Issues

MasterCard/AdvanceConsent | Endorsements & Testimonials | Streamlined Sales Tax | Net Neutrality | Behavioral/Tailored Advertising | Self-Regulation | Other Issues

MasterCard/Advance Consent/Aggressive Sales Tactics

Marketing and sales techniques involving continuity programs, automatic renewals, trial offers, or pre-notification plans - all of which are arrangements based on a consumer's "advance consent" - are long standing and legitimate practices that benefit consumers and business alike. Recently, similar practices have been utilized by companies currently under investigation by the Senate Commerce Committee. This has resulted in additional scrutiny for several practices (including, but not limited to advance consent marketing) by state attorneys general, the FTC, private companies and the Senate Commerce Committee. Please see ERA’s dedicated page on this issue. 

Endorsements and Testimonials

The Federal Trade Commission (FTC) has made changes to its Guides Concerning the Use of Endorsements and Testimonials that are far less burdensome to honest advertisers than those originally proposed. The FTC has indicated a willingness to consider disclaimers as part of evaluation of the net impression the advertisement creates. There is no absolute requirement to provide an average result for the success of a product in practice, although such information is welcome, and competent and reliable scientific evidence is still required for many claims. It is now clear that new media endorsers must disclose that they have given a free product or other compensation to a reviewer where such compensation could materially affect the credibility of the review. It is also clear that an advertiser may have liability for the statements of an endorser if they have failed to implement sufficient monitoring and training.
 

ERA’s work with FTC and on the Hill played an important role in mitigating these changes. We have submitted detailed comments to the FTC, which you may view below.

In addition, in December 2009, ERA held an educational series entitled ERA Spotlight Sessions: Endorsements and Testimonials, to help the industry prepare for the changes.

Streamlined Sales Tax

Some states have attempted to levy tax on Internet, television and catalog retailers without any physical presence in that state. Because of the complexity of state tax systems and the burden it creates, the Supreme Court currently does not allow this kind of collection without express authorization from Congress. Several states have fought to encourage this authorization. State Lobbyists, free of many of the ethical and reporting requirements corporate lobbyists must obey, have pushed this agenda as a way to increase state revenues. However, we believe if their efforts are successful the consequences would be dire for direct marketers. It will be extremely difficult for new entrants into the industry to comply because the tax codes are so complicated. It would also result in a great deal of lost revenue for larger companies. Currently, we are working to prevent these changes from taking effect.

Net Neutrality

Some Internet Service Providers (ISPs) want to companies pay more in order to improve the speed and quality users experience on particular websites. While at first it may not sound harmful, in the long run this could drastically increase costs for anyone selling online. It could also decrease the amazing potential the Internet presents for new products and companies. When ISPs allow one company to prioritize traffic to their website, they implicitly slow traffic to every other website. Additionally, this prioritization creates inefficiencies in the movement of information across the Internet. Overall, consumers will get a lower quality experience and companies will be forced to pay high prices for reasonable service. ISPs claim they would only do this to manage the increasing traffic on the Internet, but they could easily solve that problem by increasing capacity. We are working to create incentives for ISPs to keep the Internet free of interference and to allow the Internet to develop as a marketplace for ideas and goods.

Useful Links:

Behavioral/Tailored Advertising

Some internet content providers, like online publishers or retailers, want to customize the users experience by placing more relevant advertisements on the pages they visit. There are different technological variations, but essentially companies are using existing technologies, like “cookies” to identify that a user has a particular interest in a certain product or service. Unfortunately, ISPs have tried to use much more invasive new technology called Deep Packet Inspection (DPI), which is sometimes confused with Behavioral or Tailored Advertising. Unlike Behavioral or Tailored Advertising, DPI involves opening the content part of information that is sent over the Internet in order to add advertisements. On the Hill and at the relevant agencies, we are working to distinguish these technologies and to insure that content providers retain their freedom to advertise.

Self-Regulation

ERA is also committed to working as an industry to protect consumers. The Electronic Retailing Self-Regulation Program (ERSP) is an excellent example of how effective industry self-regulation can be. The program, administered by the Council of Better Business Bureaus, has helped to take false claims and scams off of the air and the Internet. Learn more about ERSP.

Other Issues