Ringtones Survival Guide

Posted on December 20, 2007

In this week’s Trends report, we introduce the notion of affiliate accountability, not that affiliates have thus far in their existence acted without accountability, but for reasons both valid and not, affiliates have, in many circles, garnered a reputation as a group that often acts with seeming impunity and without regard to the wishes of the brands they represent. A discussion on whether that actually sums up the situation or not, misses the main point, that the affiliate marketing industry faces scrutiny and pressure almost unlike any ever seen. As mentioned, the situation today mirrors closely that seen throughout 2003 and 2004, where each state began to adopt its own legislation for the proper practice of email marketing. The difference between the rise of state-by-state email legislation which fortunately resulted in federal legislation and the current state level inquiries comes down to money. In its first "agreement," Florida scored one million dollars; that kind of money only invites other states seeking for ways to bolster their often underfunded state legal coffers. Imagine the feeding frenzy that could occur when other states decide to try and go after marketers, and given with whom the Florida AG came to an understanding, i.e., a network, individual affiliates might once again think that they will fly under the radar. If you think that, you are making a grave mistake, because as an independent contractor, you bear the responsibility for your actions, not the network.

We have two goals with this article – for all those doing Internet marketing to understand the severity of the current investigation – it’s serious and just beginning – and to help anyone marketing online – especially to stay out of trouble. Below, we present our Ringtones Survival Guide or more broadly Mobile Subscription Marketing Survival Guide. The problem with trying to come up with a guide has to do with the fact that multiple stakeholders all have an idea of what they think constitutes proper marketing. With mobile subscriptions, marketers must abide by not just federal guidelines, but also newly constructed state guidelines, best practices from the leading mobile trade organization, and finally guidelines in place by for profit companies – the FTC, Florida Office of the Attorney General, Mobile Marketing Association, and Google. The future still looks bright for mobile subscription marketing, but the days of easy money and marketing without consequence have come to a close.

Disclosure: the below does not constitute legal advice, but it could help put you on the right path. Please see the hyperlinks to the original document found in Section 2, and if you have any questions, it is advised to seek legal counsel with a familiarity in this space.

Section 1 – Summary
Here we distill the documentation from the four major stakeholders. Call it the Cliff’s Notes version of what you need to know and take into consideration.

Free – don’t use it, don’t buy on it, because it will simply invite headaches. No other word undergoes as much scrutiny, and the same applies for anyone trying to make money leveraging it. Now, for the softer version, certain offers, such as Jamster do meet the guidelines for free, but for the vast majority, if not all, of the subscription programs, stay away from anything to do with free – in banners, keywords, in ad text, landing page text, etc.
Deceptiveness – ask yourself a simple question, "Are you trying to be sneaky?" If you hesitate at all in answering, the answer is yes. Others call it the sniff test. Does it look like you’re trying to hide something. What would someone without much sophistication think? What would a judge think if examining your page(s)?
Pricing / Type of Service – "Clear and conspicuous" is a phrase used again and again in the literature from the FTC, to the Florida AG, to Mobile Marketing Association. It plays hand in hand with the notion of deceptiveness. People should be able to see as part of the reading the call to action any material information that might influence their decision whether to go through with the transaction, one of the biggest being price. If there is a cost, it should be clearly associated with the offer itself, and if that cost is one-time, recurring, charged to their phone bill, etc., that too must be in an obvious and logical location (the bottom of the page, in a corner, and/or in a font that matches the background doesn’t count as obvious). Put the price on every page, including carrier landing pages.
Terms and Conditions – not just enough to be present, users must clearly indicate their acceptance of the terms before entering any personally identifiable information; in addition, they cannot be prechecked, and a link to the terms and conditions should be available any time the words are mentioned and on every page. Clicking on that link must take the user directly to the terms and not to some intermediate page that would discourage the reading of the terms. At the very least, before submitting any information, such as phone number, users need to understand what will come next, i.e. that they will receive a PIN code and be shown the providers terms to accept.
Age Requirement Disclosure – Florida requests language requiring that the service cannot be used by anyone under the age of 18. There is little doubt that people under that age have and will probably continue to subscribe to these services, but signing up for a subscription service represents entering into a binding legal agreement. Those under the age of 18 cannot do so without parental consent, so the best advice is to make this disclosure standard and not exclusive to Florida, as it is likely to be adopted, if not already required, by other states as well as the content providers themselves.
Check with your account manager and affiliate networks’ compliance department – this is some of the best advice. Your account manager wants – they need – you to succeed. The major networks now all have a compliance department. Be smart and make sure that your account manager and their compliance team have a copy or link to every landing page you are running and that they have approved them. Running unapproved pages is once again inviting trouble.

Section 2 – Guidelines and Recommendations by Stakeholder
In this section we provide more in depth information starting from the top, the federal government on down to the requirements from an individual company, Google. Most of the language below comes from their websites, although in many cases we provide only text deemed directly relevant, which, especially in the case of the Florida agreement, means only a portion of the full text. In the case of the Mobile Marketing Association’s best practices, much of their recommendations were used in crafting the Florida Agreement, and as such, the bullet points are listed instead of the full text.

FTC – Advertising and Marketing on the Internet: Rules of the Road
http://www.ftc.gov/bcp/conline/pubs/buspubs/ruleroad.shtm

The Federal Trade Commission Act allows the FTC to act in the interest of all consumers to prevent deceptive and unfair acts or practices. Advertising must tell the truth and not mislead consumers. A claim can be misleading if relevant information is left out or if the claim implies something that’s not true. Disclaimers and disclosures must be clear and conspicuous. That is, consumers must be able to notice, read or hear, and understand the information. Still, a disclaimer or disclosure alone usually is not enough to remedy a false or deceptive claim. Regarding the use of the word free – all such offers must be made with extreme care so as to avoid any possibility that consumers will be misled or deceived. (For more on "free" see the next paragraph.)

