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.