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Affiliate Marketing Garners FTC’s Concern

Jon Leibowitz entered the position of Federal Trade Commission chairman with three priorities: privacy, poverty and health. According to FTC Northeast Region Director Leonard Gordon, who spoke to a packed conference room at the offices of marketing and advertising firm Venable LLP yesterday, the FTC is focused on these via three fronts: litigation, regulation and consumer education.

The first two, understandably, make interactive ad people nervous. However, he noted that the threat of regulation and/or legislation encourages industries to act in their own interests — e.g., self-regulate — something the Interactive Advertising Bureau and the Performance Marketing Association are taking to heart.

Online affiliate marketing has caught the commission’s eye, Gordon said, as it’s a space that has exploded — and with it many deceptive campaigns that have left the FTC less than pleased.

However, Gordon suggested that the FTC is going to first go after advertisers that put consumers at risk: false cancer cures, dangerous drugs and misleading health claims. On the poverty front, initiatives are particularly aimed at protecting those effected by the recession from being taken advantage of by con artists through mortgage, work-at-home and debt-reduction scams.

In particular, the agency is concerned with improving enforcement on negative option marketing: free-now, cancel-later type programs that lead to unauthorized billing. Also, affiliate marketing involving fake blogs — “flogs” — or fake news articles — yes, “farticles” — were a growing source of FTC apprehension.

The FTC initiates investigations based not only on internal searches but also Better Business Bureau complaints and grievances spelled out by competitors. But the question remains: Who is ultimately responsible for deceptive claims made by an affiliate?

Gordon said the FTC wouldn’t rule out investigating both the affiliate and the primary marketer, as both should have responsibility for claims an affiliate makes. The primary marketer should be aware of what its affiliates are propagating and compared it to binding ad agencies making deceptive claims and their clients.

However, the FTC is examining the entire food chain, as Gordon noted that the online space gets quite complicated with ad networks and exchanges and the numerous other players in the space. An attendee noted that it seemed that merchants were feeling the brunt of affiliate’s bad behavior.

by Gavin Dunaway

  

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