Transcript Deceptive or Unfair Claims - Association of Corporate Counsel

3/21/2017
Marketing Compliance
Copyright© 2011 WeComply, Inc. All rights reserved.
3/21/2017
Marketing Compliance
Copyright© 2011 WeComply, Inc. All rights reserved.
Overview
Vast array of laws and regulations governs marketing activities
•Intent is to protect consumers and competitors from
deceptive and unfair marketing
Laws and regulations cover —
•What we may say about our products/services
•What we may say about competitors and their products
•Marketing to consumers by phone, e-mail and Internet
•What information we can collect and how we can use it
As an employee involved in our organization's marketing process, you need a
basic understanding of these laws and regulations and how they impact your job
responsibilities
Copyright© 2011 WeComply, Inc. All rights reserved.
3
Overview (Cont’d)
Vast array of laws and regulations governs marketing activities
•Intent is to protect consumers and competitors from
deceptive and unfair marketing
Laws and regulations cover —
•What we may say about our products/services
•What we may say about competitors and their products
•Marketing to consumers by phone, e-mail and Internet
•What information we can collect and how we can use it
As an employee involved in our organization's marketing process, you need a
basic understanding of these laws and regulations and how they impact your job
responsibilities
Copyright© 2011 WeComply, Inc. All rights reserved.
4
Truthful Representations
Employees who do marketing must comply with all applicable
legal requirements
All marketing communications must be truthful, current and
accurate
Rule applies to representations that —
•Could influence a purchasing decision
•Are made by, attributable to or approved by us
•Are in external communications
•Are in internal communications that could be used externally
Copyright© 2011 WeComply, Inc. All rights reserved.
5
In the news…
POM Not So Wonderful?
Competing Lawsuits Filed over Juice’s Advertising Claims
POM Wonderful, which markets an expensive and
popular pomegranate juice, has locked horns with
the Federal Trade Commission (FTC) over the
company's advertising claims about its juice. The FTC
charged the company and its owners with making
"false and unsubstantiated claims" that the juice
prevents or treats heart disease, prostate cancer and
erectile dysfunction. In its complaint, the FTC said
that POM ignored evidence that contradicted its
health claims. The FTC seeks to prevent POM from
making further medical claims unless they are
substantiated by the Food and Drug Administration.
POM has also sued the FTC, claiming that the FTC's
rules regarding deceptive advertising violate POM's
constitutional free-speech rights.
Copyright© 2011 WeComply, Inc. All rights reserved.
6
Deceptive or Unfair Claims
We may not use deceptive or unfair claims and statements
• "Deceptive claim" is a material representation or omission
that is likely to mislead or deceive
Key concepts for deceptive claims:
• Materiality: degree of importance of information to audience
• Omissions: unstated information important to a purchasing decision
• Puffery: marketing "fluff"
Unfairness is broader than deception
Copyright© 2011 WeComply, Inc. All rights reserved.
7
Deceptive or Unfair Claims (Cont’d)
We may not use deceptive or unfair claims and statements
• "Deceptive claim" is a material representation or omission
that is likely to mislead or deceive
Key concepts for deceptive claims:
• Materiality: degree of importance of information to audience
• Omissions: unstated information important to a purchasing decision
• Puffery: marketing "fluff"
Unfairness is broader than deception
Copyright© 2011 WeComply, Inc. All rights reserved.
8
Deceptive or Unfair Claims (Cont’d)
We may not use deceptive or unfair claims and statements
• "Deceptive claim" is a material representation or omission
that is likely to mislead or deceive
Key concepts for deceptive claims:
• Materiality: degree of importance of information to audience
• Omissions: unstated information important to a purchasing decision
• Puffery: marketing "fluff"
Unfairness is broader than deception
Copyright© 2011 WeComply, Inc. All rights reserved.
9
Deceptive or Unfair Claims (Cont’d)
We may not use deceptive or unfair claims and statements
• "Deceptive claim" is a material representation or omission
that is likely to mislead or deceive
Key concepts for deceptive claims:
• Materiality: degree of importance of information to audience
• Omissions: unstated information important to a purchasing decision
• Puffery: marketing "fluff"
Unfairness is broader than deception
Copyright© 2011 WeComply, Inc. All rights reserved.
10
Special Note…
Avoiding Deceptive Claims with "Qualifying Statements"
Qualifying statements are often appropriate and, indeed, necessary to make
representations clear and accurate. Qualifying statements are words, phrases
or sentences that explain or clarify the basis for a representation. They also
prevent representations from being deceptive or misleading.
The appropriate wording of a qualifying statement depends on the nature of
the representation being made. Watch for these potentially misleading
representations in your marketing materials:
•Untrue or not-quite-true statements: Modify the statements to match
whatever substantiation you have for the representation.
