We've been working hard the past month at Traverse Internet Law getting clients compliant with the new FTC rules on online marketing that became effective December 1, 2009. Many businesses in the online lead generation industry have apparently been taken in by some bloggers claiming, unfortunately in error, that the new regs do not apply to lead generation. "Unfortunately in error" because...most lead generation activities are, indeed, covered by the new affiliate marketing rules.
Now, a lead generation business might ask...how that could be? We are not affiliate marketers. We earn our own keep, go out as entrepreneurs and generate an asset that is then capable of being sold in the marketplace. And if that was the case, then the business would likely not be operating as a marketer at all, but as an industrious producer of information that is then sold.
But in reality, what is happening in the online lead generation industry is often something very different. Leads are being pursued, developed, concatenated, segmented, and packaged per the requirements of acquirers. In other words, lead generation is often just the filling of an order for the purchase of personally identifiable information, sometimes (often?) complemented by aggregating multiple data sources to meet defined customer specifications.
If you are generating mortgage leads, your purchaser has often defined the data reguirements for qualified leads it will buy from you. In effect, then, you are really acting like an affiliate marketer acting on behalf of a third party. And you are going to be subject to the new FTC regulations requiring certain clear and conspicous notifications of financial connections. Even an expectation of compensation or consideration from a third party with whom you do not have a written or express forward flow agreement will likely be adequate to bring you under the new rules.
Lead generators then have to give the notice that the communication (blog, website, tweet, social network profile, video, email, etc.) is from a business with a financial interest (material connection notice). And that is so even if your content does not include a specific reference to the identity of the end consumer of information (the party to whom you sell the lead).
The reference to new rules for endorsements is just part of the new FTC regulations. Don't be fooled into thinking that as long as you don't use endorsement you are in compliance. Are there some lead generators that are not subject to the rules? I am sure there are. But I bet it is less than 1% of the marketplace, and that would comprise only those who truly create leads without regard to the requirements of end users, don't have a forward flow purchase expectation, and will actually take the lead and open up the sale to a competitive market. And that doesn't sound like a very likely, or attractive, business model for most lead generators.
At Traverse Internet Law we recognize that lead generation may not be seen without the industry as affiliate marketing. But if you read the new FTC guidelines, you'll see that our big brother government sees things a bit differently.
Comments