Consumer and Business Education

Transcription

1 Consumer and Business Education June 12, 2008 Richard L. Cleland Assistant Director Gregory W. Fortsch Senior Attorney Division of Advertising Practices Federal Trade Commission

2 Consumer Education Consumers who are educated about business practices are less likely to be injured by deception. Consumer education materials can be prepared based upon knowledge obtained during investigations. 2

3 Consumer Education We have prepared printed materials and Internet pages on numerous subjects, including: credit identity theft online shopping spam buying a franchise telemarketing, and other subjects 3

4 Getting the Message Out We use a variety of methods to get consumer education messages out to the public. 4

5 FTC Website Consumer education materials are available on the FTC website. 5

6 Press release ad-ons When the FTC issues a press release about a case, we may add a link to a consumer education brochure related to that case. Example: When we issue a press release in a case involving health claims, we attach a link to educational materials that remind consumers to be skeptical about health claims that look too good to be true. If a newspaper runs an article about the case, it often will also talk about the FTC s consumer education materials. 6

7 Teaser Sites We also have prepared teaser internet sites. These look real but are instead designed to warn consumers about common frauds. 7

8 Teaser sites East West North With FatFoe Eggplant Extract, you can kiss your dieting days goodbye. Feast on your favorite foods and lose up to two pounds a day st Qtr 2nd Qtr 3rd Qtr 4th Qtr Take this quiz and find out if FatFoe is right for your unique metabolism. 8

9 FatFoe is not a real weight loss product. The ad to which you responded is a fake, posted by the FTC to warn consumers about diet rip-offs. 9

10 Getting the Message Out Very important consumer education messages have dedicated websites. EXAMPLE: is a site with information about safe use of the internet. 10

11 Postcards, fans, magnets, and bookmarks We print summary consumer education messages on low-cost tangible items, like postcards, fans, magnets, and bookmarks. These materials are distributed at community events nationwide. 11

12 Postcards, fans, magnets, and bookmarks These low-cost items contain the core information that we want to tell consumers. They always direct the consumer to an FTC operated website for more information. Example: The OnGuard Online bookmark lists 7 practices for safer computing and directs consumers to for more information. 12

13 Business Education We also prepare materials to advise businesses about how we interpret the FTC Act as it applies to different areas of commerce. We have business education materials about: online advertising dietary supplement advertising how to comply with the FTC s telemarketing sales rule how to advertise consumer credit and many other subjects. 13

14 Getting the Message Out We post business education materials on the FTC s Internet site. We also send FTC staff to cities across the U.S. to talk to businesses about complying with the FTC Act. 14

15 Business Briefcase In addition, our consumer and business education materials are now available on a CD-rom called the Business Briefcase. 15

16 Business Briefcase 16

17 Business Briefcase We have distributed more than 15,000 of these discs so far. 17

18 Self-Regulation June 12, 2008 Richard L. Cleland Assistant Director Gregory W. Fortsch Senior Attorney Division of Advertising Practices Federal Trade Commission

19 Encouraging Business to Regulate Itself Consumers are better protected when businesses believe that they must regulate their own conduct. 19

20 Self-Regulation Self-regulation often works faster and is more flexible than government regulation. Effective self-regulation reduces the need for government action. 20

21 Self-Regulation The FTC promotes self-regulation by businesses. We meet with industry organizations to encourage self-regulation. We give feedback on proposed selfregulatory standards, when requested. We give public credit to industries that engage in appropriate self-regulation. 21

22 Self-Regulation When a business does not comply with industry self-regulatory guidelines, the industry can refer the matter to the FTC. We take such referrals seriously. 22

23 Self-Regulation Self-regulation should be designed to promote consumer interests. It should not be designed to exclude new competitors, raise prices, or prevent useful innovation. 23

24 Self-Regulatory Rules Tools for self-regulation include: Education of members Adoption of ethical standards or identification of best practices that protect consumers from deception Complaint resolution Certification/Trustmarks 24

25 Business Organizations That Use Self-Regulation Industry Coalitions and Trade Associations Examples: The National Advertising Division (NAD) of the Better Business Bureau US alcohol advertisers Direct Marketing Association Electronic Retailing Association 25