FTC GUIDE CONCERNING USE OF THE WORD “FREE” AND SIMILAR REPRESENTATIONS
When making "Free” or similar offers all the terms, conditions and obligations upon which receipt and retention of the "Free” item are contingent should be set forth clearly and conspicuously at the outset of the offer so as to leave no reasonable probability that the terms of the offer might be misunderstood. Disclosure of the terms of the offer set forth in a footnote of an advertisement to which reference is made by an asterisk or other symbol placed next to the offer, is not regarded as making disclosure at the outset. Offers of "Free” merchandise or services which may be deceptive for failure to meet the provisions of this section may not be corrected by the substitution of such similar words and terms as "gift”, "given without charge”, "bonus”, or other words or terms which tend to convey the impression to the consuming public that an article of merchandise or service is "Free”. No "Free” offer should be made in connection with the introduction of a new product or service offered for sale at a specified price unless the offeror expects, in good faith, to discontinue the offer after a limited time and to commence selling the product or service promoted, separately, at the same price at which it was promoted with the "Free” offer. http://www.ftc.gov/bcp/guides/free.htm

Florida Office of the Attorney General
According to Attorney General McCollum, "Consumers in Florida and throughout the nation have long been victimized by Internet marketing that promises one thing and delivers another. His newly created and funded task force, "will be instrumental in identifying problematic trends in the industry and working towards solutions that will hold the industry and its players responsible for their practices and provide remedies for our citizens.” His office wants to "set new standards in the industry as to Internet marketing and advertising and that their agreement will serve as a model for the way cell phone content will be marketed online."

Main points of the Assurance of Voluntary Compliance:
http://myfloridalegal.com/webfiles.nsf/WF/KGRG-78QMWR/$file/Azoogle-AVC10-31-07.pdf

A. Defining “Clear and conspicuous” or “clearly and conspicuously” – a statement, representation, claim or term being conveyed is readily noticeable and reasonably understandable by the persons to whom it is directed.
Factors in determining whether a statement, representation, claim or term, is clearly and conspicuously disclosed:

sufficient prominence in terms of size, placement, color,contrast, duration of appearance, sound and speed, as to be readily noticeable and reasonably understandable by a person to whom it is directed;
presented to the person(s) to whom it is directed in a coherent and meaningful sequence
contradictory or confusing in relation to any other representations, statement, claim, or term being conveyed
abbreviations if used are commonly understood by consumers acting reasonably under the circumstances
language and terms used are free of technical or legal jargon and are commonly understood by consumers acting reasonably under the circumstances
in close proximity to the representations, statements, claims, or terms it clarifies, modifies, explains, or to which it otherwise relates
presented in a place where consumers cannot miss seeing it
presented in such a way as to be free of distractions
level of scrolling needed to view any disclosure

B. Free – conspicuously state that the free item may be received by a consumer pursuant to his or her authorization of billing for a paid subscription plan, the price of the plan, and its term.

C. Carrier Availability – conspicuously discloses that the content is not available through all carriers and clearly and conspicuously disclose for each type of content, the carriers that support each type of content being advertised.

D. Phone Compatibility – conspicuously discloses that the content is not available on all phones and discloses in close proximity thereto thespecific makes and models for which the content is available.

E. Cross Promotions – cannot deliver ads to phones via text messaging, e-mail or otherwise, that are unrelated to the current offer, unless expressly and specifically consented to by the consumer.

F. Prechecked Boxes – prechecked boxes cannot be used for acceptance of a term(s) or condition(s) of the offer.

G. Price and Billing – clearly and conspicuously disclose the price and billing period of the recurring charge of the third party wireless content immediately adjacent to the cell phone submit field and the P.I.N. code submit field, e.g., “$9.99 per month;

H. Terms – clearly and conspicuously disclose on the cellphone number submit webpage and the PIN Code submit web page the following material terms and conditions:

the initial and recurring charge for content, goods or services
whether other charges may apply
if the offer is for a recurring subscription plan; that the consumer will be charged automatically with no further action on the part of the consumer; the frequency with which the charge will automatically be made to the account in the absence of cancellation of the plan; and that the consumer will continue to receive the charges until the consumer cancels the plan
how to cancel the plan
the mechanism for charging the consumer, e.g., “on your cellphone bill or deducted from your prepaid balance on your cellphone account.”
that the purchaser of the mobile content must be 18 years of age or older.

I. Other Requirements – place a hyperlink to the terms and conditions on every cellphone submit page and PIN Code submit page in the order path.

Mobile Marketing Association
http://www.mmaglobal.com/bestpractices.pdf
Clear and conspicuous display of all material terms affecting the program, including pricing, type of service (subscription)
No Prechecked boxes

Carrier availability fully disclosed, especially in cases where the service offered is not supported by all carriers or a different service will be offered in its place
Opt-out messaging on all promotional materials and messages
No use of free if fees are involved

Google
1. Prominently display these details on the page where users first enter personal information (such as a name or phone number):

The identification of your service as a subscription
The price of the service
The billing interval (such as per week or once per month)

2. On the first page where users enter personal data, provide a prominent opt-in checkbox or other clear mechanism indicating that the user knowingly accepts the price and subscription service. The user should not be able to proceed without opting in.

3. Clearly display cancellation information (or a clearly marked link to cancellation instructions) on your ad’s landing page, the first page of your site users see after clicking on your ad.

All of the items above should be located in a prominent place on your webpage and should be easy to find, read, and understand.

https://adwords.google.com/support/bin/answer.py?answer=74334
&query=ringtones&topic=&type=f&onClick=