Dozier Internet Law: New Affiliate Marketing Laws Go Into Effect October 1, 2008

The affiliate marketing provisions of the Fair and Accurate Credit Transactions Act ("FACTA") go into effect October 1, 2008. Dozier Internet Law has added the compliance analysis to our legal audits. In a nutshell (it is really quite complicated) an affiliate marketer transferring leads or personally identifiable information to its advertiser requires advance notice to a consumer and an effective 30 day opt-out option.

Penalties? Up to $1,000 per violation (per each solicitation attempt), plus punitive damages and attorneys' fees. In other words, violations will likely bring class action lawsuits and create exposure that is enormous for affiliate marketers.

Dozier Internet Law recommends:

First:  Every affiliate marketer consider its particular information-sharing and marketing practices, today and in the future, to determine whether a notice and opt-out opportunity must be given.

Second: Affiliates should consider whether Advertisers are categorizing the affiliate as subject to the Act, and if so determine whether Affiliate Marketing Agreements require compliance in the contract, even if the Affiliate Marketer is operating outside the scope of the Federal Law definition.

Third: Merchants, Advertisers, and Affiliate Managers should review their Affiliate Marketing Agreements to make sure this new law is taken into account in the contract, and then implement appropriate performance standards, creatives, and the like for affiliates.

Fourth: Everyone should get ready to be compliant by October 1, and be prepared to assure and prove compliance with both internal and external facing performance standards. 

Fifth: Check and see if there were state laws that mandated certain disclosures and affirmative permission from a consumer that now may be PREEMPTED by this federal law. Yes, there is a preemption provision effectively invalidating state laws that purport to regulate the marketing activities now covered by this Federal law. That could be a good thing for affiliates and merchants and everyone else involved.

Sixth: Keep in mind that there is a work-around for the much talked about 30 day opt-out provision. 

Dozier Internet Law  offers compliance services in a broad range of online legal areas, with a strong emphasis on affiliate marketing. Whether you use our firm, or someone else, really consider getting some help in this area. One wrong step can have enormous and adverse consequences. And, keep in mind that things are not going to get any easier. There is a lot of proposed legislation and proposed rules that will continue to impact the affiliate marketing community. 

Comments

[diditcom]

The law seems to focus on credit and financial related data while much of the affiliate. lead-gen and coregistration market seems to be around other types of leads.
Are you indicating at any and all PII lead-gen is covered under your interpretation of the law?
Kevin Lee, Didit

[Dozier Internet Law]

It's another example of a law being expanded beyond the original intended scope. "Eligibility Information" transfer is prohibited. It is defined as both transactional and experience information, and other information, that would normally be considered a "consumer report". A list of names, addresses, telephone numbers, etc. may, or may not, be covered, and that will depend upon whether there is linkage to other information that bears upon any one of the "seven factors" defining a "consumer report". They are credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.

Very complicated when you consider just reporting the site visited could bear upon some, or many, of these factors.