Get Legal Advice To Be Sure That Your On Line Business Complies With the Law

Seal of the United States Federal Trade Commis...

Image via Wikipedia

There have been some big developments over the last few days on the internet. These will impact your product launch marketing strategies, make no mistake. First, the Federal Trade Commission published  a new set of guidelines, then Google terminated the accounts of many of their clients and now further directions have been issued concerning how products should be marketed. Basically, it boils down to the need for full disclosure, clarity and ease of doing business [or not] for the customer.

I was looking for some details that I could give you. A visit to  Mike Hill’s blog as called for. Mike is at the cutting edge of CPA marketing. As someone who is into product launch marketing his advice is well worth listening to. If you are unsure about anything, get legal advice. It is your responsibility to do so and yours alone. Mike is not a lawyer and neither am I. The following information is provided on that basis…

DIRECT RESPONSE BEST PRACTICE  GUIDELINES FOR MERCHANTS
NB: Those with a new Product Launch Marketing strategy

TRIAL  OFFERS
Marketing models that employ “Free-Trial”, “Deferred Billing” and/or “Shipping Only” are considered trial offers for purposes of this communication. Consumers must be receiving a tangible good or contracted service in exchange for charging of payment cards.
Instead Give your prospects a ‘sneak peak’ of your digital product before asking them to part with their hard earned cash so they can get a good look at what they are buying first.

Incentivized discount offers are acceptable when the cardholder is receiving goods or services in exchange for payment; however engaging in hidden or delayed charges and ‘free’ offers that are not truly free is unacceptable.

1. Avoid using terms in your marketing and offer presentation such as “Free”, “Risk Free” or any similar and potentially misleading phrases when consumers will be enrolled in a monthly continuity program at the end of a trial period, or will be paying a deferred charge for the trial period. The phrase “Free Trial” is prohibited unless there is truly no cost or obligation incurred by the consumer.

2. ”Shipping & Handling Only” offers must be a fair and accurate shipping charge reasonable to be accrued by the merchant for providing the product.

3. Trial offers must be extended for a minimum of 10 days.

4. Trial periods should not begin until the product is shipped to the consumer.

MARKETING
1. Avoid creating a ‘false sense of urgency’ for the consumer. Unless the consumer’s ability to order is genuinely taken away after a specified time frame or order count is reached, this practice is prohibited. Use of applications such as countdown clocks, tickers, or language such as “Offer Expires Today!” is also prohibited. Be sure that yo ur reason for ‘scarcity’ is genuine

2. Product claims, by law, must be truthful. Claims regarding effectiveness must be substantiated by clinical research conducted to support the claims, and consistent with the formulas and ingredients in your product

3. Qualifications for trial periods of a product should follow pre-determined rules disqualifying consumers who do not meet parameters, including but not limited to: Age, Weight, Height, and Location.

4. Unreasonable claims or guarantees are prohibited. Examples of claims considered unreasonable are: “Flushes  Pounds”,  ”Flushes  Toxins”,  ”Builds  Muscles”
–    Stating that use of a product will result in permanent weight loss
–    Stating that a product will cause the consumer to lose a specified amount of weight in a specified time frame
–    Stating that a product will cause substantial weight loss no matter what or how much the consumer eats.
–    Stating that use of a product can cause weight loss (or muscle growth) in specific body parts

“Free Money”,  ”Instant  Money”

–    Stating that the product can substitute the income of a full time job
–    Stating that money can be earned with little to no effort or investment
–    Stating that use of a product will earn you hundreds of thousands or millions of dollars

Additional  examples  include:

–    Stating that the product has been successfully used by an unrealistic or unsubstantiated number of people
–    Stating that a product will secure the consumer a job, either at the product’s company or another company
–    Stating or implying that a product is endorsed or in any way associated with President Obama or a government entity.

ENDORSEMENTS/TESTIMONIALS:

1. Endorsements and testimonials of user experiences must reflect the true and honest opinions of the endorsee(s).

2. Endorsements and testimonials provided must present a clear picture to consumers of realistic results of using the product. If advertisers do not have substantiation of a specific claim or endorsement, then generally expected results must be clearly disclosed and backed by substantiation of any claims.

3. Blogs used for promotional purposes must be in compliance with published advice, representing an accurate and full representation of the endorsee, or clearly designated as a fictional story if developed internally for marketing purposes.

4. News Sites published in marketing materials must be in compliance with published Federal Trade Commission recommendations, and must be clearly presented to the consumer as an advertorial. Written consent should be obtained from a media outlet prior to using the logo.