•Superlatives: Make superlatives acceptable by using a modifier, such as "one
of the best" or "virtually unmatched."
•Promises or assurances: Modify promises to be accurate — e.g., use "allows"
instead of "guarantees" and "designed to" instead of "warrants."
Copyright© 2011 WeComply, Inc. All rights reserved.
11
Comparative Claims
Comparative claim explicitly or implicitly compares one
product/service to another
Comparative claims are generally acceptable if they —
•Are true and not misleading
•Are fair comparison of similar properties
•Are objective, accurate and factual
•State basis for all comparisons
•Don't discredit the reputation of another
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12
Special Offers
Certain claims or offers have special considerations:
• Offers of "free" products or services: Use the word "free"
only if there is no obligation to consumer
• Guarantees: Avoid saying "guarantee" or "promise"
without qualifying statement
• Endorsements: Must be authorized by endorser and disclose any material
connection with endorser
Copyright© 2011 WeComply, Inc. All rights reserved.
13
In the news…
FTC Tackles Astroturfer
Marketing Firm Agrees To Stop Posting Fraudulent Reviews Online
The Federal Trade Commission (FTC) recently announced
that it had reached a settlement with a California
marketing company for the company's "astroturfing"
activities — i.e., posting phony product endorsements
online. The FTC charged that the company engaged in
deceptive advertising by employing people to write and
post phony product reviews in the Apple iTunes Store
without disclosing that they were paid for these
activities. The posts — four- and five-star reviews of
games of the company's game-developer clients — were
made under account names that made them appear to
have been written by ordinary people. Under the
settlement, the company agreed to remove all of the
phony iTunes reviews and to refrain from making similar
endorsements in the future.
Copyright© 2011 WeComply, Inc. All rights reserved.
14
Substantiation
We must be able to substantiate every marketing
representation we make
Your responsibilities:
• Ensuring that substantiation directly supports the
representation
• Finding substantiation from an acceptable source
• Verifying that substantiation is sufficient
• Documenting the substantiation for all representations
Substantiation must exist before representation is made
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15
Substantiation (Cont’d)
We must be able to substantiate every marketing
representation we make
Your responsibilities:
• Ensuring that substantiation directly supports the
representation
• Finding substantiation from an acceptable source
• Verifying that substantiation is sufficient
• Documenting the substantiation for all representations
Substantiation must exist before representation is made
Copyright© 2011 WeComply, Inc. All rights reserved.
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Sweepstakes and Contests
Sweepstakes and other contests must be run properly to comply
with requirements
Participants may not be required to pay or make a purchase
Promotional materials must —
•State that no purchase is required
•State that purchases will not increase chances of winning
•Clearly explain method for entering
•Advertise prizes clearly and accurately
•Clearly explain all terms and conditions
Copyright© 2011 WeComply, Inc. All rights reserved.
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Sweepstakes and Contests (Cont’d)
Sweepstakes and other contests must be run properly to comply
with requirements
Participants may not be required to pay or make a purchase
Promotional materials must —
•State that no purchase is required
•State that purchases will not increase chances of winning
•Clearly explain method for entering
•Advertise prizes clearly and accurately
•Clearly explain all terms and conditions
Copyright© 2011 WeComply, Inc. All rights reserved.
18
Pop Quiz!
Which of the following statements can you include in a sweepstakes entry form?
A. "Purchases will not increase your chances of winning."
B. "You're a winner!"
C. "Just buy any XYZ Inc. product to enter the sweepstakes!"
Copyright© 2011 WeComply, Inc. All rights reserved.
19
Negative-Option Marketing
Negative-option marketing: seller interprets consumer's
silence as consent
Four types of plans:
• Pre-notification: consumers must return rejection form
before shipment
• Continuity: consumers must tell sellers to stop (no rejection form)
• Automatic renewals: seller renews until consumer cancels
• Free-to-pay conversions: consumers receive free merchandise for trial period
and then are charged a fee
Sellers must inform consumers of terms and obtain consent
Copyright© 2011 WeComply, Inc. All rights reserved.
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Digital Marketing
Digital marketing: promotion of goods and services
through digital media
General rules:
•E-mail: message must —
1. Not use false or misleading information
2. Identify itself as an ad
3. Identify seller as sender
4. Use accurate subject line
5. Include seller's physical address
6. Give opt-out instructions
• Mobile: seller must obtain recipient's express prior authorization
• Social media: seller must Copyright©
— 2011 WeComply, Inc. All rights reserved.
21
Digital Marketing (Cont’d)
Digital marketing: promotion of goods and services
through digital media
General rules:
•E-mail: message must —
1. Not use false or misleading information
2. Identify itself as an ad
3. Identify seller as sender
4. Use accurate subject line
5. Include seller's physical address
6. Give opt-out instructions
• Mobile: seller must obtain recipient's express prior authorization
• Social media: seller must Copyright©
— 2011 WeComply, Inc. All rights reserved.
