The Federal Trade Commission (FTC) enforces US consumer protection laws and protects consumers against “unfair and deceptive” marketing.
RM Warner’s lawyers work with parties under FTC investigation.
FTC Statutes & Regulations
- The 1995 Telemarketing Sales Rule (TSR) and its amendments
- The 2003 National Do Not Call Registry
- The Dot Com Disclosures
- The Native Advertising Guidelines
- Section 5 of the FTC Act (“unfair and deceptive marketing”)
The FTC Prohibits Telemarketers From:
- Offering free trials followed by automatic charges,
- Offering book or CD club memberships,
- Billing customers automatically,
- Soliciting phone calls from consumers by email or fax,
- Using customer account data that has already been acquired.
Other FCC and FTC rules for telephonic and electronic marketing:
- Predictive dialing systems must limit abandoned calls to three percent of dials.
- Automated dialing systems must ring a minimum of four times before ending the call.
- Telemarketers may not mask their caller IDs.
FCC Statutes & Regulations
Important laws for companies that engage in telephonic marketing campaigns:
- 1991 Telephone Consumer Protection Act (TCPA)
- 2003 National Do Not Call Registry (DNC)
The Federal Communications Commission oversees all telephone marketing in the United States and monitors compliance with the National DNC Registry. Most states also have their own DNC lists. Telemarketing companies are required to update their records monthly to reflect DNC Registries.
Telemarketers may not contact DNC registrants unless the registrant has done business with them within the last 18 months or have inquired about doing business with them within the last 3 months.
Charities and political organizations are exempted from the National DNC Registry requirements. Specifically, political campaign calls are protected by the First Amendment and aren’t subject to most DNC rules. Charities, however, must maintain an internal do not call list.
Quick Facts about FTC Regulations
- Section 5 of the FTC Act authorizes the FTC to investigate and punish unfair and deceptive marketing practices.
- Most FTC rules and regulations apply only to “commercial speech,” i.e. any statement that is used to market or sell a product or service.
- Reviews or testimonials on commercial websites must be provided by real people based on their actual experiences.
- The FTC rules do not apply to endorsements that are genuine, true, and uncompensated. However, it is still a good idea to get affidavits from anyone who provides you with an endorsement to prove that it was made gratis.
- Payments to reviewers who were unaware of any compensation at the time their reviews were made need not be disclosed.
- Reviewers who are in a business, employment, or familial relationship with the manufacturer or marketer of the product that they are endorsing need to disclose it, even if they paid full-price for the product. Simply listing your relationship on a profile page is an insufficient disclosure.
- A business isn’t necessarily responsible for endorsements of its products made by its employees, but should at least make efforts to inform them of FTC requirements.
- Reviewers who are given free or discounted products (including meals) to review need to disclose it, even if their reviews aren’t positive.
- Marketers who cherry-pick above-average customer experiences for their materials need to disclose that such results are not typical.
- All disclosures must be made in a way that is easy for an average reader to identify (e.g. not hidden on linked pages), understand, and associate with the claims in question.
- Video reviews and endorsements should include any necessary disclosures in the footage itself, preferably near the beginning of their runtime. Disclosures in a description field are insufficient.
- Although the FTC still hasn’t determined whether social media “likes” count as endorsements, it has prohibited services that offer to provide them for a fee. However, the legality of programs that provide “likes” in exchange for free or discounted products is an open question.
- Social media advertisements or promotions should be appropriately labeled within the applicable character limit, such as with #contest, #sweepstakes, #ad, #paidad, or #sponsored.
- Simply identifying affiliate links is an insufficient disclosure.
- Marketers and promoters are responsible for the statements and actions of any affiliates or influencers that they hire.