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Important News No One Can Afford to Miss

Important News No One Can Afford to Miss

April 08, 2008

If this were TV, an announcer with a very deep voice would begin by saying:

'We interrupt this program to bring you a special news report.' (Cue the dramatic theme music as the camera zooms in on me looking gravely serious sitting behind the anchor desk. In the right corner of the screen a box appears with a picture of a judge's gavel and a headline that reads, 'Online advertiser fined $2.9 million!')

Fortunately, this is not TV and I don't have to worry about fixing my hair just right. But I do need to deliver some sobering news. The headline I described is indeed correct and it's the largest settlement of its kind.

Just recently, the FTC forced online advertiser ValueClick, Inc. to pay a record $2.9 million to settle charges that its advertising claims and e-mails were deceptive and violated federal law. The FTC also says ValueClick failed to protect customers' financial information.

It all comes down to our favorite word

The heart of the case revolves a powerful and favorite word I like to use and all marketers like to use: Free.

According to the FTC, ValueClick's subsidiary Hi-Speed Media, used deceptive e-mails, banner ads, and pop-ups to drive consumers to its web sites. The e-mails and online ads claimed that consumers were eligible for 'free' gifts, including laptops, iPods, and high-value gift cards, and included come-ons such as:

  • 'Free PS3 for survey';
  • 'Let us buy you a 42-inch plasma TV! Just type in your zip code';
  • 'We're giving away a Visa gift card pending participation in our presidential survey';
  • 'Free Apple iPhone for Daniel'; and
  • 'CONGRATULATIONS! Select your FREE Plasma TV.'

The FTC says consumers lured to ValueClick's Web sites by these promises were led through a maze of expensive and burdensome third-party offers ' including car loans and satellite television subscriptions ' which they were required to 'participate in' at their own expense, in order to receive the promised 'free' merchandise. The FTC charged that ValueClick's use of deceptively labeled e-mail offering free gifts and its failure to tell consumers they must spend a substantial amount of money to obtain the promised 'free' merchandise violates the CAN-SPAM Act and the FTC Act.

The problem, says the FTC in its complaint, is that on each subsequent web page, Hi-Speed Media does 'not clearly and conspicuously disclose' to the consumer that he or she may have to purchase other products and may have to apply for credit cards or auto loans. In some instances, consumers have to get up to five friends to participate in the program. If all the friends don't complete the required offer, the consumer never gets the free gift promised. As a result, most never got the free gifts promised.

ValueClick, Inc. admitted no wrongdoing in the settlement.

What does this mean to you?

Let's be clear. Free is still among the two most powerful words you can use in marketing (send me an email to JonGoldman@BrandLauncher.com if you think what the other one is). The power of the word free is also why it's sometimes used unethically. That single word grabs our attention but it must be used appropriately.

So can you still offer something for free along with a payment for a product or service?

Absolutely! The rules haven't changed. But this latest action does give us more insight. The key is that you tell prospects that your free offer also requires a purchase and that requirement is 'clearly and conspicuously disclosed' in the marketing.

Remember, the most important thing is that the disclosure is 'clear and conspicuous.' That's a subjective call, but cases such as these help us figure out how the rules are being interpreted. According to the FTC, 'clear and conspicuous' means the disclosure has to be just as prominent as the free offer. It has to be presented in the same size font and in relative proximity of the free offer. So if your free offer is presented in 24-point type at the top of a landing page, the disclosure can't be in 6-point type in the footer.

'Clear and conspicuous' also means that you can't offer something for free and then force the consumer to navigate through a maze of landing pages before finally learning that some expenses may be required.

Hopefully, you have a set of principles or ethical standards that you operate by to help guide you through some of these gray areas. The rules aren't always black and white. And some offers can be tempting to run with, especially if you see them working for others.

I purposely stay away from some marketing tactics even though I know they've been successful for entrepreneurs. Just because it may work doesn't make it right.

Always taking you from where you are to where you want to go,


Jon Goldman

P.S. For more guidance when dealing with the 'gray areas' in marketing be sure to check out my Manipulative Marketing Corner in the Business GPS archives.