Back in May in this column you read about the FTC’s current approach towards the incentivized advertising space. At that time, we discussed that large publicly traded companies could be involved. Well it’s old news in the industry now, but in fact, ValueClick found itself in the sights of the FTC due to its incentivized lead generation business segment.
As that investigation moves forward, each bit of news creates jitters in the affiliate marketing industry. This week saw a precipitous drop in the price of ValueClick’s stock. Whatever the outcome of the FTC’s investigation, you can be sure that it’s causing difficulties, even for a company as large as ValueClick. But ValueClick is a large and stable company. And while the FTC’s investigation may make it a less attractive takeover target in the short run, its diversity of profitable business segments means it will weather the storm. It has the resources, the cash flow, and dollars to the bottom line to ensure its future. The question is, are you that well prepared yourself?
By now you know about the ValueClick investigation, and you probably know that it involves "incentivized offers." You might even know a little of the details. Because it is already having an impact on our industry, and the outcome surely will affect many companies, it’s in your best interest to stay informed and make your business decisions keeping the case in mind. So let’s briefly cover the situation here. I know some of this is a repeat of previous columns, but I think it’s important to update people who might be reading this column for the first time. This issue is as current and important as it gets in our industry.
The heart of the issue is in regard to how much disclosure is required up front when making incentivized offers. In other words, if you’re running an offer which asks people to fill out surveys in order to win a free iPod (or other incentive), where and how do you need to disclose all the details? Specifically, what disclosure is required as to how many surveys must be filled, how long are they, how much time it will take, etc?
Previously, industry professionals were generally in agreement that as long as the disclosures provided were not hidden away, but were obvious, clearly related to the offer, and easily accessible, it would constitute reasonable disclosure under the Dot.com Disclosures. However, the FTC appears to be moving towards ruling out the use of hyperlinks, asterisks, etc. which lead consumers to appropriate disclosures. It’s possible we're moving towards and interpretation requiring that disclosures must be immediately contiguous to the offer, in the same font color and size as the offer, and must disclose all details about the offer.
So what’s it all mean? In the end, it means that you absolutely need to read and absorb the Dot.com Disclosures. http://ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf
While that document isn’t 100% clear, it will put you well on your way to making sure your pages aren’t obviously and egregiously out of compliance. I also recommend your disclosures are as physically close to your offer as possible, and that you make it obvious what they are and how to get to them. Exactly where and how you place them, and exactly what you should say is a matter to discuss with counsel.
From a business perspective, if you’re heavily involved in the incentivized space, I’d be making some assessment of how you believe this is going to affect you or your company, and start planning accordingly. While sometimes these cases plod along and nothing happens for months on end, it’s also possible that there could be a quick stipulated judgment which could negatively affect this advertising space. Don’t be caught unaware. Make your contingency plans and you’ll survive any bumps that might come along.
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Come back to the iLegal column every week as we get specific about the rules, regulations, laws and trends that affect the online advertising industry. Each week we discuss important legal issues, talk about how to avoid the pitfalls, and cover the breaking legal and regulatory advertising industry news.
Legal Disclaimer: Information conveyed in this column is provided for informational purposes only and does not constitute legal advice. These materials do not necessarily reflect the opinions of Digital Moses, and is not guaranteed to be complete, correct, or up-to-date. The column is provided for "information purposes" only and should not be relied upon as "legal advice." This information is not intended to substitute for obtaining legal advice from an attorney. No person should act or rely on any information in this column without seeking the advice of an attorney.
Mark Meckler is the General Counsel for UniqueLeads.com, Inc., and Unique Lists, Inc. Mark sits on the eCommerce and Technology Committee of the Association of Corporate Counsel, and is a member of the International Association of Privacy Professionals.
Copyright 2007 Mark J. Meckler
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