Electronic Retailer - April 2011 - 53

self-regulate – i.e., if the players did not participate in the forum or did not comply with the recommendations of the units – that they would be there to step in, if necessary. The potential for government intervention acted as an effective deterrent and played an invaluable role in the eventual success of advertising self-regulation. (As a side note, in 2009, the NARC Board was expanded to include the Electronic Retailing Association, the Interactive Advertising Bureau and the Direct Marketing Association). Then, in 1983, the FTC officially documented the shift in the burden of proof for claim support from the “inquirer” to the “disseminator.” More specifically, the FTC announced its “Policy Statement Regarding Advertising Substantiation” which requires, in part, that “…advertisers and ad agencies have a reasonable basis for advertising claims before they are disseminated” (emphasis added). Further, the Commission, in recognizing that a one-size-fits-all approach to claim support was infeasible because of the magnitude of certain representations, espoused on the evidentiary burden for establishment claims. It noted in the Policy Statement that: “When the substantiation claim is express (e.g., “tests prove”, “doctors recommend”, and “studies show”), the Commission expects the firm to have at least the advertised level of substantiation. Of course, an ad may imply more substantiation than it expressly claims or may imply to consumers that the firm has a certain type of support; in such cases, the advertiser must possess the amount and type of substantiation the ad actually communicates to consumers.” The Policy Statement also provided some insight as to how the FTC would evaluate what constituted a “reasonable basis.” More specifically, “The Commission’s determination of what constitutes a reasonable basis depends, as it does in an unfairness analysis, on a number of factors relevant to the benefits and costs of substantiating a

particular claim. These factors include: the type of claim, the product, the consequences of a false claim, the benefits of a truthful claim, the cost of developing substantiation for the claim, and the amount of substantiation experts in the field believe is reasonable.” As we have come to learn, in the FTC’s analysis, claims relating to health and safety are given increased evidentiary scrutiny and are evaluated in the context of the marketer possessing “competent and reliable scientific evidence” for such claims. As articulated in the Iovate and Nestle orders from last summer, the Commission determined that “competent and reliable scientific evidence shall consist of at least two adequate and well-controlled human clinical studies of the Covered Product, or of an Essentially Equivalent Product, conducted by different researchers, independently of each other, that conform to acceptable designs and protocols and whose results, when considered in light of the entire body of relevant and reliable scientific evidence, are sufficient to substantiate that the representation is true.” Finally, the 1983 Policy Statement closed with the very important message (and please indulge me for a moment) that the Commission would “…continue [its] useful relationships with self-regulation groups and to rely on the expertise and findings of other government agencies in our proceedings to the greatest extent possible.” In light of all the recent positive reinforcement regarding the value of self-regulation in the advertising industry, I thought I would channel my best Ralph Nader (I always wanted to be a “Raider”) and identify three pivotal issues that face direct response marketers in the coming months and years. In brief, they are: 1. The New Global Marketplace – As the U.S. economy continues to rebound, astute marketers are sharpening their focus oversees to Europe, Asia, and South America. The world of electronic commerce certainly provides the appropriate vehicle to meet

the growing demand and mass appeal of emerging products and services. From a self-regulatory perspective, ERA Europe has created a formidable self-regulatory presence and I would certainly encourage international marketers to avail themselves of this benefit. We at ERSP will keep a close eye on what’s happening at ERA Europe and use our best efforts to harmonize our efforts here with what is transpiring overseas. 2. Privacy – This has become the “crusade de jour” for regulators and consumer advocates and justifiably so. Personal data has become valuable currency in the industry and behavioral (i.e., interest-based) advertising is one of the most viable methods of reaching the target audience. The real issue for regulators out there is whether marketers are attempting this endeavor at the expense of consumer privacy. 3. Social Media – Vehicles of social media are proliferating our daily lives and marketers are still struggling to maximize the sales potential from these forums. For regulators and selfregulators like ERSP, it will be an ongoing challenge to make sure that advertisers are disseminating sales messages truthfully and transparently. For example, what may appear to be an innocuous statement from a consumer on a product website may, in fact, rise to the level of commercial speech because of some material connection between the speaker and the advertiser. All very compelling issues to keep an eye on as we continue to navigate the future waters of the direct response industry. Rest assured, this Raider will be using his best efforts to ensure that the messages bombarding the marketplace are being disseminated truthfully and accurately. Peter Marinello is Director of the Electronic Retailing Self-Regulatory Program (ERSP). He can be reached at (212) 705-0126 or via email to pmarinello@narc.bbb.org. 53

April 2011 | electronicRETAILER
Electronic Retailer - April 2011

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