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Regulations Advertisers in USA and EU Should Know About – FTC and European Commission

Posted by John W. Furst on

Due to the latest announcement of changes in regulations for advertisers in the USA, a lot of people talk, write, and speculate about that subject.



Situation In The USA


I published my opinion about an hour ago as a separate note: The core elements can be summarized as follow:
  • Disclose the use of affiliate links on your sites and in your social media profiles.
  • Disclose any form of relationship when writing about commercial products and services. Even if you only got a free sample worth $0.99
  • Monitor your affiliates and publishers for compliance with the new regulations.
  • Always tell the truth.
  • Think twice before showing specific results in testimonials.
  • Last but not least don't use fake blogs with made up reviews and those kind of things.
You may want to read my entire note.

Update
October 10, 2009

The most important pages to read in the FTC PDF document are pages: 55-81.
  FTC: Endorsements and Testimonials in Advertising
  [377 KiBytes, 81 pages, PDF document]

Advertisements are evaluated from the perspective of a typical consumer.
Three important questions.

(a) Whose opinion is displayed? (average consumer, the advertiser, an expert in that field, ...)
(b) Are there reasons this opinion could have been influenced by the advertiser?
(c) What are the results a typical, average customer can expect?

(Very soon anything without a disclaimer will look suspicious. :-) )



Situation In The European Union


Let's not forget, the Internet is more or less a medium without national borders.

I mean to say, it is likely that any website targeted to US consumers will effect some of the 500 million consumers in the European union as well.

Maybe a good idea to recall the fact that the European Union cracked down on unfair business practices two years ago.


At the core of the EU regulation efforts are 4 key elements for eliminating unfair business practices.
  • A far reaching general clause defining practices which are unfair and therefore prohibited.
  • Misleading Practices (Actions and Omissions) and Aggressive Practices.
  • Safeguards for vulnerable consumers.
  • An extensive black list of practices which are banned in all circumstances.


A Short Teaser - The "Dirty Dozen Black List"

  1. Bait advertising
  2. Fake "Free" offers
  3. Direct exhortations to children to buy advertised products
  4. False claims about curative capacity
  5. Advertorials
  6. Pyramid schemes
  7. Prize Winning
  8. Misleading impression of consumers’ rights
  9. Limited offers (!)
  10. Language of after-sales service
  11. Inertia Selling
  12. Europe-wide guarantees
And of course "Free" should mean free.

I kept this introduction very short on purpose to motivate you look up the detailed documents published by the European Commission. (links above)


The Bottom Line


  • Always tell the truth.
  • Don't hide anything about your relationship with the seller/advertiser.
  • Be upfront with your motives
  • Keep in mind you are writing for a typical consumer. Their expectations are the measure for all things.
  • Monitor your agents/affiliates and make sure they comply with all regulations.
  • No false pressure.
  • Some extra rules for special interest groups like children, low income consumers, and a lot of extra regulations for some markets like health, fitness, financial, real estate, etc. …

Most people in business will be up-to-date with most regulations. Major shift right now is concerning product endorsements and the use of testimonials.

That's it.

No reason to freak out.

Yours
John W. Furst

P.S.: Frank Kern's post about those matters is very educational and entertaining to some extent as well. Go check it out.
  • “FTC Declares Shenanigans On All Kinds Of Stuff!”

    My comment on Frank's blog: “Absolutely d’accord. Makes sense. I mean, when it starts to rain, what do you do? You take an umbrella, still go out and keep your smile on your face, don’t you. Like in the great movie ‘Singing In The Rain’ … ”

(This entire blog post reflects my personal opinion and is certainly not any form of legal advice.)

Trackbacks

Andy Beard – Internet Business Systems on : FTC Fake Bait & Disclosure

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[... John points out us Euros have had to live with this quite a while (I have covered it a lot myself in the past) along with some sound tips – I suppose I should disclose that John leaves great comments and has been known to tweet my articles. Don’t forget my old post defining 32 kinds of Blogging and Linking Payola – the FTC should really ...]

E-Biz Booster Blog on : Websites And Law Across Borders (FTC versus EU)

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[... If your non-compliance, earnings, (possible fraud triggering criminal charges) are big enough the US- or any European government will hunt you down, no matter where you are. A simple non compliance with a disclosure requirement for example can be interpreted as being a criminal fraud. One internationally operating lawyer I corresponded with pointed at a case of a UK citizen who was extradited from Australia where he lived at the time to the USA. He pleaded guilty for having violated US e-commerce laws and is serving a five year term in a US federal prison. Not funny at all. ...]

E-Biz Booster Blog on : New FTC Rules: The Clock Is Ticking

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[… from the Federal Trade Commission in the USA which will affect Internet marketing practices effective December 01, 2009. …]

E-Biz Booster Blog on : FTC Changes For Internet Marketers Coming Up Fast Dec. 01, 2009

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Internet Marketing Expert - Jim Edwards New rules and guidelines for online Internet marketers and vendors are coming up fast. The date they become effective in the USA is Tuesday, December 1, 2009. I guess some webmasters will be busy over the week

E-Biz Booster Blog on : Better Let Your Prospects Know About You

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That’s me, John W. Furst. I just have read a not so bad blog post. However, when I checked out the about page I got turned off. “This is an example of a WordPress page, you could edit this to put information about yourself or your site so readers

Comments

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James on :

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So should I care about the FTC? My business is in the U.K. Some sites hosted at Hostgator in the US, others here in London though.

John W. Furst on :

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James,

Interesting and good question. I actually tipped the question off to some lawyer friends. Let's see what they come up with.

In general a business MUST respect all regulations and laws of the country where the customer -- especially a consumer -- is located.

Look at your hosting agreements with your US providers. They can pull the plug rather easily.

Hope that helps.

Let's face it, the regulations on both sides of the Atlantic are not too different altogether. It's much harder to comply with EU standards.

Disclaimer: IANAL (I am not a lawyer and this is not legal advice.)

Elcorin on :

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Thanks for the article. I enjoy reading your blog everytime.

--Elcorin

hazz.hazz on :

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Hello,

lets discuss Ecommerce in the USA. Every city, county and state has their own separate sales tax with differing rates, limits and deadlines. This means Ecommerce merchants who sell their products or services in the U.S.A. could therefore be subject to all of these taxing districts. So how are online merchants able to collect their payments of sales tax with the varying sales taxes?

Regards

hazz.hazz

John W. Furst on :

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You are absolutely right. Any business -- not only online businesses -- is subject to various regulations on local level as well.

I know as marketer that online businesses used to collect taxes for customers in their state only. But the situation has changed and like the State of New York requires online merchants to collect taxes in their behalf. As a result Amazon.com fired all New York State based affiliates (if I remember correctly) because they did not want to implement those changes.

Compared to Europe doing online business in the USA is still very easy.

Dealing with tax issues, sometimes even customs issues, and especially shipping issues, and more restrictive regulations effectively KILLS many online ventures before they can take off.

And the Commission of the European Union has already successfully forced large vendors to handle and collect tax for European customers as well; vendors like GoDaddy, Clickbank, Amazon fully comply.

The duty of a business is to find ways to complies. It's part of doing business.

Yours

John W. Furst

sumi on :

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