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FTC Releases 2020 Annual Highlights

By
Richard B. Newman
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0

On March 25, 2021, the Federal Trade Commission released its 2020 Annual Highlights, emphasizing the agency’s ongoing efforts to protect consumers.

“Despite the challenges of the pandemic, the FTC remained dedicated to protecting consumers and promoting competition,” Acting FTC Chairwoman Rebecca Kelly Slaughter said.  “The FTC acted quickly to take down a number of illegal COVID-related scams, sued to block or unwind an unprecedented number of mergers, and took a number of other strong enforcement actions across its missions.” 

The Highlights capture the Commission’s prompt response to the pandemic and purported bad actors who try to exploit it to take advantage of consumers.   The FTC has taken action to halt alleged false and deceptive claims related to supposed treatments for COVID-19.  The agency has sued companies that allegedly failed to deliver on promises to quickly ship critical personal protective equipment, and companies that purportedly lured consumers into income scams. 

The agency has also sent out hundreds of blog posts to educate consumers about COVID-19 scams and remind businesses about their responsibilities regarding honest advertising.

The FTC’s Highlights report promotes some of the agency’s most significant enforcement actions, policy and advocacy initiatives, and education and outreach programs in the past year.

With regard to enforcement, for example, the FTC demonstrated a commitment to addressing purported false treatment claims regarding COVID-19.  In doing so, the agency pursued a rigorous warning letter program.  The FTC, on its own, and with FDA, issued over 350 warning letters to marketers making prevention, cure, and treatment claims, and the vast majority of recipients took quick steps to correct problematic claims.

When warning letter recipients do not correct their problematic claims, however, the FTC can — and does — follow up with law enforcement suits.  In fact, the agency charged Golden Sunrise Nutraceutical, Inc. — a warning letter recipient that did not correct its claims — with deceptively advertising a $23,000 treatment plan as a scientifically proven way to treat COVID-19.  Going forward, under a new federal law, the COVID-19 Consumer Protection Act, the FTC has the authority to obtain first-time civil penalties for scams related to COVID-19.  This new law provides another tool in the FTC’s fight against operators engaged in such deception.

In other health-related matters, the Commission approved a Part 3 administrative complaint against Health Research Laboratories, LLC for purported unsubstantiated claims that their dietary supplements can treat cardiovascular and other diseases.  The complaint is scheduled to be heard before an administrative law judge in July 2021.

In its first law enforcement crackdown on deceptive claims in the growing market for cannabidiol (CBD) products, the FTC sued six sellers of CBD-containing products for allegedly making a wide range of scientifically unsupported claims about their ability to treat serious health conditions like, cancer, heart disease, hypertension, and Alzheimer’s disease.  Under an administrative settlement, the marketer behind Whole Leaf Organics is barred from making baseless claims that his CBD-based product can treat or prevent the risk of COVID-19.

Teami, LLC, a marketer of teas and skincare products, paid $1 million to settle FTC charges that it promoted its products using deceptive health claims and endorsements by well-known social media influencers who did not adequately disclose they were being paid to do so.

Last year the FTC brought a number of cases against the marketers of health-related products, including actions against supposed cures for joint pain and inflammation, for cancer and diabetes, for ailments and physical damage related to aging, and for growing new bone to alleviate pain, as well as an action against an app that allegedly failed to keep users’ health information private.

On the technology front, while millions of users have flocked to video communications platforms. Zoom Video Communications, Inc. agreed to settle FTC charges that the company misrepresented the level of encryption it offered and the time it took to store meetings in Zoom’s secure cloud storage in an encrypted format, and allegedly installed software on certain users’ computers that circumvented a privacy and security safeguards for certain users offered by their browser.  The settlement prohibits Zoom from making a wide variety of privacy- and security-related misrepresentations, requires Zoom to implement an information security program (including a security review for all new software before release and restrictions on circumventing third-party security safeguards), and independent program assessments by a qualified third party.

The FTC also took action to halt the alleged use of technology to promote deception and fraud related to COVID-19.  The Commission sent warning letters to Voice over Internet Protocol (VoIP) service providers and other companies for their activities purportedly “assisting and facilitating” illegal Coronavirus-related telemarketing calls.  And, last year, the Commission also brought its first consumer protection case against a VoIP provider, Globex Telecom, Inc., which agreed to pay $1.9 million to settle charges from the FTC and the State of Ohio that they allegedly facilitated an illegal bogus credit card interest rate relief scheme.  In addition, Alcazar Networks Inc. settled the FTC’s charges that they facilitated tens of millions of illegal telemarketing phone calls.

In other deceptive and unfair marketing, the FTC brought its first cases enforcing the Better Online Ticket Sales (BOTS) Act.  Three ticket brokers will pay $3.7 million to settle allegations they used automated software to illegally buy tens of thousands of event tickets, then resold the tickets at higher prices.

In terms of deceptive and unfair marketing, the FTC brought several cases against companies that allegedly failed to deliver on their promises to get consumers goods in high-demand as a result of the pandemic.  A federal court in Ohio issued a temporary restraining order against 25 alleged counterfeit websites that purportedly tricked consumers into paying for Clorox and Lysol products that the defendants never delivered.  The Commission also brought actions against three online merchandisers and SuperGoodDeals.com, Inc., based, in part, on violations of the Mail, Internet, or Telephone Order Merchandise Rule (Mail Order Rule) and promises they would quickly ship facemasks, sanitizer, and other personal protective equipment.

The FTC took also action against Traffic Jam Events, LLC to stop a scheme that allegedly deceived consumers with mailers that promised to get them federal COVID-19 stimulus benefits but was actually luring them to a used car sale.

