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The Laws Marketers Need to Know to Avoid Legal Backlash
Posted on February 10th 2012
So if you want to make sure you're not being a marketing outlaw, here's what you need to know to comply with the major laws that apply to marketers so you don't end up with a lawsuit, or worse. Rumor has it you can't blog regularly in the slammer.
1. CAN-SPAM Act
The CAN-SPAM Act (or the 'Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003') is a law that outlines rules for commercial email, establishes requirements for commercial messages, provides email recipients with the right to make you stop emailing them, and lays out big consequences for violations of the Act (such as penalties of up to $16,000 for each separate email violation). As a marketer, all of your email marketing messages need to comply with the requirements set forth in the CAN-SPAM Act.
How to Abide:
- Avoid using misleading, deceptive, or falsified information in your “From,” “To,” “Reply-To,” subject line, and routing information. Make sure you clearly identify who is sending the email, whether it's from a company or an individual. Make sure your email subject line clearly indicates what the content of the email is about.
- Include your physical postal address. Every email message you send out has to include your valid physical mailing address.
- Include an opt-out link, and honor unsubscribes promptly. You must include a clear and obvious way for recipients to unscubscribe from all email communication from you, even if you also provide a list of other types of email to which they can subscribe instead. If a recipient asks to be removed from your list, you must honor their request within 10 business days, and then you cannot sell or transfer their email address to another list.
- Choose a reputable email service provider (ESP). Even if you're sending emails using an ESP like HubSpot, that doesn't mean you won't be held liable if the emails sent aren't compliant with CAN-SPAM regulations. Both your business and your ESP can be held responsible for a screw-up, so make sure you select a legitimate ESP for your email marketing.
Real-Life Offender: In 2004, Nicholas Tombros pled guilty to charges and became the first spammer to be convicted under the CAN-SPAM Act of 2003 for "war-spamming" thousands with emails advertising pornographic websites. Tombros was sentenced to three years of probation, six months of house arrest, and was fined $10,000.
2. Do-Not-Call Implementation Act
You've probably heard of the National Do Not Call Registry, which allows U.S. consumers to limit the telemarketing calls they receive. This is the Act that made it happen, and today, more than 200 million people are registered with the Do Not Call Registry. The Do Not Call Registry doesn't prevent all unwanted calls, such as calls from organizations with which a person has established a business relationship, calls for which a person has given prior written permission, calls that aren't commercial or do not include unsolicited advertisements, or calls from or on behalf of tax-exempt non-profit organizations. Violating this Act will cost you up to $11,000 per violation. Now that's an expensive phone call.
How to Abide:
Here's the obvious advice: Don't cold call! Using inbound marketing to establish a business relationship with a prospect first saves you from being a slave to the Do Not Call Registry. At the very least, limit it. If you do cold call and use telemarketing...
- Regularly update your list. You're required to search the Do Not Call Registry at least once every 31 days and remove from your call lists the phone numbers of new registrants.
- Do not call people on your list before 8 AM or after 9 PM. It's prohibited.
Real-Life Offender: In December 2010, the FTC shut down two groups of Florida-based telemarketers that inundated consumers with “robocalls” in which they falsely promised to reduce consumers' credit card rates. JPM Accelerated Services-associated defendants were fined $5.9 million, and fines of $3.2 million were ordered to six other defendants who were associated with an affiliated operation, IXE Accelerated Financial Centers.
How to Abide:
- Never sell or share sensitive information. This includes social security numbers, credit card numbers, bank account information, criminal background, or health records.
- If you conduct business internationally, obtain your Safe Harbor certification. Intended for organizations within the EU or U.S. that store customer data, the Safe Harbor Principles are designed to prevent accidental information disclosure or loss. US companies can opt into the program as long as they adhere to the 7 principles outlined in the EU Data Protection Directive on the protection of personal data. For more information, visit the official Safe Harbor arrangement site.
Real-Life Offender: In November 2011, Facebook agreed to settle federal charges from the FTC that it violated users' privacy "by telling them they could keep their information on Facebook private, and then repeatedly allowing it to be shared and made public." The settlement requires Facebook to allow independent auditors to review Facebook's privacy practices over the next 20 years. It also requires that Facebook get approval from users before changing how it handles their data.
4. Defamation Law
Defamation is a false statement of fact that is harmful to someone's reputation and published as a result of negligence or malice. Depending on state laws, defamation is often defined in specific ways. Libel is written defamation, whereas slander is spoken defamation. Luckily, under Section 230 of the Communications Decency Act, websites are protected against defaming user-generated content such as blog comments, which means you won't have to monitor and weed out that type of content (although you'll probably want to remove it anyway).
How to Abide:
- Don't abuse your freedom of speech in your content. You have the right to share your opinions in your content, but avoid definitive statements that just plain aren't true.