5. Implied celebrity endorsement by use of an image in your marketing is prohibited without express legal written consent.

AFFILIATE  MARKETING (CPA)  NETWORKS

A significant contributing factor to Historical Excessive chargeback violations has been the utilization of CPA Networks. Transactions generated from internet traffic and all other lead sources must be managed and monitored for potential fraud using an approved system. Third Party service engagement may be a requirement for account approval.

1. CPA Networks should contractually be held accountable for monitoring traffic generated from participating marketers.

2. Merchants must have monitoring plans in place to detect suspect traffic and monitor Affiliate and Sub-Affiliate performance. Be careful to pick only quality JV partners

BILLING  TERMS  DISCLOSURE

“Negative Option” enrollment programs are frowned upon. Authorities are taking a very aggressive position against merchants utilizing/employing this business practice. Recommendations may include but are not limited to the following:

1. Negative Option disclosures must be clear and conspicuous to the consumer and comply with published principals.
2.
The full price of products sold must be within reasonable “fair market value”
3.
Under no circumstances should consumers be billed for a product or service not disclosed.
4. Consumers must be required to validate understanding of the terms of the offer twice during order submission.
The first validation can take place with the initial offer presentation prior to submission of credit card information, and the second during the checkout process. The confirmation order page must also require consumers to acknowledge that they agree to the Terms & Conditions and authorize the merchant to charge the credit card
for the disclosed dollar amount. Terms must be displayed adjacent to the “submit”,”confirm” or any other “call to action” button confirming the order. The price must be within 100 pixels of the “submit”,”confirm” or any other “call to action” button.

–    Terms must be in a minimum 12-point “easy to read” font.
–    Avoid visually distracting graphics from the display of terms.
–    Pre-checked boxes must never be used.
–    Consumers should be required to actively and individually select each offer or bonus during the checkout process when there are multiple offers or up sells presented. No offers or up sells should be pre-selected or pre-checked.
–    Consumers should not be able to move forward in the offer or checkout until the box acknowledging the terms is checked.
–    Verbiage must clearly disclose the enrollment into an ongoing membership with no distraction. An example of an acceptable disclosure is: “By clicking “Submit” you acknowledge that you understand you are being enrolled in a 10 day trial for $4.95, and after expiration of the 10 day trial period you will be charged $59 per month until you cancel your service”
–    All products or services purchased when the call-to-action button is clicked should be billed as a single charge unless the order is fulfilled at different times requiring multiple charges.
–    Shipping and Handling should not be billed separate from charges for the product or service.

BILLING  TIME FRAMES

1. A merchant may not bill a consumer the full price twice in a 30-day span. An acceptable billing cycle example would be:

–    Day 1 – Consumer signs up for a 10 day trial offer with paid shipping of $4.95 charged at the time of order.
–    Day 11 – The first monthly order is shipped and the consumer is billed the full price of $59.
–    Day 41 – The second monthly order is shipped and the consumer is billed the full price of $59.

2. Consumers should not be billed prior to shipment of products.

REFUND  POLICIES

Merchants must not make it difficult for consumers to exercise the disclosed cancellation procedures and all cancellation requests must be honored in accordance with the stated terms of the transaction.

1. Refund policies must be disclosed prior to the sale completion. Establish a clear, concise statement of your refund and credit policy. Your policy should be consistent with the objectives of your business and the products or services sold.
2. Merchants must not require return of any trial offer product samples in order for the consumer to receive a refund, or cancel their ongoing subscription.
3.
”Full Money Back” or “Full Satisfaction” guarantees are considered false and prohibited unless the offer provides a full refund on all products, including but not limited to Shipping & Handling charges.
4. Refunds should be for the full amount charged including shipping and handling
5. All future billing to a customer should be canceled when a refund is issued.
6. All future billing to a customer should be canceled when a charge-back is received.

BACK  END OFFERS, AKA  UP SELLS OR  CROSS  SELLS:

All sales should be directly between the business entities (merchants) processing the transactions and the consumer, with consumer authorization for all purchases.

1. Under no circumstances can consumer data be shared with another company as this is a violation of Brand Regulations, including but not limited to the Payment Card Industry Data Security Standard.