The FTC also took action to protect workers.

The FTC alleged that Amazon failed to pay Amazon Flex drivers the full amount of tips they received from Amazon customers over a two and a half year period.  As part of a settlement, Amazon will pay more than $61.7 million, representing the full amount the company allegedly withheld from drivers, which will be used by the FTC to compensate drivers.

The impact of income opportunity scams has intensified as scammers take advantage of the COVID-19 pandemic and financial crisis. The Commission, along with 19 federal, state, and local partners, led Operation Income Illusion, a nationwide crackdown of more than 50 law enforcement actions against scams that target consumers with fake promises of income and financial independence that have no basis in reality.

The FTC also continued its efforts on behalf of small businesses.  The FTC and the Small Business Administration (SBA) sent warning letters to eight companies that targeted small businesses seeking SBA loans as a result of the Coronavirus pandemic.

The Commission also continued its work in other areas.

The FTC won a $120.2 million judgment against the primary Sanctuary Belize defendants, successfully putting an end to what is allegedly the largest land fraud in FTC history.

Other cases included actions against the operator of an allegedly deceptive crowdfunding scheme and a rent-to-own company that paid $175 million for allegedly misleading buyers.

The Commission also brought cases stopping allegedly deceptive negative option practices, including Age of Learning, Inc.; Nutraclick; and AH Media Group, LLC.

In other cases, the FTC took action against two companies (Williams-Sonoma, Inc. and Gennex Media, LLC) for allegedly making unsubstantiated Made in USA claims; a mobile banking app for alleged false promises about interest rates and access; a company selling phone plans that ripped off the families of incarcerated love ones; an alleged pyramid scheme that lured consumers with false promises of financial independence; operators of an allegedly  deceptive business coaching scheme; companies allegedly selling misleading ad listings to small businesses, and an operation that allegedly tricked consumers by lying about being affiliated with the SBA.

The FTC continues its vigorous enforcement against operations that assist companies defrauding consumers.

In 2020, the FTC brought six cases involving payment processors — RevenueWire, Inc., Apex Capital Group, LLC, Qualpay, Inc., Complete Merchant Solutions, LLC (CMS), Madera Merchant Services, LLC, and First Data Merchant Services LLC — for allegedly enabling deceptive practices or scams.  In four of the cases, the defendants were banned from payment processing, either completely or for certain types of businesses.

The FTC, with more than 50 federal and state law enforcement partners, brought Operation Corrupt Collector, a nationwide law enforcement and outreach initiative to protect consumers from deceptive and abusive debt collection practices.  In one case, the FTC alleged Critical Resolution Mediation LLC threatened consumers with arrest and imprisonment and tried to collect debts that consumers did not actually owe.  A federal court shut down the operation.

Another case was against a seller of alleged get rich quick “training programs” that purportedly promised buyers they would make significant income but allegedly had data showing most buyers of the training made little to no money.

The FTC also brought actions against companies that hurt people looking for housing, looking to borrow money, reduce their credit card rates, pay down their debt, or fix their credit.  The FTC charged pay day lender Lead Express, Inc. (Harvest Moon Financial) with deceptively overcharging consumers millions of dollars and withdrawing money repeatedly from consumers’ bank accounts without their permission.  A federal court has entered a temporary restraining order halting the operation and freezing the defendants’ assets.

Credit repair company BoostMyScore LLC agreed to settle FTC charges they misled consumers with promises to improve credit scores and increase access to lower mortgage rates.  AppFolio, Inc., a provider of background reports to property management companies, paid $4.25 million to settle the FTC’s charges the firm did not follow reasonable procedures to ensure the accuracy of its reports about potential tenants.

This year, the FTC also brought actions against several companies that allegedly falsely promised struggling student loan borrowers that — in return for paying an illegal upfront fee — the defendants could lower or eliminate their debt.  SLAC, Inc., CD Capital Investments, LLC, Elegant Solutions, Inc. (Mission Hills Federal), and American Financial Benefits Center were banned from the debt relief business, and courts entered combined judgments of nearly $40 million against CD Capital Investments and Elegant Solutions.

In 2020 the FTC continued its initiatives to protect the privacy of consumers.  Recently, the FTC began to seek more comprehensive remedies against technology companies that failed to live up to consumer privacy promises.

The FTC settled allegations that the developer of the photo app Everalbum deceived consumers about its use of facial recognition technology and its retention of user photos and videos by requiring the deletion of models and algorithms developed from user data.  The Commission also turned its attention to the growing area of health apps, settling allegations that the developer of a period and fertility-tracking app, Flo, shared user health information with outside data analytics providers after promising that such information would be kept private.  As part of the settlement, Flo must notify affected users about the disclosure of their personal information and instruct any third party that received users’ health information to destroy that data.

The FTC continued its actions protecting children’s online privacy through enforcement of the Children’s Online Privacy Protection Act Rule (COPPA Rule).  App developer HyperBeard, Inc. agreed to pay $150,000 and to delete personal information it illegally collected from children under 13.  Miniclip, S.A., a digital game maker, settled the FTC’s allegations that it misled consumers into thinking it was a current member of the Children’s Advertising Review Unit’s (CARU) COPPA safe harbor program.

The Department of Justice (DOJ), on behalf of the FTC, sued MyLife.com, Inc., alleging that the company deceived consumers with “teaser background reports” that often falsely claimed to include information about arrest, criminal, and sex offender records.

Two recent cases required the defendants to put in place comprehensive data security programs to settle the FTC’s allegations:  Ascension Data & Analytics, LLC (which allegedly failed to ensure that its vendor was adequately securing personal data, leaving the sensitive information of more than 60,000 consumers exposed on the internet for a year); and SkyMed International, Inc. (which allegedly left unsecured a cloud database of approximately 130,000 membership records so they were in plain text and easily accessible).