- Check your sources. We'd like to think that you wouldn't purposely post defaming content on your website, but where you might get into trouble is if you unknowingly source defaming content and use it in your own content. Be sure you check your sources and question anything that could be considered defamatory before you publish.
Real-Life Offender: Many of you probably remember the popular example of online defamation that resulted in a $430,000 settlement that Courtney Love paid fashion designer Simorangkir for the 20 minutes worth of Twitter hatred she unleashed on the designer over an invoice dispute. To her 40,000 followers, Courtney had called Simorangkir a drug-dealing, prostitution-pushing thief who lost her children because of an assault and battery record.
5. Intellectual Property Laws
Intellectual property laws oversee the creation and enforcement of intellectual property such as copyrights, trademarks, patents, trade secret laws, etc. These laws grant owners specific exclusive rights to various assets, such as musical, literary, and artistic works; discoveries and inventions; and words, phrases, symbols, and designs. While Section 230 of the Communications Decency Act does protect you against user-generated content that is defamatory, the law does not offer protection for intellectual property violations, meaning it's possible that you could be found liable if a user posts something to your site that is in violation of intellectual property laws. Although you'll need to reference specific laws to understand the intricacies of each, there are a few things you can do to make sure you stay on the right side of the law.
How to Abide:
- Attribute your sources. If you have any question about whether or not (or how) you can use another's content in your own, reach out to the source. To prevent others from using your content inappropriately, create a set of content usage/attribution guidelines (you can refer to HubSpot's content usage guidelines as an example), and make them visible on your website.
- Remove questionable user-generated content. Don't allow content that you think is in violation of intellectual property laws to remain on your website. You don't want to run the risk of getting sued over it. Create and publish a user-generated content/comments policy that indicates you have the right to remove any content you feel is defamatory, inappropriate, or in violation of intellectual property rights and that you will disclose personal information to requesting authorities over questions of intellectual property violation.
- Use Creative Commons-licensed content. Creative Commons (CC) is a non-profit organization that offers a free alternative to full copyright. In marketing, it's particularly useful if you're looking for images to use in your content. The conditions of CC licenses vary depending on which license the owner chose for his/her content, but for the most part, CC-licensed content can be used when attributed correctly. This page provides the information you need to know when using/attributing CC-licensed content, and you can search for CC-licensed content here. You can also cheaply purchase royalty-free images from sites like iStockphoto, without needing to attribute the source.
Real-Life Offender: Who remembers Napster, arguably the most popular intellectual property case ever? Napster allowed users to share music files, causing thousands of people to download songs for free instead of purchasing CDs or MP3s. The problem was, Napster didn't own the rights to the music its users were uploading to Napster's servers. The Recording Industry Association of America (RIAA) sued Napster and won, forcing Napster to shut down. Napster is now owned by Rhapsody.
6. Disclosing Paid Reviews/Promotion/Affiliation
In 2009, the Federal Trade Commission (FTC) published revised guidelines to its FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising. The guidelines explain the conditions by which the FTC would find endorsements or testimonials unfair or deceptive. Per the FTC's guidelines, a positive review from a person connected to the seller -- or someone who receives cash or payment to review a product or service -- should disclose the connection between the reviewer and the seller of the product or service. In other words, bloggers who make an endorsement are required to disclose their connection with the seller of the product or service. And if, in an ad, a company refers to the findings of a research organization that conducted research sponsored by the company, the ad is required to disclose the connection between the advertiser and the researcher. These guidelines also extend to informal, under-the-table payments for testimonials from influencers used in word-of-mouth or buzz marketing.
How to Abide:
- Don't ever offer payment in exchange for positive reviews. That said, it's perfectly acceptable to encourage customers and fans to leave you positive reviews if they wish by reminding your happy customers and biggest fans that positive reviews are always appreciated.
- Always disclose relationships with partners and co-marketing partners. When it comes to online marketing, transparency is key to maintaining a credible, trustworthy brand image.
Real-Life Offender: Don't be like Legacy Learning Systems, a popular seller of guitar-lesson DVDs that ended up with a $250,000 fine for using misleading online 'consumer' and 'independent' reviews. The FTC charged that it "deceptively advertised its products through online affiliate marketers who falsely posed as ordinary consumers or independent reviewers."
The bottom line? As an inbound marketer, you need to stay in the know about the laws that govern the web to avoid possible legal ramifications. Even if it doesn't cost you a hefty fine or some time behind bars, the negative attention associated with legal trouble could cost you your brand's reputation.
And Now, Some Legalese...
This blog post has provided information about the law designed to help our readers better understand the legal issues surrounding internet marketing. But legal information is not the same as legal advice -- the application of law to an individual’s specific circumstances. Although we have conducted research to better ensure that our information is accurate and useful, we insist that you consult a lawyer if you want professional assurance that our information, and your interpretation of it, is accurate. To clarify further, you may not rely upon this information as legal advice, nor as a recommendation or endorsement of any particular legal understanding, and you should instead regard this article as intended for entertainment purposes only.