Online marketing rules in the US

Online marketing should always state the truth and not mislead consumers. It must ensure the protection of businesses and consumers and preserve the integrity of the Internet as an advertising medium. Online marketing involves research and active outflow of information. Combining offline and online techniques can double profits.

In order to allow business to benefit while protecting consumers from the perils of this new arena, many advocates are encouraging the passage of an "Internet Sales Rule" to offer consumers the same protection in online purchases as they have in other distance sale situations, such as purchases made by telephone.
The Federal Trade Commission Act (FTCA) allows the FTC to act in the interest of all consumers to prevent deceptive and unfair acts or practices. A claim can be misleading if applicable information is absent or if the claim implies something that is inaccurate. Sellers are liable for claims they make about their products and services. Third parties such as advertising agencies or website designers and catalog marketers also may be liable for making or distributing deceptive representations if they contribute to the research or allocation of the advertising or know about the deceptive claims.

The marketing organization is responsible for assessing the information used to validate ad claims. A consumer cannot simply rely on an advertiser's assurance that the claims are proved. In order to protect themselves, catalog marketers should ask for material to back up claims rather than replicate what the manufacturer states about the product. Further, they should believe their intuition when a product sounds too good to be true. Disclaimers and disclosures must be clear and evident so that consumers can understand the information. Display of the product must indicate how it will perform under regular use. The marketers must refund money to dissatisfied consumers, especially if such refunds were promised. Sellers should take special care not to misrepresent a product or its performance when advertising to children.

Advertising over the Internet is subject to the same laws as other advertising. Marketers should be free to offer promotions, but users should be allowed ample opportunity to review all rules, guidelines, and parameters before committing. Internet consumer data is not for resale without the express permission of the user. This is a matter of privacy, and respect for the sensitive nature of information on the Internet.

Some basic guidelines for online marketers are that they must provide truthful, accurate and clear information on their website, always back up the claims made about their goods and services, and all advertising or marketing materials must be identifiable to consumers as such. It is important to disclose who is sponsoring an ad if it is unclear to consumers and to take special care when advertising to children. Finally, marketers should and respect consumers' choices not to receive email solicitations.

What is the Children's Online Privacy Protection (COPPA) Rule?

The primary goal of this act is to give parents control over what information is collected from their children online. It applies to operators of commercial websites that knowingly collect personal information from children under 13. It requires operators to place clear and comprehensive privacy policies on the website expressing their information practices for children's personal information and to give notice to parents and, with limited exceptions, obtain verifiable parental consent before collecting personal information from children. Further, the rule gives parents the choice to consent to the operator's collection and use of a child's information while prohibiting the operator from disclosing that information to third parties and provide parents access to their child's personal information to review and/or have it deleted. It also gives the parents the opportunity to prevent further collection or use of the information and to maintain the confidentiality, security, and integrity of information collected from children. Finally, the act prohibits operators from conditioning a child's participation in an online activity on the child's providing more information than is reasonably required to participate in that activity.

What penalties can be imposed against a company that runs a false or deceptive ad?

The penalties depend on the nature of the violation. The FTC or the courts can impose legally binding orders requiring the company to discontinue the deceptive ad or practice, to provide evidence for claims in future ads, to report occasionally to FTC staff about the support they have for claims in new ads and to pay a fine of $11,000 per day per ad if the company violates the law in the future. Violation of some statutes can result in civil penalties ranging from thousands to millions of dollars, depending on the nature of the violation. In other cases, advertisers have had to give full or partial refunds to all consumers who bought the product. Sometimes, marketers are forced to take out new ads to correct the misinformation conveyed in the original ad. They also have to inform purchasers about deceptive claims in ads, include specific disclosures in future ads, or give other information to consumers. In some situations, marketers can be banned from continuing business.