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Consumer Law

: Reasonable Basis

This one hurts

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600pxusfederaltradecommissionsealsv A jury verdict in favor of adult web site operator Impulse Media is a blow to the Federal Trade Commission's efforts to hold advertisers liable for the conduct of their affiliates.  When it filed its complaint against Impulse Media (and others) alleging violations of the federal CAN SPAM Act, the Commission acknowledged that Impulse Media did not send the allegedly violative email.  Rather the Commission asserted that Impulse Media operated ?affiliate marketing? programs in which it paid others to market on its behalf and thus was liable for the illegal spam sent by those affiliates.

According to seattlepi.com's Todd Bishop, Impulse Media argued that its policies prohibited affiliates from using spam and that it terminated affiliates that did.  These policies were "a sham," according to attorneys for the government, and terminated affiliates were allowed to re-enter the program.  Siding with Impulse Media, the jury returned a unanimous verdict in its favor.

Affiliate marketing is a cost effective way for advertisers to reach potential customers and its use is not limited to operators of adult websites.  The Commission should set out some realistic guidance on when it will seek to hold advertisers liable for the conduct of affiliates.  The version of "strict liability lite" the Commission is trying to impose is ignored by businesses, questioned by judges, and has now been rejected by at least this jury.  Likewise, advertisers and marketers need to realistically address problematic conduct by affiliates.  Affiliates that spam, employ spyware, violate the Do Not Call provisions of the Telemarketing Sales Rule, and engage in other deceptive conduct will invite overreaching by the Commission and reinforce the negative perception of affiliate marketing.

Thanks to Venkat at Spam Notes for the link.

Full post as published by Reasonable Basis on March 25, 2008 (boomark / email).

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