The agency entered a modified administrative order against Facebook, formally adding approved amendments to its 2012 privacy order to include provisions that were incorporated into the FTC’s 2019 settlement with the company.

The FTC also brought charges against eight companies that allegedly misrepresented their participation in the EU-U.S. Privacy Shield framework (Privacy Shield), which enables companies to transfer consumer data legally from EU countries to the U.S.  The orders settling the FTC’s charges were released in January, March, July, and October.

Certain statistics are available in the Stats & Data 2020 infographic.  Archives of past FTC Annual Highlights and Reports and a printable version of the 2020 report are also available.

Richard B. Newman is an FTC defense lawyer at Hinch Newman LLP. Follow FTC defense lawyer on National Law Review. 

Informational purposes only. Not legal advice. May be considered attorney advertising.

Marketing Fraud Continues to Grow in 2021, and Ad Companies Are Clueless

By
Pesach Lattin
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0

A new report from White Ops demonstrates that marketing fraud is growing, but that many in the online advertising space may not realize exactly how much the problem has grown in the past year.

Oh, it’s pretty bad. According to MediaPost, 43% of respondents in the survey said survey said they could not estimate how much of the traffic coming to their website is bot activity as opposed to humans they wanted to reach — and they have no one on their team trying to catch the criminals.

Online marketing fraud primarily consists of the use of fake traffic to commit advertising fraud. This bilks advertisers via the digital marketing platforms they pay for targeted ad delivery.

Advertisers often engage in “pay per impression” or “pay per click” campaigns under the assumption that the person viewing the ad is part of the target demographic they hope to reach.

Instead, the report reveals that a growing amount of these supposed prospective customers are actually fairly sophisticated bots designed to milk ad budgets. There are also other emerging forms that are becoming much bigger criminal industries, such as lead generation fraud and incentive program abuse.

The “2021 Marketing Fraud Benchmarking Survey and Report” was conducted in fall 2020 and surveyed 129 marketing decision makers that mostly (60%) work at companies that employ over 1,000 people. At least half of the responding organizations had average monthly page visits of over 250,000 and spend at least $5 million annually on digital advertising.As the report notes, the digital marketing industry spends at least $300 billion annually and is expected to grow in the wake of the Covid-19 pandemic effects. While one would reasonably anticipate that nearly all sectors of cyber crime have grown during the pandemic period, marketing fraud is an area that tends to go overlooked. Data breaches that compromise the records of millions tend to grab the headlines, but there is more than enough money in the ad spend pool to attract serious criminal attention.

Marketing fraud can be even more nefarious to organizations than hacking and leaks in that it requires continual auditing to detect. A data breach, or even a serious attempt, generally triggers a cybersecurity audit. Victims of marketing fraud may not even realize that they are hemorrhaging vast sums of money until they conduct a routine audit of their database of leads and their invalid traffic, something that they are not always doing.

And even when organizations are on top of their traffic, they sometimes cannot tell when it is fraudulent. 43% of respondents said that they could not estimate how much of the suspicious traffic on their websites was originating from sophisticated bots. 22% of respondents believe that at least 25% of their sales database is composed of fraudulent leads. A full 2/3 said that they had experienced marketing fraud last year, but less than half said that they regularly scrub their databases for inauthentic contacts.

Communication and assignment of responsibility are contributing to this problem. Less than half of marketing teams even communicate with the security team about these issues, and they can’t decide who is supposed to be preventing marketing fraud: 33% of respondents say it’s the security team’s responsibility, while 40% say the marketing team should be doing it themselves. 12% had no idea who is responsible.The more sophisticated marketing fraud that these teams are now seeing is difficult to detect because it blends in with the devices and web browsers of legitimate end users. These bots are often planted on the devices of unaware targets (usually via malware) and can make use of the subject’s device information, browsing history and web activity to add a layer of legitimacy to interactions with the advertiser’s site and tools.

These sophisticated bots have both created new marketing fraud models and enhanced existing ones. Lead generation fraud is one example. Criminals have been observed drawing on the personally identifiable information (PII) leaked in massive data breaches to auto-fill forms.

Bots are also enabling previously minor forms of marketing fraud on a much larger scale, some of them incorporating machine learning techniques. One example is the use of bot networks to automatically buy up inventories of limited-release items that are fairly certain to go up substantially in price on the secondary market (particularly with a bunch of bots creating artificial shortages, something that has vexed those seeking to buy the PlayStation 5 and Nintendo Switch gaming consoles in recent months). Another is the mass creation of fake accounts to engage in negative “review bombing” campaigns.

How much fraud can digital marketers expect when they run a campaign? The survey finds that organizations can expect anywhere from 1% to 40% of their traffic to be fraudulent for any given campaign, depending on how tight of a screening ship they run. Large leading retail organizations are estimated to lose about $7 million to marketing fraud each year on the front end, and then another $7 to $8 million in wastage within the marketing tech stack.

Data breaches that compromise the records of millions tend to grab the headlines, but there is more than enough money in the #adspend pool to attract serious criminal attention. #fraud #respectdata

However, constant monitoring and auditing is likely impossible for most organizations.

So what are the warning signs of bot traffic?

The report identifies the following symptoms that should trigger an audit: dramatic traffic spikes that cannot be connected to a recent event, time-on-site metrics that differ drastically depending on the source of the traffic, complaints from the sales team about the quality of leads captured from the web site, and conversion rates come up lower than expected.

