Overview of recent regulation, lawsuits and laws that impact online marketing. Compliance doesn’t have to kill conversions so we’ll discuss how to run a compliant campaign while still making money. Experience level: Intermediate Target audience: Affiliates/Publishers Niche/vertical: Compliance Sarah de Diego, Attorney, De Diego Law (Moderator) Jim Banks, CEO, Spades Media (Twitter @jimbanks) Susannah Booth, Senior Partner Manager, Union Square Media Vladimir Karetnikov, Media Buyer, Westwood Promotion Inc. (Twitter @westwoodpro) Tom Cohn, Partner, LeClair Ryan

1. Flogs, Farticles, Facebook, Fraud, FTC, oh
F%!*
Affiliate Summit East 2012, 2:00 – 3:00 p.m.
Moderator:
Jim Banks, CEO, Spade Media
Panelists:
- Sarah de Diego, Attorney, De Diego Law
- Vladimir Karetnikov, Media Buyer, Westwood Promotion, Inc.
- Susannah Booth-Winemiller, Senior Manager, Union Square
Media
- Tom Cohn, Attorney, LeClair Ryan

2. • Web Marketers Falsely Claim Endorsement by ABC, Fox
News, CBS, CNN, USA Today, and Consumer Reports, FTC Alleges
• FTC obtained federal court orders to temporarily halt allegedly deceptive
tactics of 10 operations using fake news websites to market acai berry
weight-loss products.
• According to FTC, defendants operate websites that are meant to appear as
if they belong to legitimate news-gathering organizations, but in fact the
sites are simply ads aimed at deceptively enticing consumers to buy the
featured acai berry weight-loss products from merchants.
• FTC complaints allege that these fake news sites have titles like “News 6
News Alerts,” “Health News Health Alerts,” or “Health 5 Beat Health
News.” Sites often include names and logos of major media outlets, such
as ABC, Fox News, CBS, CNN, USA Today, and Consumer Reports, and
falsely represent that the reports have been seen on these networks.
• http://ftc.gov/os/caselist/1023232/index.shtm

4. • By March 2012, a total of eight out of ten affiliate
marketers (including Intermark/ Copeac, sued for its
conduct as both network and affiliate) had settled actions
by the FTC and were ordered to stop using fake news sites
to market dietary supplements and other products.
• In these settlements, the affiliates also had to agree to:
– claim substantiation provisions for weight loss and other health-
related products, and
– monitor other affiliate marketers, should they ever operate as
an advertiser or a network.
– money judgments ranging from $143K to $2.7M, but were
partially suspended due to inability to pay.
• Copeac settlement: three individual defendants together
ordered to pay over $1.3 million.

5. • FTC announced that an operation that marketed acai berry
supplements, "colon cleansers," and other products using allegedly
fraudulent free trial offers and phony endorsements from Oprah Winfrey
and Rachael Ray will pay $1.5 million as part of a settlement. The money
will be made available for consumer refunds.
• The case against is part of the FTC's ongoing efforts to protect consumers
from fraudulent internet marketing, as well as false and misleading health
claims.
• The settlement order bans the defendants from so-called "negative-
option" sales, such as continuity plans and free or introductory price trial
offers, in which consumers pay nothing up front or only a small fee to
receive a product, but are then automatically charged a higher price
unless they take steps to cancel or return before end of trial period.
• The settlement order also imposes tough monitoring requirements re:
using affiliate marketers – prior review/approval of all content;
terminate/cutoff payment to any making deceptive claims.
• http://www.ftc.gov/os/caselist/1023028/index.shtm

7. + =

8. There’s no actual mom in [Insert your
city] that is making $7,487 per month part-time

9. Example: Recent Non-Compliant Page

10. Example: Upsell with False Info
- Fake expiration date creates false urgency

11. Example: Name Dropping Exit Pop Up

12. Not so “Free” Trials
FTC v. Jesse Willms
• Willms allegedly used bogus "free" product offers that deceived
consumers in the United States and other countries and charged them for
products and services they did not want or agree to purchase.
• The settlement order, permanently bans Jesse Willms and his companies
from using "negative-option" marketing, a practice in which the seller
interprets consumers' silence or inaction as permission to charge them.
• Judgment of $359 million that will be suspended upon Willms's surrender
of bank account funds and proceeds from the sale of his house, personal
property, and corporate assets, including a Cadillac Escalade, fur coat, and
artwork.
• "The fact that almost four million consumers fell prey to the lure of these
'free trial' offers is a stark reminder that 'free' offers can come at a huge
price," said David Vladeck, Director of FTC's Bureau of Consumer
Protection. "The FTC has stopped about $1 billion in online marketing
fraud during the past two years by shutting down operations like this. But
consumers still need to beware, because scam artists are constantly
coming up with new ways to deceive people online.“

13. • Ask yourself: are you just simply making claims
up? If you answered yes, STOP.
• Avoid trouble niches: weight loss, skin care, and
biz op and most of your problems will vanish.
• Don’t state actual facts and figures unless they
are substantiated.
• If an offer appears sketchy it probably is.
• There are tons of legitimate advertisers, agencies
and networks that have legitimate products and
compliant offers - look around Affiliate Summit
and find some!

14. • Reach out to the advertiser or network for
legitimate testimonials and insist on affidavits so
you have proof.
• Ask for proof that the product or service
performs as claimed.
• Ask – do you have the right to use that
name, image, logo?
• Just use the facts.
• Be persuasive, but not a liar.
• Write good copy.
• Direct link, don’t make your own landing pages.

15. Be Creative!
VS

17. • All the Rules Still Apply
–False Advertising
–Endorsements
–Testimonials

19. State of Washington v. Adscend Media, LLC.
- Facebook and Washington Attorney General both
sued Adscend for clickjacking/likejacking
- Settled by entering into a consent decree with AG
- Agreed: ““the term “commercial electronic message”
shall include but not be limited to social networking
communications under circumstances in which an
electronic message is not delivered to an “inbox,” but
rather to locations on social networking sites such as
Wall posts, News Feeds, homepages, Page suggestions
and similar destinations”

20. Settlement Terms:
• Cannot use false or misleading headers or subject
lines, won’t conceal the sender’s identity;
• Messages must include “clear and conspicuous”
identification that its messages are
advertisements and solicitations, especially if
appear to be from a “friend”;
• Maintain an affiliate monitoring program with
daily monitoring;
• Pay $100,000 to state for attorney’s fees.

21. • Advertisers don’t pay even for legitimate
traffic;
• Offers are pulled completely;
• Advertisers don’t want to try affiliate
marketing = less good offers to choose from;
• Affiliate marketing seen as a scam;
• Negative publicity;
• More regulation by the Feds and States.

22. Jim Banks, CEO, Spade Media
Jim.Banks@spadesmedia.com
Sarah de Diego, Attorney, De Diego Law
Sarah@dediegolaw.net
Vladimir Karetnikov, Media Buyer, Westwood Promotion
Vladimir.Karetnikov@gmail.com
Susannah Booth-Winemiller, Senior Manager,
Susannah@unionsquaremedia.com
Tom Cohn, Attorney, LeClair Ryan
Thomas.Cohn@leclairryan.com