William Rothbard – Identifies Issues Affecting Merchant Processors During Merchant Acquirers’ Committee Webinar

William Rothbard - Identifies Issues Affecting Merchant Processors During Merchant Acquirers’ Committee WebinarSANTA MONICA, CA – Attorney William Rothbard, a recognized expert in online and direct response advertising who served as a former senior staff official and Attorney Advisor to the Chairman with the Federal Trade Commission, recently presented a fact-filled seminar on the latest legal issues affecting merchant processors. Rothbard’s in-depth analysis of FTC regulatory and prosecutorial trends is an invaluable source of advice for any online marketing executive to receive, with a number of particularly insightful tips to help combat the regulatory threat.

William Rothbard stressed the fact that payments industry exposure to FTC risk has reached an all-time high, both in terms of the political environment and increased regulatory scrutiny of the merchants it serves. According to him, primary industries receiving particular FTC attention include services to financially distressed consumers, free trial options, dietary supplements, business opportunities, and affiliate marketing. Another potential FTC risk, Rothbard indicated, arises from the systemic complexity of processing relationships where every player within the multi-leveled processing chain – Independent Sales Organizations (ISOs), payment facilitators, hosting payment providers, and the like – faces potential liability for questionable business practices of their merchant-clients. The past 10 years have seen more than 20 significant actions against processors, several resulting in multi-million dollar judgments. Rothbard emphasized that the only way for processors to mitigate their FTC risk is to be active rather than reactive in confronting potential legal risks presented by their merchants. Rather than wait for a high chargeback alert, he suggests, best practices need to be adopted right away to maintain regular checks on merchants’ marketing and billing practices, applying continuous diligence, skilled personnel and automated monitoring tools.

Negative option marketing and weight loss claims are two hotbeds of FTC enforcement activity that processors need to be particularly aware of in managing their merchant-related legal exposure. Given a bad name by scammers who have abused consumers with the practice, deceptive negative option plans have come under fire by the FTC and can subject violators to significant restitution and civil penalty judgments under the FTC ACT and the Restore Online Shoppers’ Confidence Act (“ROSCA”), enacted by Congress in 2010. Rothbard noted that under these statutes, “all terms must be clearly and conspicuously disclosed before the consumer submits billing information, the consumer must give express informed consent to the offer, and cancellation must be easy.” He emphasized that the FTC is now routinely seeking ROSCA civil penalties as well as redress for consumers in its negative option enforcement cases.

Weight loss products also present FTC minefields. The more specific and numeric a claim of weight reduction, the greater the FTC risk to the merchant and, in turn, to the processor. ”Disease treatment” claims, like reducing heart attack risk by lowering cholesterol, or treating diabetes, are also squarely in the FTC’s crosshairs. Rothbard explained the reasoning behind these concerns: “The FTC requires at least one controlled human clinical trial for any claim of weight loss or disease treatment to be valid. Claims must accurately reflect the clinical findings and unless the scientific proof is absolutely conclusive, cliché claims like ‘clinically proven’ will be aggressively attacked by the FTC and should be avoided.”

William Rothbard has over three decades of experience as a business litigator and advertising and regulatory law specialist. He counsels businesses on regulatory compliance in the areas of marketing, advertising, direct response and Internet law in addition to trademark and copyright matters. He negotiates and prepares licensing, business, marketing, talent, production, media, distribution and website agreements on behalf of his clients and represents them in federal and state deceptive advertising and unfair competition matters.

William Rothbard – Speaks At National Ingredient Association Conference

William Rothbard - Speaks At National Ingredient Association ConferenceSANTA MONICA, CA – William Rothbard, a prominent national attorney with over three decades of experience in advertising and marketing law, took part in the annual conference of the National Ingredient Association held in Los Angeles, California. In addition to attending the different sessions, he actively participated by delivering a presentation titled ‘FTC V. SUPPLEMENTS’, which addressed the latest Federal Trade Commission (FTC) enforcement actions on dietary supplement claims. Rothbard’s speech was created especially for the event, which featured a panel of industry leaders to discuss a variety of regulatory challenges facing the natural ingredients industry

During his presentation, Rothbard stressed the need for advertisements and product claims to be truthful and well-substantiated, and emphasized that ingredient manufacturers and suppliers can be liable for facilitating deceptive consumer advertising by their trade customers. To underscore his point, he referred to a $3.5 million settlement the FTC recently obtained against Applied Sciences, a dietary supplement ingredient manufacturer that was accused of supplying false information to its trade customers to use in promoting Applied Sciences’ products. Addressing his audience, Rothbard emphasized the need to rely on competent and reliable scientific evidence, including controlled human clinical studies, rather than customer anecdotes, subjective consumer surveys, and manufacturer’s sales literature, to substantiate ingredient claims.

William Rothbard offered valuable advice on the need to prepare and act according to the FTC’s latest compliance actions and guidance. One of the important tips he offered was to have at least one controlled human clinical study to strengthen manufacturers’ efficacy and safety claims, especially on products that contain multi-ingredient formulas. Finally, to help supplement suppliers “survive in a hyper-aggressive regulatory environment”, Rothbard explained the value of having expert counsel who understands FTC thinking and enforcement strategies to avoid the legal and financial consequences of becoming an FTC target.

