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The Two Deadly Internet Marketing Sins

By Internet Lawyer

Few things you can do raise red flags with the FTC like (a) unfair, deceptive, or fraudulent advertising and (b) predatory payment practices.

Unfair, Deceptive or Fraudulent Advertising

This type of advertising includes making unsupported claims about your product or service, and misleading endorsements and testimonials.

Unsubstantiated Claims.

Health and diet products are particular targets of both the FTC and the U.S. Food and Drug Administration (FDA). In fact, the FTC announced on January 4, 2007, that it had nailed four weight loss companies (Xenadrine EFX, CortiSlim, TrimSpa, and One-A-Day WeightSmart) for making unsubstantiated claims about their products.

“You won’t find weight loss in a bottle of pills that claims it has the latest scientific breakthrough or miracle ingredient,” said FTC Chairman Deborah Platt Majoras. “Paying for fad science is a good way to lose cash, not pounds.”

It is easy to understand that you don’t make claims that your product causes weight loss unless you have scientific proof to back it up.

Even if you would never lie, your affiliate marketers can paint a bulls-eye on your forehead by making false claims on your behalf.

The FTC doesn’t want false “miracle” cures being sold. It doesn’t care whether or not you are personally making the misrepresentations. The goal is to protect the consumer. If it takes shutting you down to prevent your affiliates from lying to the public, then so be it.

Federal Trade Commission Investigations

By Internet Lawyer

The Federal Trade Commission (FTC) uses three primary tactics to investigate your Internet marketing efforts: (1) Undercover Operations; (2) Civil Investigative Demands; and (3) Informal Inquiries.

Undercover Operations

Also known as a “sting,” an FTC undercover operation typically involves its employees posing as clients and buying your products and/or services offered via the Internet.

Unlike your normal client, the goal of the undercover operative isn’t to obtain what you sell. It is to decide if you’ve broken the law. How you conduct business in these particular transactions will likely determine whether or not the Federal Trade Commission decides to pursue a case against you.

Civil Investigative Demands

A Civil Investigative Demand (CID) is like a subpoena on steroids. Unlike a sting operation, the FTC is letting you know that you’re being targeted for investigation.

If you receive a CID, it may require you to answer written questions, produce a lot of documents, create written reports, and/or testify. To fight a CID, you have to go to federal court.

Informal Inquiries

The only thing “informal” about these types of communications with the Federal Trade Commission is that the requests are polite…but you’re still under the gun. Whether meeting face-to-face or talking by telephone, the FTC is in fact investigating you. If you refuse to cooperate, expect a CID to issue demanding you turn over the same documents, etc. that were “informally” requested.

Federal Trade Commission’s Bureau of Consumer Protection

By Internet Lawyer

Most Internet marketing cases are handled by the the Federal Trade Commission (FTC)  Bureau of Consumer Protection (BCP). The BCP deals with consumer issues involving unfair, deceptive, and fraudulent business practices.

There are seven regional Federal Trade Commission offices. The BCP works with each regional office to conduct investigations and to file lawsuits (more on this later).

The five BCP divisions most relevant to Internet marketing are:

1) Advertising Practices 2) Marketing Practices 3) Financial Practices 4) Privacy and Identity Protection 5) International 6) Enforcement.

If you’re doing business in the United States using the Internet, chances are the FTC has a legal basis for regulating what you do.

All it takes is a complaint by a consumer, a consumers’ rights organization, or even a

competitor, and suddenly the FTC is investigating your business to see if you have broken the law.

Here’s a recent example of an FTC action against Internet marketing practices. In November 2006, a company agreed to pay $50,717 to settle Federal Trade Commission claims that it violated the CAN-SPAM Act.

The company had sent out e-mail messages to consumers using an autoresponder. Unfortunately, spam-filtering software prevented the company from receiving opt-out/unsubscribe messages and the e-mails kept coming.

Because this had continued for more than 10 business days after the recipients asked the company to stop sending e-mails, the company violated the CAN-SPAM Act.

Michael Penland Makes 2007 Internet Marketing Predictions

By Internet Lawyer

Check out Michael Penland’s latest blog post: Two Predictions and Money Makers For 2007!

Penland analyzes where he sees things headed during the coming year in Internet marketing, both for video (Google, YouTube, etc.) and blogging.

The only caveat that I’d add is that the blogging prognostication needs to be tempered by recent Federal Trade Commission (FTC) developments with regard to buzz marketing. For more on that check out my column at FTC Cracks Down On Word-Of-Mouth Ads.

Wishing you a prosperous new year!