FTC Order Requires Company and Its Owner to Pay $146,249, and Stop Making Deceptive ‘Made in USA’ Claims

By
Richard B. Newman
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0

The Federal Trade Commission recently announced that a company that sells customizable promotional products such as wristbands, lanyards, temporary tattoos, and buttons, and its owner, will settle FTC charges that they made false, misleading, or unsupported advertising claims that their products were all or virtually all made in the United States.

The settlement requires the company and its owner to pay a monetary judgement of $146,249.24.

According to the administrative complaint, the FTC alleges that, as the company’s sole officer and shareholder, the owner created all content and approved all changes to the website, approved all of the company’s social media content, and created and approved its YouTube content.

“This should be obvious, but you can’t say your products are made in the USA when most of them are made elsewhere,” said FTC lawyer Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection. “When companies … make this false claim, they hurt both people who want to buy American and companies that really do make things here.”

The complaint alleges that, since at least 2012, the company and its owner have violated the FTC Act by claiming on their website that the products they sell are made in the United States, when in fact in numerous instances the products are wholly imported from China.  On the website, price lists, Facebook header, and in a promotional YouTube video, according to the FTC, the company and its owner claim that products are “Made in USA,” “USA MADE,” and “Manufactured Right Here in America!”

Under the terms of the proposed order, the company and its owner are prohibited from making unqualified U.S.-origin claims for any product, unless they can show that the product’s final assembly or processing—and all significant processing—takes place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the United States.  Under the order, any qualified Made in USA claims must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing.  Finally, to claim that a product is assembled in the United States, the company and its owner must ensure that it is last substantially transformed in the United States, its principal assembly takes place in the United States, and U.S. assembly operations are substantial.

The order prohibits the company and its owner from making any country-of-origin claim about a product or service unless the claim is not misleading and they have a reasonable basis that substantiates their claim.  It also requires the company and its owner to provide compliance reports.

The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides further guidance on making non-deceptive “Made in USA” claims. 

Richard B. Newman is an advertising practices attorney at Hinch Newman LLP.

Attorney advertising. Informational purposes only. Not legal advice.

8 Proven Tips to Market on Tik-Tok

By
Pesach Lattin
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0

Ever since its launch back in 2016, TikTok has managed to dominate the social media game, further pushing the envelope of what the medium can do and what the influencers using it can achieve.

In many ways, it’s quite easy to see why TikTok is so successful, and why it’s currently the best example of how marketing and social media can evolve. Primarily targeting the Gen Z, TikTok is easy to use, engaging, has endless content, and provides instant gratification.

On the other side of this spectrum are the users, or more specifically, the platform’s most famous individuals: the TikTok influencers. Always on top of the latest trends, TikTok influencers not only manage to gather huge followings, but also partner with brands to promote products with their creative content, leading to many actually pursuing being an influencer as a career.


The problem however is that, for every TikTok influencer that manages to break through, there are more than a few that fail to get traction. Thankfully, there are tricks, tips and tools to help wannabe influencers get a leg up in the competition.

Here, we’ve listed down the best ones that every TikTok influencer hopefuls should not only be aware of, but take advantage of:

1. Be on top of trends
Fast-moving and ever-changing, TikTok trends are one of the top content drivers in the platform, often dictating what the majority of its users will be seeing on the app. If you want to be well-known, then the key is to be able to stay on top of these trends. One of the best ways to do this is by keeping an eye out for trending hashtags, and being prepared to tailor your content to suit the current craze.

Remember that some of these trends come out of nowhere, while others are tied to current events. So master speed and adaptability, and you’ll see your following organically grow as more people see your content and recognize you as an influencer.

2. Find your niche
TikTok has proven that its platform is more than just challenges, trending dance videos, and cute animals. These days, there’s a niche topic for just about everyone, which means that whatever type of content you provide, there’s bound to be an audience for it.

Finding your niche is also a great way of standing out in TikTok’s sea of users, as it will not only help you zero in on an audience, but get a following without miming what everyone else is already doing. This also opens up the possibility of you eventually building your own community that extends beyond the app.

3. Tell a story
Telling a story and communicating it properly can help turn attention to your content. Photo: Pixabay (CC0)

Like any other platform, one of the best ways to capture your audience is by telling a story, and the easiest way to do this on TikTok is by strategically using text overlays. Using this catches your viewer’s attention, after which you can then reel them in step-by-step.

It’s also a good idea to ask yourself what sort of text and story can you publish to grab users’ attention enough for them to turn the sound on and give your video the time of day.

4. Expand your community
At its core, social media is all about socializing and sharing your life, so why not do the same for your followers?

If you already have your own following or have managed to create a small community, then it’s a good idea to maximize engagement with them by letting them follow you on other platforms like Facebook, Twitter, Instagram and Youtube.

And by taking advantage of marketing tools, you can automate your posts for all platforms and get the most out of your social media efforts. Three great examples of this are Social Web Suite, Revive Social and Tailwind, all of which provide all-in-one solutions for budding TikTok influencers and even individuals that use social media for their businesses.

As a TikTok influencer, you can take advantage of Social Web Suite to reach more people, track the success of your marketing campaigns (if you’re working with a brand), get organized, interact with fans/followers, and even schedule your content publishing.

On the other hand, Revive Social will provide you with key features and tools that are all centralized on helping you understand various aspects of the social media and keep your content front and center. Revive Social achieves this via its plugin, which features social media integration, full control over sharing, custom posts, filter tags, click-tracking and post scheduling.

Lastly, Tailwind is great for Instagram and Pinterest marketing, making it perfect for TikTokers that also want to improve their following on these social media platforms. Providing marketing tools like schedulers, analytics, access to communities, planners, hashtag finders and smart bios, it’s a trusted game-changer when it comes to growing your profiles.