2. Forced and hidden up sells are strictly prohibited

3. Up Sells with recurring charges are prohibited, regardless of consumer opt-in or acknowledgement of the offer.

4. A one-time bonus offer may be extended to the consumer for an additional product offered by the same company as the initial transaction. The price of the bonus offer must be clearly disclosed and the consumer must acknowledge the terms of the sale prior to providing credit card information for completion of the sale, and again at order confirmation/ submission.

DESCRIPTORS

1. ALL MERCHANTS  DEFINED AS OFFERING A DIRECT MARKETING PRODUCT WILL BE ASSIGNED A DESCRIPTOR FORMATTED  TO COMPLY WITH VISA REQUIREMENTS, TO INCLUDE AN *.

2. Billing descriptor should be consistent with the website name, marketing materials, purchase confirmation, and shipping notification (if any) sent to the consumer.

FULFILLMENT

1. Orders must be fulfilled in a timely manner. It is recommended that all products be shipped within 48 hours (2 business days) from the date of order.

2. A confirmation email should be provided for all online orders with physical shipment, within the prior 5 days to shipment or 2 days following shipment, including the following information:

–    Merchant contact information (at minimum a consumer service phone number)
–    Order information including purchaser’s name, unique order or customer ID, summary of item(s) purchased
–    Terms of the order, including initial amount billed and future billing schedule (this should be stressed)
–    Cancellation and refund policy
–    Delivery confirmation / tracking information

3. An invoice should be included with the product including the following information:

–    Merchant contact information (at minimum a consumer service phone number)
–    Terms of the order, including initial amount billed and future billing schedule
–    Cancellation and refund policy

CUSTOMER SERVICE:

1. Multiple methods of cancellation must be provided for consumers to cancel or request refunds, including at least two options of contact. Example of acceptable service channels include: phone, email, mail, and online chat. Phone support is strongly recommended as one of the options.

2. ”Contact Us” information including contact methods and hours of availability should be prominently displayed in all marketing, offer and payment pages, as well as included in purchase confirmations, invoices and any other communication with consumers.

3. Customer Service must be easily accessible and available during reasonable business hours

4. Refund and Cancellation Policies must be followed as disclosed to the consumer at the time of order

5. Hold times to reach Customer Service must be less than 2 minutes.

6. After hours voice mail should include a greeting that properly identifies the merchant to the consumer, provides hours of Customer Service availability and an expectation for call back.

The moral of the story is that as a business owner who has a product launch marketing strategy you should not even consider a tactic that you would be embarrassed to explain to your granny. Provide value and be transparent.

RESOURCES:

Here are the published regulations along with many resources online for businesses and consumers. A few helpful links are included below:

Commercial Practices Part 425, Use of Pre-notification Negative Option Plans:
http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=16&PART=425&SECTION=1&TYPE=TEXT

Pre-notification Negative Option Plans:
http://www.ftc.gov/bcp/edu/pubs/consumer/products/pro09.pdf

Advertising and Marketing on the Internet:
http://www.ftc.gov/bcp/edu/pubs/business/ecommerce/bus28.pdf

Dot Com Disclosures:
http://www.ftc.gov/bcp/edu/pubs/business/ecommerce/bus41.pdf

Direct Response industry publications have provided articles with some clarification regarding these guidelines:

http://www.responsemagazine.com/resources/legal-resources/legal-review-getting-strict-with-negative-option- marketing-1351

http://www.dmnews.com/get-comfortable-with-new-ftc-regs/article/136023/

Visit Mike’s Blog for further recommendations

Uncategorized

Share the love...

Rory Ramsden

Specialist focusing on getting new products ready to launch and re-launching ever-green products to the online community. What can a Product launch marketing do for you? - Significantly increase your ROI - Explode the size of both prospects and client email lists - Build strong rapport between your clients and your company - Dramatically increase the number and quality of your JV partners and affiliates - Make your business the 800lbs Gorilla in your market - Leverage your newly found cash flow and positioning to accelerate your growth - Send employee morale soaring to new undreamed of levels To get these benefits, we'll assist you to develop a strategic and tactical plan for your coordinated launch…There are a myriad of tools and tactics to use in an online product launch including - email lists - blogs - surveys - special reports - sales letters - autoresponders - video and audio presentations - webinars - squeeze pages - Social Media - Networking As professional product launch manager, we will help you select the most appropriate for your needs. Remember Product Launches work for all types of products and services, evergreen or new so contact me to find out more +33637500988 Specialties The Launch Systems Toolbox This limited consultancy will assess your state of readiness in 6 key areas. The fee is typically set against our fees for piloting your complete launch. [http://www.prolaunchmanager.com/launch-ready]