A New Kind of Sellers Beware

[IfrahLaw]

I just wrote an article on a recent FTC settlement with an acai berry diet pill marketer (Central Coast Nutraceuticals). Something I found interesting and potentially troubling is a requirement that the company police its affiliate marketers. This looks to be a new trend with the FTC.

Here is a link to the article: FTC Enlists Surprising Watchdogs to Police Marketers’ Practices · FTC Beat

 

[Reversal Magnet]

Acai Berry pill pushers are pricks and get what they deserve.
Hate the fucking product.

 

[stefanie]

Acai Berry pill pushers are pricks and get what they deserve.
Hate the fucking product.

Except that it's not just acai. He also pointed out the Legacy Learning example from a while back. They sell instructional DVDs, and thanks to affiliates they're stuck abiding by a similar set of rules:

Under the proposed administrative settlement, Legacy Learning and Smith will pay $250,000. In addition, they have to monitor and submit monthly reports about their top 50 revenue-generating affiliate marketers, and make sure that they are disclosing that they earn commissions for sales and are not misrepresenting themselves as independent users or ordinary consumers. Legacy Learning and Smith also must monitor a random sampling of another 50 of their affiliate marketers, and submit monthly reports to the FTC about the same criteria.

The issue of liability for affiliate practices should get really interesting over the next few years, especially given how hard it can be to actually figure out what some affiliates are doing (the ones cloaking, using a bazillion redirects, keeping their pages from getting indexed, etc). At the same time, some states have been talking about requiring any kind of computer/internet-related investigation to fall under the heading of "private investigation" work, which requires certification in most states (California's requirements are particularly insane). It seems like everything is headed in the direction of making it much harder to operate a large-scale affiliate program.

The legal team for one program I work with is already super nervous about the affiliate program. They get really upset when an affiliate uses slightly misleading language because they're concerned that paying the affiliate for leads generated with that language (especially when the company is aware of it) represents a huge potential liability for them. Unfortunately, pretty much every network replies to those concerns with some variation of, "All affiliates do it; we can't hold that against them."

Another company I worked with a year or so ago ultimately decided not to build up an affiliate program because they had already been through enough with the AG and affiliates terrified them. It took all of 5 minutes to find affiliates on similar offers using the same forbidden language that had caused legal headaches for them before (the phrase "pennies on the dollar" was one of them).