Covering Legal and Regulatory Issues in the Online Advertising Industry
One of the most important things you can do to reduce your exposure to legal liability when running advertising, is to make sure that the ads you run are actually true. According to the Federal Trade Commission, as an affiliate, you are responsible if they are not. Many affiliates I know are surprised when they hear that if they are running a creative that they picked up from a network, they themselves are legally responsible for the content of that creative. Better to be surprised now, instead of when the FTC or an Attorney General calls.
The FTC Act prohibits unfair or deceptive advertising of any kind. Simply put, the ads you run must tell the truth and not mislead consumers. A claim can be misleading if relevant information is left out or if the claim implies something that's not true. I suggest that you use the "Grandma Standard." If you think that your 80 year old Grandma (or anyone’s, for that matter) might be misled by an ad, then you should not run that ad.
In addition to avoiding misleading consumers, claims made in your ads must be substantiated, especially when they concern health, safety, or performance. The type of evidence required may depend on the product, the claims, and what experts believe necessary for substantiation. But simply put, if the ad you are running specifies a certain level of support for a claim - "tests show X" – then you must be able to demonstrate at least that level of support. Yes, even if it’s not your product.
While sellers are responsible for claims they make about their products and services, third parties - such as advertising agencies, website designers, affiliates and lead brokers also may be liable for making or disseminating deceptive representations if they participate in the preparation or distribution of the advertising, or know about the deceptive claims. And when the FTC calls, "I didn’t know," isn’t going to satisfy them. They are going to want to know what you did to investigate the truth of the claims in the ad.
What this means to you is that you are responsible for reviewing the information used to substantiate claims made in the ads you run. You can’t just rely on an advertiser's assurance that the claims are substantiated. In deciding whether a non-selling third party should be held liable, the FTC will investigate the extent of your participation in the preparation of the ad, and whether you knew or should have known that the ad included false or deceptive claims.
If you’re running ads that make any claims (especially health, safety or performance) to protect yourself, you should ask for material to back up claims rather than simply repeating what the manufacturer says about the product. For example, if an ad for a weight loss product contains claims, you should request proof from the manufacturer or seller. If they can’t produce the proof or they present you with proof that doesn’t pass the smell test, then you should be very careful about running that ad. This is especially true when it comes to extravagant performance claims, health or weight loss promises, or earnings guarantees.
The bottom line is this; limit the ads you run, or the copy you write to claims that can be supported, and that are not unfair or deceptive. Sometimes lawyers make this sound too complicated to understand. But the reality is that if you trust your instincts, and use the Grandma Standard, you’re likely to stay on the right side of the law.
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.
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