By using these platforms, not only will you be able to organize your socials, but also give your more time to create content and engage with your community.

5. Partner with a brand

Partnering with a brand is another good way of increasing your following, so long as your partner with the right one.

If you ever get the opportunity to, then partnering with a brand is also a great way of upping your TikTok influencer brand.

Provided that you partner with a brand that wouldn’t alienate your audience, it can quickly build your reputation and make you come off as more trustworthy, which will help you in the long run. Beyond the creativity and endless ideas, TikTok also functions as a well-oiled marketing machine, and using this aspect of the platform is guaranteed to boost your following.


In such cases, using a good and trusted Affiliate tracker like Affluent will make the difference. Providing you with all of the tools that you need in one unified dashboard, Affluent removes all the hassle that comes with the affiliate marketing industry so you can instead focus on providing value, whether it’s through products, services, or your own content.

6. Post often and be consistent
When it comes to TikTok, consistency is the name of the game, and you can do this by posting as often as you can. As such, it’s a good idea to fix a designated time for your video uploads. This way, your audience will know when to expect something new.

To shake it up every now and then, post something about your daily life, hobbies, etc. in between your regular updates, as this will help break the monotony and give your audience something more personal to connect with.

7. Don’t be afraid to experiment!

TikTok is all about creativity, so don’t be afraid to use that and keep experimenting! With millions of users on the app, you need to do something different from the crowd, and the only way to find out what works is by continuously trying new things and experimenting.

This is also a good way of making common content brand-new, so don’t be afraid to let your imagination run wild. The best part of TikTok is that there are no rules and limits, so let your inner child awaken and be as expressive as you can be!

8. Be authentic and have fun
Social media marketing and branded content aside, TikTok is, first and foremost, a platform for creativity, so don’t forget to have fun when you’re creating content.

Your audience will also be able to tell when you’re being inauthentic and fake, so do your best to keep it real even when you eventually get partnerships and branded affiliations. Being able to stay true even with promotions is a skill that takes practice, so make sure that you’re prepared for it when the time comes.

In the meantime, it’s TikTok, so have fun!

Biggest Scammer? Man Loses 200 lbs and Then Charged by Feds

By
Pesach Lattin
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1

Michael Giannulis was once a contestant on ‘Extreme Weight Loss.’ Now, the Federal Trade Commission says he sold fraudulent online business classes and have busted him for being a serial scammer. Federal Trade Commission (FTC) cracked down a the group of affiliate marketers who ensnared consumers into a fraud business coaching program called My Online Business Education (MOBE).

Last year, the FTC announced that charges have been filed against the affiliate marketers namely Michael Giannulis and Michael Williams along with their companies BPO USA LLC, Pixx Media LLC, and MyEcomClub Express.

In the complaint, the Commission alleged that the defendants sold to consumers worthless membership packages from MOBE. The defendant’s sales agents who purported to be business coaches claimed that they could teach consumers how to start and grow their online business to make a substantial income

The consumers deceived by the defendants paid thousands of dollars for the online business coaching scheme. Giannulis and Williams through their companies bilked more than $30 million from their victims.

The Commission also filed complaints against Steven Bransfield and his companies SB & A Media, SB&A Group, and Werunads; Gar Leong Chow and his company TTZ Media, and Scott Zuckman and his firm Alpha Quad Enterprises.

In the lawsuit, the SEC alleged that the defendants operated high-ranking affiliates of the MOBE scheme. Since 2013, they lured tens of thousands of consumers and defrauded them more than $300 million.

MOBE victims suffered substantial losses, experienced crippling debts

The consumers who purchased the MOBE’s online business coaching program “suffered devastating financial losses or crippling debt” contrary to the affiliate marketer’s claim that they would generate significant income, according to the FTC.

In a statement, FTC Bureau of Consumer Protection Director Andrew Smith said, “These so-called ‘affiliates’ helped MOBE swindle consumers out of millions of dollars by making outlandish and false earnings claims. Affiliates should take note that the FTC will hold you personally and financially accountable for false or unsubstantiated marketing claims.”

Affiliate marketers agreed to settle FTC charges

The defendants agreed to pay FTC a monetary judgment to settle the charges against them.

Defendant Chow and TTZ Media accepted the Commission’s order requiring him to pay $3.35 million in monetary judgment.

On the other hand, Giannulis, Williams and their companies agreed to the FTC order requiring them to a $31.6 million monetary judgment, which will be suspended once they pay $760,000 and turnover personal items obtained from their participation in MOBE.

Meanwhile, Bransfield and his companies consented to the FTC order imposing a $4.7 million monetary judgment, which was suspended due to their inability to pay. In August 2019, the defendants filed for Chapter 11 bankruptcy.

Defendant Zuckman and his company agreed to the Commission’s order requiring a monetary judgment of $1.8 million, which will be suspended upon his payment of $406, 150. The suspension of the monetary judgment was due to the defendant’s inability to pay.

All of the settling defendants also agreed to permanently stop selling or marketing any business coaching program and money-making method.

In February, the primary culprits behind MOBE agreed to pay more than $17 million to settle the FTC’s lawsuit.

FTC Clarifies Social Media Advertising Policies

By
Pesach Lattin
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0

Attorneys Holland & Knight hosted Michael Ostheimer, a senior attorney for the Federal Trade Commission (FTC), for a webinar presentation on Feb. 16, 2021. Ostheimer has been with the FTC for three decades, currently serving as a senior staff attorney with the FTC’s Division of Advertising Practices.