26 Business Organizations That Use Self-Regulation Consumer help organizations The Better Business Bureau TRUSTe Square Trade Many individual companies 26

27 Example: Self-Regulation by Coalitions and Trade Associations The National Advertising Division (NAD), funded by major US advertisers, rules on complaints that national advertising is deceptive or unsubstantiated. It handles several hundred cases per year. The Electronic Retailing Association, representing companies who direct offers to consumers through television, radio, and the Internet, rules on complaints about the truthfulness and accuracy of ads in these media 27

28 Example of a Consumer Help Organization: the Better Business Bureau The BBB is a national organization of US businesses. Members promise to follow the BBB Advertising Code, which sets forth requirements for truthful, non-deceptive advertising. Local BBB organizations accept consumer complaints, forward them to the business, and monitor whether the business responds to the complaint in a satisfactory matter. 28

29 Example of Effective Self-Regulation: the Better Business Bureau If the business has a record of not responding appropriately to complaints, the BBB can give a business an unsatisfactory rating. Consumers can and often do check with the BBB to see if an organization is a member in good standing. 29

30 Examples of Trustmark programs TRUSTe is a nonprofit program that certifies web site privacy policies. If a site s policies for handling confidential consumer information are acceptable, it can display the TRUSTe seal. TRUSTe also monitors practices and resolves consumer complaints. 30

31 Examples of trustmark programs TRUSTe is a nonprofit program that certifies web site privacy policies. If a site s policies for handling confidential consumer information are acceptable, it can display the TRUSTe seal. TRUSTe also monitors practices and resolves consumer complaints. 31

32 Examples of Trustmark Programs BBB Online offers two trustmark programs for online businesses. Companies that want to display BBB Online s reliability logo must adhere to advertising and online business practice standards. Businesses that want to display BBB Online s privacy seal must comply with standards for protecting consumer data. 32

33 FTC Role Effective self-regulation by businesses reduces, but does not eliminate, the need for government intervention. The FTC works with industry to ensure that self-regulatory programs protect consumers without impeding competition. 33

34 Frontier Advertising Issues June 12, 2008 Richard L. Cleland Assistant Director Gregory W. Fortsch Senior Attorney Division of Advertising Practices Federal Trade Commission

35 Word-Of-Mouth Marketing When are disclosures required? When do you need substantiation for representations made in blogs, public relations material, and websites? Are material connections adequately disclosed? 35

36 Product Promotion by Consumers The FTC does have concerns where consumers are speaking on behalf of marketers and that fact is not disclosed. 36

37 Commercial Alert Petition In late 2005, the FTC received a petition from Commercial Alert requesting that we investigate companies engaged in buzz marketing. The concern was that some companies were using endorsers to promote their products without the endorsers disclosing that they were being paid by the companies to do so. 37

38 The Bottom Line Old laws still apply in these new settings. The same truth in advertising standards apply to all types of marketing, including 38

39 Viral Marketing 39

40 Stealth Marketing 40

41 Blogs (and Flogs) 41

42 The Sony PSP Flog In December 2006, bloggers discovered that a blog created by alleged fans of the Sony PSP was in fact created by Zipatoni, a public relations agency hired by Sony. The video blog pretended to be the work of Charlie, an amateur hip-hop artist and contained a video posted on YouTube. Sony admitted that the blog was an advertising vehicle and it has been removed. 42

43 Mobile Marketing FTC has held a series of town hall meetings on new and evolving technologies, including mobile devices and marketing/advertising on those devices In early May 2008, a town hall on advertising on mobile devices was held to gather information and hear industry and consumer perspectives Consumer protection issues associated with evolving use of mobile phones/devices discussed 43

44 Product Placement Product placement in entertainment programs has become common When are disclosures required? What is representation? 44

45 Case Studies June 12, 2008 Richard L. Cleland Assistant Director Gregory W. Fortsch Senior Attorney Division of Advertising Practices Federal Trade Commission

46 Case Studies Hypotheticals (handouts) Omega Ultimate Health Actual advertisements Coppertone Gerber Klondike Wonder Bayer Kentucky Fried Chicken (KFC) 46

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