Traverse Internet Law: Internet Lawyers

Traverse Internet Law at Upcoming Conferences

Traverse Internet Law will be attending and participating in the following upcoming conferences:

Affiliate Summit in Vegas in January

The Social Network Conference in Miami in January 

LeadsCon in Vegas in February

We'll be doing book signings at each, so stop by and say hello. More information on my presentations coming soon. Obviously FTC regs is at the top of the list with the lead generation audience. Hope to see you there.

Traverse Internet Law: FTC Regs Apply to LeadGen Industry

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. 

New FTC Online Marketing Rules Effective Today

Effective Dec. 1, 2009, the FTC has changed the playing field for online marketing. Mandatory commercial interest notices, new rules for endorsements...regulations and laws are just beginning to catch up to what had become standard business practice abuses. 

If you haven't had your lawyer review your content, assist you with the legal notices now required, and explain the expanded liability that now comes with using affiliate marketers, you may want to do so today. Or contact Traverse Internet Law and we would be happy to discuss the landscape. These changes are huge to most of the online marketing world.    

Traverse Internet Law: US Senate Slams Online Marketers

At Traverse Internet Law a   good majority of our law pract ice deals with online marketing. It seems our days are spent working on compliance issues, structuring contracts and litigating advertising related disputes. Needless to say, given the evolving interest in this space by the FTC and Congress and the Department of Justice and the State Attorneys General, this is a growth industry for an Internet lawyer.

Now comes the following from the US Senate: 

Affinion, Vertrue and Webloyalty use aggressive sales tactics intentionally designed to mislead online shoppers. These three companies exploit shoppers‘ expectations about the online purchasing process to charge millions of consumers each year for services the consumers do not want and do not understand they have purchased. Hundreds of e-commerce merchants – including many of the best-known, respected websites and retailers on the Internet – allow these three companies to use aggressive sales tactics against their customers, and share in the revenues generated by these misleading tactics. While Congress and the Federal Trade Commission have taken steps to curb similar abusive practices in telemarketing, there has not yet been any action to protect consumers while they are shopping online.

This damning report can be found here: Senate Online Advertising Report. Everyone in the online advertising industry should read this in its entirety. At Traverse Internet Law, we took particular notice of the finding that there were inadequate laws in place to deal with the "deceptive" (that's this Committee's opinion) practices outlined in the report. Expect more regulatory intervention and Congressional activity and investigations if you are involved in the online advertising industry. (and who isn't?)  

  

 

 

 

Dec. 1 Effective Date of New FTC Regulations on Online Advertising

At Traverse  Internet Law, we have seen a gradual, and now more pronounced, shift towards creating liability on the advertiser when an affiliate acts up and breaks the law. There has always been liability if the affiliate marketer is acting as an agent. But that is hard to prove. In the CANSPAM act an affiliate's misconduct can be imputed through to the business for whom he is marketing if the business "consciously avoided" acquiring knowledge of the spammer's misconduct. Now with the new FTC Guidelines coming into effect December 1 the Federal Trade Commission expects businesses (advertisers) using third parties (affiliates or publishers) to "monitor" blogger compliance with new advertising disclosure laws...or else.

We have been recommending for years a three pronged approach to managing the risk that arises with third party marketer misconduct:

1) Conduct Due Diligence on the affiliate in advance of acceptance.

2) Establish clear guidelines and performance standards in your affiliate contract.

3) Implement a compliance/audit program to assure compliance.

That's really what the FTC is talking about when it uses the term "monitor". 

Be careful out there.

Internet Law: New "Red Flag" Law Coming May 1

New Data Transfer Laws that were originally set to go into effect Oct. 1 of last year. The date was moved to May 1, 2009. Traverse Internet Law reviewed the new laws as they might be applied by the Federal Trade Commission to the online world of affiliate marketing. But all e-commerce websites (and even passive sites capturing and transfering data) need to take a fresh look at the new landscape.

One of the things Traverse Internet Law has noticed is the potential ambiguity of the definition of covered parties. The analysis is convoluted and complex for some online sites, particularly affiliate marketers. 

Seems like a good time to be reviewing privacy policies, data transfer practices, and legal compliance. I'll be speaking in Boston at the Internet Retailer conference in June on data loss and risk management. It's becoming a very hot topic. And with good cause.