During the interview, Holland & Knight Partners Anthony DiResta and Da’Morus Cohen asked Ostheimer dozens of questions covering a broad range of topics concerning social media advertising and marketing practices, including:

  • trends in social media advertising
  • what regulations govern social media advertising
  • the role of disclosures and disclaimers
  • the use of blogs, celebrities and influencers in social media advertising
  • revisions to the FTC’s Guides on Testimonials and Endorsements
  • employee posts on social media platforms
  • product and service reviews
  • concerns relating to sweepstakes and similar promotions in social media
  • conduct by tech companies and user-generated content
  • law enforcement actions, warning letters and other initiatives by the FTC concerning inappropriate social media advertising
  • risk management, including understanding liability and available relief to consumers and the government as a result of an enforcement action, and
  • recommended policies and procedures, including social media policies and training practices

Importantly, these compliance issues touch upon every industry sector in the U.S. economy, including financial services, healthcare and life sciences, retail, technology, hospitality and tourism, transportation, education, media, technology, telecommunications and manufacturing.

The webinar is chock-full of best practice tips and “inside information” that can help companies enhance their regulatory compliance programs and minimize their risks associated with social media advertising and marketing.

Key Takeaways

Impact of Administration Change

It is too early to tell what impact the Biden Administration and the president’s appointees will have on the FTC and its enforcement priorities. However, it is likely that Acting Chair Rebecca Slaughter will seek monetary penalties in almost all cases, utilize analytics and artificial intelligence to determine potential outcomes of investigations and the likelihood of success, focus on e-commerce, and uncover how fake reviews contribute to consumer appetite for product and how these reviews contribute to the importation of counterfeit product from abroad.

Standards of Review

From the FTC’s regulatory and legal perspective, social media advertising is not substantively different from traditional advertising, such as television and radio. In fact, social media advertising is subject to the same rules and standards as traditional advertising. The FTC’s focus is on the integrity of the communications from the marketer to the consumer – whether the communications are accurate, transparent and nondeceptive. In other words, brands must tell the truth, not exaggerate any claims, and be transparent through disclosures and disclaimers.

Educating the Public

To enforce FTC regulations and educate marketers and the consuming public, the FTC has launched several initiatives concerning social media advertising, which include:

  • filing law enforcement actions, which are seeking both injunctive and monetary relief
  • issuing warning letters to marketers, including product manufacturers and influencers, especially those regarding health claims, Made in USA claims and COVID-19 claims
  • issuing updated guidance for marketers, specifically focused on social media advertising and marketing, including revisions to the Guides on Testimonials and Endorsements and the publication of Disclosures 101 specifically targeted to influencers themselves
  • conducting workshops and webinars, and
  • disseminating educational materials for consumers

Key Legal Issues in Advertising

From the FTC’s perspective, the key issues of interest relating to social media advertising and marketing are:

  • correctly identifying social media posts as advertising and marketing
  • including appropriate, clear and conspicuous disclosures in those advertising and marketing materials that not only identify a social media post as an advertisement but also include disclosures relating to any material connections, including from employees of the company or brand, and
  • ensuring that beyond sufficient disclosures, social media advertising and marketing generally complies with the FTC’s regulations, including the Guides on Endorsement and Testimonials

Social Media Policies

Social media policies are a must. Every business that engages in social media advertising must have a formal social media policy. Those policies should be implemented with management oversight and must be effective. The policies should be communicated to third-party vendors as well as employees. The FTC also expects marketers to train employees on proper social media use. This obligation may extend beyond employees to third-party agents depending on the underlying relationship between a third-party agent and the marketer. Finally, some form of monitoring is expected to ensure compliance with the marketer’s social media policy and the FTC’s regulations and guidance.

Social Media Disclosures

Disclosures are required no matter the social media platform – this includes high-profile platforms such as Facebook, Instagram and TikTok as well as YouTube and Twitter. This list is clearly not exhaustive. The rule is simple: If your company is advertising and disclosures would otherwise be required, include disclosures. Visual disclosures and audible disclosures may be required – this requirement may not be limited to only videos. Disclosures should also be prominent and appear first. For instance, on Instagram, disclosures should appear in the first two to three sentences of the caption to be truly conspicuous and they should not appear within a “more” link, but should appear above.

Should gifts and other free items be disclosed? Absolutely. It is critical for companies to disclose the “material connection” between the influencer or speaker and the brand/company so that consumers know when there is an incentive that underlies the promotion. A free sample provides such a material connection, as does an invitation to a party.

Conduct by Tech Companies

Tech companies are big fish. In December 2020, the FTC issued notices to large tech companies requesting that they “provide data on how they collect, use, and present personal information, their advertising and user engagement practices, and how their practices affect children and teens.” While it is not known whether these companies have complied, it is clear that the FTC is turning its focus to the tech giants leading the way in social media advertising and marketing.

The World of Influencers

As with traditional media, a disclosure of material connections is required for influencer posts. Those disclosures must be “clear and conspicuous.” The hashtag – #ad – may be sufficient if the consumer understands that the communication is an advertisement. There are instances when the hashtag should include capital letters if the capitalization would make the hashtag easier to read. Relying solely on a “See More” link is likely to be insufficient, as consumers routinely ignore or fail to click on such links.

While the FTC’s focus remains on brands themselves and not individual influencers, brands should give guidance to their influencers on what they should and should not say in terms of making material connections disclosures and in terms of not making deceptive claims. Brands should train and monitor influencers on the brand’s policies and ensure compliance with those policies through pre-review or post-review of influencer posts. This goes for brands large and small – regardless of size, each brand is held to a strict scrutiny standard to be transparent and tell the truth.

