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.

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William Rothbard

William Rothbard has been a business litigator and advertising law specialist for more than 30 years. He has widespread experience counseling advertisers and representing them in state and federal unfair competition and deceptive advertising proceedings. Prior to entering private practice he was an advertising enforcement attorney with the Federal Trade Commission and an attorney adviser to the FTC Chairman. 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.