Formerly an Advertising Attorney with the FTC who also served as Attorney Advisor to Chairman at the FTC, William Rothbard has nearly four decades of experience in advertising and marketing regulation and defense of companies and individuals in federal and state law enforcement proceedings. A graduate of the University of Michigan and the University of California Hastings College of Law, he also served as Senior Counsel to the U.S. Senate Judiciary Committee, Subcommittee on Antitrust, Monopoly, and Business Rights.

William Rothbard – On Avoiding FTC Actions: Presentation at Affiliate Summit West

William Rothbard - On Avoiding FTC Actions- Presentation at Affiliate Summit WestSANTA MONICA, CA – Former Federal Trade Commission attorney, William Rothbard, recently presented valuable tips on avoiding FTC actions to attendees at premier affiliate marketing conference Affiliate Summit West. His presentation, entitled ‘Tips from an FTC Pro: How to be Smart and Avoid FTC Hell,’ first clarified the practices that would cause a business or individual to be targeted by the FTC – namely deceptive or unfair advertising. After defining these terms, he then outlined the actions that the FTC can take, ranging from cease and desist orders to the dreaded ex parte (without notice) temporary restraining order where the entire assets of a business and its owners can be frozen and the business can be forced into receivership.

Substantiation is an imperative part of maintaining FTC compliance, according to Rothbard, which means all objective claims must be supported by “competent and reliable evidence”, while performance, efficacy, health, and safety claims, whether expressed or implied, must be supported by “competent and reliable scientific evidence.” Health claims for dietary supplements and other natural products, such as those made by POM Wonderful that famously ran afoul of the FTC, were counted among the agency’s enforcement priorities; others included free trial/negative option marketing, affiliate fraud and deception and mobile (SMS) marketing. Endorsements and testimonials are also closely checked for veracity and disclosure of payment to lay-endorsers.

The veteran FTC attorney, William Rothbard, also examined the legal definition of ‘clear and conspicuous’ for affirmative disclosures that are required to prevent an advertisement from being misleading. Rothbard warned that simply including a disclosure will not ensure compliance. Rather, the disclosure must be prominent, presented in easy-to-understand and non-contradictory language, and placed in an area that is both sure to be seen by the consumer and near the text that is being qualified. He noted that the FTC is even starting to “micro-regulate” the color, font and type size of disclosures in evaluating whether they meet the “clear and conspicuous” standard. Of vital importance, especially in this age of e-commerce, is proper use of ‘negative option’ or ‘free trial’ billing. Given a bad name by scammers that have abused consumers with the practice, deceptive negative option plans have come under fire by the FTC and can subject violators to significant restitution and civil penalty judgments under the FTC Act and the Restore Online Shoppers’ Confidence Act (“ROSCA”), enacted by Congress in 2010. Rothbard noted that under these statutes, “all terms must be clearly and conspicuously disclosed before the consumer submits billing information, the consumer must give express informed consent to the offer, and cancellation must be easy.” He emphasized that the FTC is now routinely seeking ROSCA civil penalties as well as redress for consumers in its negative option enforcement cases.

William Rothbard then delved into the meat-and-potatoes of everyday FTC compliance efforts. He named responsive customer service – particularly with respect to cancellations and refunds — anti-affiliate fraud policies and procedures, and clear privacy policy terms, including the right to prevent sharing of personal data, as “must haves” to achieve compliance. Affiliates and Affiliate Networks are, among other responsibilities, required to act within the guidelines of the anti-spamming act CAN-SPAM and avoid fraudulent, confusing, or incentivized marketing. Citing a $30 million judgment the FTC recently won against LeadClick, an affiliate network that was found liable for deceptive advertising by its “sub-affiliates,” he said networks would be well-advised to review their affiliate compliance postures to mitigate their own risk of becoming an FTC target. He stressed that networks and affiliates also can have “cross liability” for a merchant’s advertising not only through actual knowledge but also negligence and “willful ignorance” of a merchant’s deceptive advertising practices. “Be aware of the hyper- aggressive FTC landscape,” Rothbard concluded, “and consult expert counsel who thoroughly understands the FTC’s thinking and enforcement strategies, so you have the benefit of sound advice to help you avoid ‘FTC Hell.’”

William Rothbard is an accomplished Advertising Lawyer with over 35 years of experience in the field. After graduating from The University of Michigan and the University of California’s Hastings College of the Law, he served at the FTC as an Advertising Attorney and Attorney Advisor to the FTC Chairman, and later as Senior Counsel to the U.S. Senate Judiciary Committee, Subcommittee on Antitrust, Monopoly and Business Rights. In 1995 he established his own practice in Los Angeles, California, where he specializes in Advertising and Marketing Law, with particular focus on federal (FTC) and state regulation of the Direct Response and Interactive Advertising industries.