In fact, the FTC released its Disclosures 101 guide in November 2019 specifically aimed at providing a user-friendly summation of the Guides on Testimonials and Endorsement to influencers themselves.

Finally, virtual influencers pose their own host of issues. But any company using a virtual influencer to push a product should ensure that sufficient disclosures or information is available for the consuming public to know: 1) the communications are advertisements; 2) the influencer is virtual or artificial intelligence and not a real person; and 3) the virtual influencer does not have the ability to try or test out a product – even the product being advertised.

Consumer Reviews

Consumer reviews are essential but come with their own set of obligations. It is important for marketers to understand what’s required when a brand induces consumers to leave reviews, including material disclosures and giving consumers the ability to leave accurate, truthful and nondeceptive reviews. Also, there is the question of whether brands are required to perform some diligence to determine that a review is from a consumer who actually purchased the products (e.g., verified purchaser reviews). While this point is subject to debate, there remains an obligation on brands to cure any reviews that are not accurate, truthful and nondeceptive. This includes removing fake reviews (if possible, depending on the platform), not discouraging posting of negative reviews and not buying fake reviews. Consumers should be able to trust and rely upon brand reviews to make an informed decision.

Employee Reviews

As with consumer reviews, employee reviews are also subject to regulation and must comply with the general notion that they are accurate, truthful and nondeceptive. In addition, it may not be adequate to merely state “staff review” before an employee’s review. A more fulsome disclosure is likely required. Failure to do so may subject the company to liability. Specifically relating to social media posting, hashtags such as #employee and #myemployer may be sufficient under certain circumstances. But brands are reminded that certain “trendy” marketing campaigns using employees may be disfavored by the FTC if a consumer is unable to immediately ascertain that the marketing communications are being delivered by an employee of the brand.

Brands may also not pay or solicit their employees to leave misleading, deceptive, fake or untruthful reviews. The FTC has recently enforced and received hefty monetary relief against several brands whose employees were instructed to leave fake reviews for the brand’s products.

Brands cannot censor less than favorable reviews. That is the law, as outlined in the Consumer Review Fairness Act.

User-Generated Content

When a user simply likes or loves a product for what it is, there is no need for that user or the brand to disclose a connection when that user truthfully and genuinely posts or comments on the product. If the review is organic and not incentivized, then there is nothing that needs to be disclosed.

Promotional Devices

Brands must carefully manage their promotional devices in social media, such as sweepstakes and contests. Promotional devices are useful tools to engage consumers and trigger clicks. But brands are reminded that information disseminated relating to the promotional device must be accurate, truthful and nondeceptive. In addition, state law also provides various requirements for promotional devices, including registration depending on the approximate value of the prize to be awarded or the frequency with which a brand is conducting such promotional devices. In addition, best practices dictate the preparation of official rules and other documents to inform consumers of the material terms of the promotional device, including method of entry, promotional period and applicable limitations. Lastly, social media platforms have their own unique requirements relating to using their platforms to promote promotional devices, including very specific disclosures.

Enforcement

When does the FTC enforce? There are several factors that lead the FTC to commence an investigation, including consumer complaints, monitoring by FTC staff, a high number of reviews, whistleblowers, competitors, news stories, congressional inquiries, sweeps of industry practices by the FTC, and claims that are not likely to be substantiated and referrals from nonregulatory bodies such as the National Advertising Division (NAD) and the Better Business Bureau (BBB). The FTC considers whether health and safety is involved, whether egregious conduct is at play, the method of dissemination of deceptive advertising and whether the deception entails an emerging industry. Because the NAD conducts its own investigation and due diligence into claims, the FTC weighs the NAD’s decisions and conclusions heavily and will investigate any referral from the NAD.

Remember, it is not enough to merely have a social media policy in place. That policy must be implemented, monitored for effectiveness and enforced.

The FTC has education materials and emails where brands may inquire about compliance. This includes compliance with the “all or virtually all” standard for Made in USA claims (MUSA@ftc.gov).

The FTC is very concerned about native advertising, as detailed in its Enforcement Policy Statement on Deceptively Formatted Advertisements.

Enforcement Relief

Monetary relief is considered in almost every investigation. Brands are subject to hefty monetary penalties for noncompliance, and the FTC looks into what various civil penalties are available. This includes determining whether the conduct at issue violates a civil rule, whether new rulemaking should be had, including with Made in USA claims, and whether Section 205 synopses should issue to brands notifying them of potentially illegal conduct.

The FTC actively works with other law enforcement partners to monitor social media advertising and enforce compliance, such as state attorneys general and other federal agencies, including the Consumer Financial Protection Bureau.

 

Uber Chief Claims Most Performance Marketing is Pure Fraud

By
Pesach Lattin
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0
Kevin Frisch, the former head of performance marketing and CRM at Uber, told the tale of how ad fraud (specifically attribution fraud) ate at least $100 million of Uber’s $150 million online ad budget…

“We turned off 2/3 of our spend, we turned off 100 million of annual spend out of 150, and basically saw no change…”

Most “performance marketers” have no idea how deeply they’re being penetrated by online ad fraud. They don’t even know where to look. They have no clue how untrustworthy or irrelevant the numbers they’re getting are. Listening to Frisch tell his story brings it all to life.

Perhaps the most deeply disturbing aspect of his story was his description of how nobody gave 1/10 of a flying shit how much money was being pissed away.

It matters because even with those quantities of money, nobody seemed to know it was happening. While it’s not uncommon to turn off performance marketing and see little to no change in business outcomes.

Kevin Frisch appeared last week on the Marketing Today podcast to talk about some of the challenges he faced in the role, especially around the time of #DeleteUber controversy.

