Presentation by Pete Wellborn and Bennet Kelley at Affiliate Summit West.

1. OPRAH, FLOGS & THE FTC HOT TOPICS 2010 Pete Wellborn Wellborn, Wallace & Woodard, LLC www.wellbornlaw.com Bennet Kelley Internet Law Center www.internetlawcenter.net

2. AFFILIATE SUMMIT WEST 2010 LAS VEGAS, NEVADA OPRAH, FLOGS & THE FTC: HOT TOPICS 2010 Affiliate Programs

3. AD CONTENT TRUTH, PROOF & FAIRNESS

4. TRUTH IN ADVERTISING * * * GENERALLY * * * PROHIBITS “DECEPTIVE” ADS AND “UNFAIR” ADS F T C

5. TRUTH IN ADVERTISING * * * GENERALLY * * * BRICKS & MORTAR = .COM F T C

8. False claims OR

9. Unsubstantiated claims.F T C

11. Demonstrations

12. Refund Policies

13. Ads Directed at Children

14. Environmental Claims

15. “Free” Stuff

16. Jewelry-Related ClaimsF T C

20. Ad Agencies (Negligence Standard)

21. Site Designers (Negligence Standard)

22. Affiliates (Negligence Standard)

23. Individuals (Personally Involved) “Negligence Standard” = knew or should have known that the ad included false or deceptive claims. F T C

25. MLM/Pyramid Scheme Rules/Laws

26. Truth in Lending Act

27. Fair Credit Billing Act

28. Fair Credit Reporting Act

29. Equal Credit Opportunity Act

30. Electronic Fund Transfer Act

31. Consumer Leasing Act

32. Mail/Telephone Order Merchandise Rule

33. Negative Option Rule

34. 900-Number Rule

35. Telemarketing Sales Rule

36. Written Warranty Rule

37. Etc. Etc. Etc.F T C

39. Consumer Point-of-View

40. Proof

41. Careful: Disclaimers/ Disclosures

42. Careful: Endorsement ClaimsF T C

43. OUR FOCUS TODAY Testimonials & Endorsements “Free” Stuff “Flogs” (Fake Blogs) Proof of Claims

44. TESTIMONIALS & ENDORSEMENTS

45. TESTIMONIALS & ENDORSEMENTS FIRST RULE: Accurate SECOND RULE: With Permission (“Right of Publicity”)

48. Same Claim-Standard as SellerGuides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR Part 255 )

50. Same Claim-Standard as Seller

51. Endorsers Must Continue in BeliefGuides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR Part 255 )

53. Same Claim-Standard as Seller

54. Endorsers Must Continue in Belief

55. Statements Presented in ContextGuides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR Part 255 )

57. Same Claim-Standard as Seller

58. Endorsers Must Continue in Belief

59. Statements Presented in Context

60. Claimed Use: Bona Fide and Ongoing Guides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR Part 255 )

63. Same Claim-Standard as Seller

64. “Actual Consumer” Must Be Just ThatGuides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR Part 255 )

66. Actual Exercise of Expertise/Opinion

67. Claims Must Be True As Stated Guides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR Part 255 )

69. Must Be True “Expert” OpinionGuides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR Part 255 )

71. Rule Often Applies Where Endorser Is Not Celebrity or Well-Known Expert.

72. “Connection” May Be Money or Publicity.Guides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR Part 255 )

73. “FLOGS” (FAKE BLOGS) MATERIAL CONNECTIONS RULE APPLIES TO BLOGS AND FLOGS (EXAMPLES)

75. “Regular Price” means same price, in the same quality, quantity, and service level at which the seller has sold the product in that geographic market or trade area for a reasonably substantial period of time.

76. Ad must be clear. All obligations and conditions set forth at the outset (not the end).

77. Seller must “cut off” deceptive resellers.

79. “Reasonable” = Content + Presentation + Context + Qualification

80. Amount and Type of Substantiation/Proof - Type of Product (Health Products = High Level) - Type of Claim - Benefit of Truthful Claim - Cost of Substantiation - Consequences of False Claim - What Experts in Field Say Is Reasonable

82. Amount and Type of Proof Varies (“Anecdotes not enough”)

83. Quality of Evidence (“Competent and reliable”)

84. Totality of Evidence (“Can’t ignore unfavorable”)