Copyright © 2009 Chip Cooper

There’s been a lot of excitement in the blogosphere about the eighty one-web site Guides for the use of Endorsements and Testimonials in Promotion issued by the Federal Trade Commission (FTC). Most of the discussion and dialogue has centered on the rules (and potential liability) going through bloggers who write testimonies and endorsements.

But what about the advertisers that recruit bloggers and other intermediaries to write testimonies and endorsements (believe on line marketers that recruit affiliates or resellers)? What are the rules impacting these advertisers, and what’s their liability if they really don’t comply?

When Are On the internet Marketers Regulated By The Guides?

The threshold question for on line marketers is “when do the Guides implement to my advertising and marketing practices”?

If all you do is sector right from your web site with no involvement by intermediaries, the Guides do not implement.

Nevertheless, if you recruit intermediaries – this sort of as affiliates or resellers – to pitch your merchandise or products and services, then the Guides implement, and with them, potential liability. Intermediaries would also include things like viral advertising and marketing programs with incentives and network advertising and marketing programs in which endorsers periodically evaluation your merchandise or products and services and they acquire a no cost solution or company about which they write a evaluation.

If the Guides do implement, you are categorised as an “advertiser”, and your intermediaries are categorised as “endorsers”. As an advertiser, you are required to:

* present guidance and instruction to your endorsers to aid them fully grasp their authorized obligations about advertising statements about your merchandise or products and services generally, that their statements are truthful, not deceptive, and substantiated, and

* observe your endorsers and consider steps to remedy advertising statements, practices, or methods that are illegal.

If the Guides do implement, and you fail about the two obligations detailed earlier mentioned, you may well be held liable for the actions of your endorser. This is the way the FTC put it: “It is foreseeable that an endorser may well exaggerate the rewards of a no cost solution or fail to disclose a materials connection in which a single exists. In using this suggests of advertising and marketing, the advertiser has assumed the threat that an endorser may well fail to disclose a materials link or misrepresent a solution, and the potential liability that accompanies that threat”.

Strategies For Advertisers

Your initially precedence should really be to get a authorized evaluation of your affiliate and/or reseller agreements. Modify your agreements to comply with the Guides. While the pursuing record of prompt clauses is not exhaustive, it would be a great begin:

* No-Spam Plan – at the least, strict compliance with the U.S. CAN-SPAM Act of 2003 should really be required and you should really look at prohibiting any and all bulk, unsolicited electronic mail, even although it is permitted underneath the CAN-SPAM Act topic to specific demands also look at requiring your endorser to indemnify you in opposition to statements primarily based on their violation of the no-spam coverage

* Recruitment of Sub Affiliates – if sub affiliates are permitted, they should really be topic to prior evaluation and acceptance by you and be required to enter into your arrangement

* FTC Procedures Pertaining to Endorsements and Testimonials – this clause addresses the guidance and instruction necessity discussed earlier mentioned it focuses on the endorser’s demands about endorsements and testimonies

* FTC Procedures Pertaining to Truthful and Non-Misleading Promotion – this clause also addresses the guidance and instruction necessity discussed earlier mentioned it focuses on the endorser’s demands about truthful and non-deceptive advertising

* Monitoring Rights – this clause addresses the monitoring necessity discussed earlier mentioned it offers that you may well involve the endorser to modify or stop any advertising and marketing solutions, methods, or communications for uses of compliance with relevant rules and laws and

* Consent to Release Information and facts – this clause offers that you have the right to launch data about the endorser to any governmental or regulatory company, or to any non-public social gathering or firm which you think has a great faith declare primarily based on the endorser’s advertising and marketing solutions, methods, or communications.

In addition to examining and revising your affiliate and/or reseller agreements, what actions should really you consider? While the pursuing record of prompt actions is not exhaustive, it would be a great begin:

* familiarize by yourself with the relevant rules and laws you will not be able to accomplish your guidance, instruction, and monitoring obligations if you really don’t

* discover a brief and quick way to proceed to remain on best of all the hottest authorized developments in this region this sort of as a recurrent publication once more, you will not be able to accomplish your guidance, instruction, and monitoring obligations if you really don’t

* exercise your monitoring rights and obligations, and document that you have accomplished so be mindful to truly enforce your insurance policies, and once more, document, document, document. If the FTC ever arrives contacting, you are going to want to be able to document your compliance and

* do a thorough position of screening your potential endorsers prior to you approve them recall, an ounce of prevention is worth a pound of treatment.

Summary

You want to be mindful that authorized students are at this time debating whether or not the FTC may well impose liability on advertisers for advertising statements made by their endorsers. A perfectly-set up federal statute (47 USC 230(c)(1)) may well present a protection to this liability. This will have to be settled by judicial interpretation in the foreseeable future. At present, advertisers can not rely on this protection to get them off the hook.

Time is increasing quick for advertisers that are coated by the Guides to get started a compliance application. The Guides go into effect on December 1, 2009.




Supply by Chip Cooper