Quite a bit of confusion and concern have been caused in the affiliate marketing industry by an FTC press release titled “FTC Approves Affiliate Marketing Rule Regarding Use of Consumer Information.” (http://ftc.gov/opa/2007/10/affiliate.shtm) The title of this press release got quite a few hearts beating yesterday. On its face, it appeared that the FTC had approved new rules which would regulate the use of “consumer information” by affiliate marketers. One prominent industry blog even led with this: “The Federal Trade Commission made an announcement today regarding the use of consumer information by affiliate marketers.”
It’s hard to blame anyone for misunderstanding what appears to be a very clear headline. However, a read of the 157 pages of Federal Register material, linked at the FTC’s site under this story, leads to a very different conclusion. These rules don’t really affect those of us in the "affiliate marketing" space, but are instead aimed at the transfer of "eligibility information" between "affiliated" companies. While the FTC’s press release headline ("FTC Approves Affiliate Marketing Rule Regarding Use of Consumer Information") certainly seemed like this rule making was aimed squarely at us, a thorough read of the Federal Register makes it clear that this is not about "affiliate marketing" as we know and practice it.
I’ve received quite a few calls about this issue since yesterday, so in order to make everyone more comfortable, I’ve provide some of the specifics from the FTC’s new rules.
In the Rules, "affiliate" is defined as follows:
(b) Affiliate. The term "affiliate" means any company that is related by common ownership or common corporate control with another company."
And the rules are intended to cover "solicitations" by an affiliate of a company who has collected "financial eligibility information" on a consumer. For example, these Rules apply in situations where your bank transfers "eligibility information" to an "affiliated" (common ownership) insurance company, and then the insurance company uses that information to market insurance products and services to you.
Here is the definition of "solicitation":
(k) Solicitation. (1) In general. The term “solicitation” means the marketing of a product or service initiated by a person to a particular consumer that is—
(i) Based on eligibility information communicated to that person by its affiliate as
described in this part; and
(ii) Intended to encourage the consumer to purchase or obtain such product or service.
(2) Exclusion of marketing directed at the general public. A solicitation does not
include marketing communications that are directed at the general public. For example television, general circulation magazine, and billboard advertisements do not constitute solicitations, even if those communications are intended to encourage consumers to purchase products and services from the person initiating the communications.
(3) Examples of solicitations. A solicitation would include, for example, a
telemarketing call, direct mail, e-mail, or other form of marketing communication directed to a particular consumer that is based on eligibility information received from an affiliate.
You’ll note that a "solicitation" (which is what these Rules address) is narrowly defined as marketing "Based on eligibility information communicated to that person by its affiliate". As "affiliate" is narrowly defined as encompassing only companies with "common ownership or control," it really isn’t applicable to our world of "affiliate marketers." There is even a specific exclusion (shown above) that says that this doesn’t apply to solicitations to the "general public" which is precisely what we as affiliate marketers do.
This analysis is the result of a review all 157 pages of the Federal Register in regard to this matter. The Federal Register covers all the public comments and FTC discussion and analysis regarding these new Rules, and the Rules themselves. I hope you find this analysis helpful, and that it relieves some of the anxiety out there in the industry.
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Come back to the iLegal column every week as we get specific about the rules, regulations, laws and trends that affect the online advertising industry. Each week we discuss important legal issues, talk about how to avoid the pitfalls, and cover the breaking legal and regulatory advertising industry news.
Legal Disclaimer: Information conveyed in this column is provided for informational purposes only and does not constitute legal advice. These materials do not necessarily reflect the opinions of Digital Moses, and is not guaranteed to be complete, correct, or up-to-date. The column is provided for "information purposes" only and should not be relied upon as "legal advice." This information is not intended to substitute for obtaining legal advice from an attorney. No person should act or rely on any information in this column without seeking the advice of an attorney.
Mark Meckler is the General Counsel for UniqueLeads.com, Inc., and Unique Lists, Inc. Mark sits on the Information Technology and eCommerce Committee of the Association of Corporate Counsel, and is a member of the International Association of Privacy Professionals.
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