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Telemarketing
Telemarketing is subject to detailed laws and regulations
Basic rules:
• Callers must honor "do-not-call" rules
• Callers must identify themselves and their organization and inform consumer of
purpose of call
• Callers must generate caller-identification information
• Callers may not use automated dialers unless they check do-not-call list before
dialing
• Callers generally may not abandon calls they initiate
Copyright© 2011 WeComply, Inc. All rights reserved.
23
Telemarketing (Cont’d)
Telemarketing is subject to detailed laws and regulations
Basic rules:
• Callers must honor "do-not-call" rules
• Callers must identify themselves and their organization and inform consumer of
purpose of call
• Callers must generate caller-identification information
• Callers may not use automated dialers unless they check do-not-call list before
dialing
• Callers generally may not abandon calls they initiate
Copyright© 2011 WeComply, Inc. All rights reserved.
24
In the news…
Recruiters Ring Up Abuse
GAO Probe Reveals Abusive Telemarketing Practices at For-Profits
Recently, the U.S. Government Accountability Office
(GAO) conducted an undercover investigation of 15 forprofit colleges to determine whether their
representatives engaged in fraudulent or questionable
marketing practices, including telemarketing practices.
Four GAO representatives who registered with Web sites
designed to link for-profit colleges with prospective
students received numerous, repetitive calls from the
colleges — in some cases, within five minutes of
registering. One fictitious prospective student received
182 recruiting phone calls in one month. The for-profit
college recruiters placed calls to the fictitious
prospective students at all hours of the day and as late
as 11 pm. Attorneys general in ten states have since
launched a coordinated investigation into allegations of
deceptive marketing and consumer-fraud concerns at
for-profit colleges.
Copyright© 2011 WeComply, Inc. All rights reserved.
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Policy
Abusive Telemarketing Practices
The following types of conduct are considered abusive telemarketing
practices and violate most telemarketing laws and regulations:
•
Calling a person's residence before 8:00 a.m. or after 9:00 p.m. local time
without the person's prior consent;
•
Calling a person or engaging a person in telephone conversations
repeatedly with the intent to annoy or harass that person;
•
Calling a person who has previously stated that he/she does not wish to
receive calls from the company whose goods or services are being offered;
•
Using threats, intimidation or the use of profane or obscene language;
•
Disclosing or receiving unencrypted consumer account numbers for use in
telemarketing (subject to an exception for charities);
•
Causing billing information to be processed for payment without the
express informed consent of the customer; and
•
Using a fax machine, computer or other device to send an unsolicited
advertisement to a fax machine.
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Marketing to Children
COPPA gives parents control over information collected from
their children
• Prohibits knowing collection of personal information from
children under 13 without parents' consent
• May require specific steps to —
1. Collect children's personal information appropriately
2. Protect information we collect
3. Guard against misuse
• COPPA prohibits us from conditioning participation on collection of more
personal information thanCopyright©
is reasonably
necessary
2011 WeComply, Inc.
All rights reserved.
27
Marketing to Children (Cont’d)
COPPA gives parents control over information collected from
their children
• Prohibits knowing collection of personal information from
children under 13 without parents' consent
• May require specific steps to —
1. Collect children's personal information appropriately
2. Protect information we collect
3. Guard against misuse
• COPPA prohibits us from conditioning participation on collection of more
personal information thanCopyright©
is reasonably
necessary
2011 WeComply, Inc.
All rights reserved.
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Collection and Use of Marketing Data
We want to be able to use data we collect in promotional
campaigns and programs
Law restricts how we collect and use personally identifiable
information (PII) about consumers
Follow these guidelines:
• Give notice of details of our privacy policy and practices
• Give consumers choice to opt in or out of receiving marketing communications
• Provide our contact information
• Honor representations in our privacy policy regarding consumers' access to their
data
Copyright© 2011 WeComply, Inc. All rights reserved.
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Costs of Noncompliance
Potential costs:
•Penalties for violations of law — fines, injunctions and
prison terms
•Civil lawsuits seeking actual and possibly punitive
damages
•Bad publicity and negative impact on our brand,
reputation and stock
Report all questionable or improper activities to your supervisor, Director of
Marketing or Legal Department
Copyright© 2011 WeComply, Inc. All rights reserved.
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3/21/2017
Final Quiz
Copyright© 2011 WeComply, Inc. All rights reserved.
3/21/2017
Questions?
Copyright© 2011 WeComply, Inc. All rights reserved.
3/21/2017
Thank you for participating!
This course and the related materials were developed by
WeComply, Inc. and the Association of Corporate Counsel.
Copyright© 2011 WeComply, Inc. All rights reserved.