About Online Advertising http://business.ftc.gov/documents/bus41-dot-com-disclosures-information-about-online-advertising d. Displaying Disclosures Prior to Purchase — Disclosures must be effectively communicated to consumers before they make a purchase or incur a financial obligation. Disclosures are more likely to be effective if they are provided in the context of the ad, when the consumer is considering the purchase. Where advertising and selling are combined on a Web site, disclosures should be provided before the consumer makes the decision to buy, say, before clicking on an .order now. button or a link that says .add to shopping cart..

So, was this contest legal since I had to post $97 (refundable deposit) to enter?

Was this website legal since it told me if was “free” but did not make any of the terms or conditions of the offer available until after I paid money?

Was it legal to not reveal any disclosures prior to my clicking on an ‘add to cart’ button?

What do you think?

What would you do with this knowledge?

These are some of the questions I asked myself this week after receiving an email from an internet marketing company. The email itself wasn’t offensive. It was what happened after I clicked on the email. Actually, it was what happened after I signed up for the FREE seminar that made my blood curdle.

The first email of the campaign was short, simple and enticing…

Debra,

Want a chance to win $30,000??

We’ve given away iPads, trips to Costa Rica, and all sorts of stuff.

Yes, I’m a bit CRAZY, but I guess you can say I’m in love with marketing.

To find out how you can win $30,000:

CLICK HERE!!!!

Of course, I’d love to win $30,000, who wouldn’t? So I click. The sales letter page then promises me the following:

three of the top marketing powerhouses from the Infusionsoft community (Ultimate Marketer: Bob Britton, SEO Expert: Grant James, and Internet Guru: Micah Mitchell) have now joined forces and developed the SINGLE MOST IMPORTANT thing a business owner needs to triple their sales and profits in 12 months or less,

The landing page goes on to claim:

“We have decided to host a special “FREE Sneak Peak, Live Event“  for the first 100 people to register.”

“you can attend WITHOUT shelling out your hard earned cash for a plane ticket, a hotel room or ANYTHING else,”

“YES! I Want To Be One Of Only 100 People To Attend This FREE Live Sneak Peek Event Into How Your Guys Systems Can Stuff An EXTRA $100,000+ Dollars This Year Into My Wallet! YES! I Also Want To Learn How I Can Win The $30,000 Cash”

Notice the use of the word free everywhere.

There was also a line that said this:

“having a one in 50 chance of winning $30,000”

If they are accepting 100 registrations, how do your odds become 1 in 50? There are no contest terms listed. No legalese at all anywhere.

Here’s the worst part…

Once you type in your name and email, they send you to a new page that says this…

“Your registration request for the “Infusion Elite Mastermind Sneak Peek Live Event” has been received, but before I can register you I first need you to pay a seat deposit of $97.”

“IMPORTANT!!: If you DO NOT pay the seat deposit, you WILL NOT receive a link for this event and you’re spot WILL NOT be reserved.”

And there is a video of the Infusionsoft Ultimate Marketing Award Winner (he makes this claim in the video) telling everyone why they need to pay $97 and they only get it back if they actually attend the event.

So they entice people with a $30,000 prize. They offer no terms and conditions regarding the contest rules. They play upon their relationship with Infusionsoft and their authority as the Ultimate Marketer of the Year. They tell you its free to join. Then after you sign up they say that you can’t complete the registration until you pay them $97.

I found this to be the type of campaign that gives internet marketers a slimy reputation. I found it to be borderline ethical and legal (deceptive advertising).

I now ask you, my readers,

What would you do?

Do you find this to be ethical?

Is this the type of role model we should be emulating?

Here’s a link if you want to check it out. PLEASE DO NOT GIVE THEM YOUR MONEY!

How do you handle an Social Media or Twitter post when you are an affiliate marketer?

Last night I was at an event where an attorney spoke about internet marketing laws. I asked her this very question and she responded about how there was no good legal guideline in tort law established yet. But, based on the new FTC Endorsement Rules, you should somehow disclose your relationship (if compensated for it) when endorsing something via a tweet or status update.

Then, this morning I received this email from a company with whom I am an affiliate. From a business owner perspective, I actually think it is a pretty good policy and guideline for people to follow when posting an affiliate link to Twitter or social media networks so I am posting it here for others to learn from.

Dear Debra Zimmer:

XXX.com will be updating their program terms to include guidelines for advertising in the social media space.  This update was due to recent FTC rules and regulations that XXX.com and its affiliates must comply by.  We encourage you to read through the information below and make the necessary changes to be compliant.

1.     All social media messages must adhere to XXX.com content standards. http://www.XXX.com/affiliate/contentstandards.asp

2.    Affiliates linking to XXX.com on social media sites must disclose their relationship as an affiliate. Reason: We require this so that all affiliates will be in compliance with FTC regulations. If you are recommending a company or product by sharing a link that can potentially earn you revenue, you must disclose this to your followers, readers, fans, etc.

Example of compliant message:
Need dental care savings? XXX.com has 30+ discount dental plans to choose from (affiliate link) http://bit.ly/GoodExample

Example of NON-compliant affiliate message:
Just saved lots of money using my plan from XXX.com. You should get a plan too. http://bit.ly/BadExample

3.    Affiliates linking to XXX.com on social media sites must state in their bio or in the link that they are an affiliate and not a XXX.com employee. Reason: While we welcome affiliates to use social media, we do not allow affiliates to act as official spokespeople for our company.

Contact Information
Have a comment or question about this update? Call or email your Affiliate Manager.

I haven’t seen anyone on twitter or other social media sites using a disclosure statement yet, have you? Have you been seeing tweets and status updates that say “affiliate link”? I would bet that it would make it a lot harder for affiliates to make money. Is it just me or does it seem that the affiliate industry is taking a beating recently?

The Federal Trade Commission has finally issued an update to their guidelines concerning the use of endorsements and testimonials as used on the internet and social media. The last update was in 1980, well before the influence of websites, blogs and social media.

If you are a blogger, affiliate marketer or internet marketer, you need to be aware of how these revisions affect you and your business. You may want discuss these changes with your attorney and make adjustments to your web site, blog or social media campaigns.

The full text of the press release is available here.

The full text of the Act is available here.

In summary, the clarifications to the FTC Act are:

1) Advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect.

2) “Material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. So, Bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.

3) Celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.

It’s a good idea to ensure your web site, blog and social media strategy are following these new guidelines for the use of testimonial advertising and endorsements.