“What we saw is a lot of installs we thought had come through paid channels suddenly came through organic.”

  • The brand was under significant political pressure, much of which would come to Frisch, when the pressure group Sleeping Giants pointed out that Uber ads were popping up on the far-right website Breitbart.
  • Superiors were unhappy with the public heat, so Frisch instructed his ad buying networks to stop showing ads on the site. When they continued to appear, he just cut the flow of money (10% of the budget roughly). Nothing happened.

Attribution fraud differs from impression fraud by claiming credit (and payment) for downloads that would have happened organically.

Uber launched a lawsuit in 2017 against its agency, Dentsu Fetch, until it was countersued the following year for unpaid invoices. By 2019, the company had re-targeted its complaint towards its ad networks, though that was, AdExchanger observed, almost more interesting for what it omitted than what it included. In the filing, the firm recognised around 100 unknown companies.

 

FTC Sues Facebook for Social Network Monopolization

By
Richard B. Newman
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The Federal Trade Commission has announced that it has sued Facebook, alleging that the company is illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct.

Following a lengthy investigation in cooperation with a coalition of attorneys general of 46 states, the District of Columbia, and Guam, the complaint alleges that Facebook has engaged in a systematic strategy—including its 2012 acquisition of up-and-coming rival Instagram, its 2014 acquisition of the mobile messaging app WhatsApp, and the imposition of anticompetitive conditions on software developers—to eliminate threats to its monopoly.

According to the FTC, this alleged course of conduct harms competition, leaves consumers with few choices for personal social networking, and deprives advertisers of the benefits of competition.

The FTC is seeking a permanent injunction in federal courtthat could, among other things: require divestitures of assets, including Instagram and WhatsApp; prohibit Facebook from imposing anticompetitive conditions on software developers; and require Facebook to seek prior notice and approval for future mergers and acquisitions.

“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, Director of the FTC’s Bureau of Competition.  “Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition.  Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”

According to the FTC’s complaint, Facebook is the world’s dominant personal social networking service and has monopoly power in a market for personal social networking services.  This unmatched position has provided Facebook with staggering profits, says the FTC. The FTC believes that, last year alone, Facebook generated revenues of more than $70 billion and profits of more than $18.5 billion.

Alleged Anticompetitive Acquisitions

According to the FTC’s complaint, Facebook targeted potential competitive threats to its dominance.  Instagram, a rapidly growing startup, emerged at a critical time in personal social networking competition, when users of personal social networking services were migrating from desktop computers to smartphones, and when consumers were increasingly embracing photo-sharing.

The complaint alleges that Facebook executives quickly recognized that Instagram was a vibrant and innovative personal social network and an existential threat to Facebook’s monopoly power.

The complaint alleges that Facebook initially tried to compete with Instagram on the merits by improving its own offerings, but Facebook ultimately chose to buy Instagram rather than compete with it.  Facebook’s acquisition of Instagram for $1 billion in April 2012 allegedly both neutralizes the direct threat posed by Instagram and makes it more difficult for another personal social networking competitor to gain scale.

Around the same time, according to the complaint, Facebook perceived that “over-the-top” mobile messaging apps also presented a serious threat to Facebook’s monopoly power.  In particular, the complaint alleges that Facebook’s leadership understood—and feared—that a successful mobile messaging app could enterthe personal social networking market, either by adding new features or by spinning off a standalone personal social networking app.

The complaint alleges that, by 2012, WhatsApp had emerged as the clear global “category leader” in mobile messaging.  Again, according to the complaint, Facebook chose to buy an emerging threat rather than compete, and announced an agreement in February 2014 to acquire WhatsApp for $19 billion.  Facebook’s acquisition of WhatsApp allegedly both neutralizes the prospect that WhatsApp itself might threaten Facebook’s personal social networking monopoly and ensures that any future threat will have a more difficult time gaining scale in mobile messaging.

Alleged Anticompetitive Platform Conduct

The complaint also alleges that Facebook, over many years, has imposed anticompetitive conditions on third-party software developers’ access to valuable interconnections to its platform, such as the application programming interfaces (“APIs”) that allow the developers’ apps to interface with Facebook.

In particular, Facebook allegedly has made key APIs available to third-party applications only on the condition that they refrain from developing competing functionalities, and from connecting with or promoting other social networking services.

The complaint alleges that Facebook has enforced these policies by cutting off API access to blunt perceived competitive threats from rival personal social networking services, mobile messaging apps, and other apps with social functionalities.

For example, in 2013, Twitter launched the app Vine, which allowed users to shoot and share short video segments.  In response, according to the complaint, Facebook shut down the API that would have allowed Vine to access friends via Facebook.

The lawsuit follows an investigation by the FTC’s Technology Enforcement Division, whose staff cooperated closely with a coalition of attorneys general, under the coordination of the New York State Office of the Attorney General. Participating Attorneys General include: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

The Commission vote to authorize staff to file for a permanent injunction and other equitable relief in the U.S. District Court for the District of Columbia was 3-2.  Commissioners Noah Joshua Phillips and Christine S. Wilson voted no.

Richard B. Newman is an FTC defense attorney at Hinch Newman LLP. Follow him at National Law Review at FTC defense attorneys.

Informational purposes only. Not legal advice. May be considered attorney advertising.

Rebel Interactive takes risks in crowded digital-marketing industry

By
Pesach Lattin
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Bryn Tindall, founder and CEO of Southington digital marketing firm Rebel Interactive Group, says actual rebels are hard to find.

“If you ask people, ‘Are you a rebel?’, they like to think they are, that they are risk-takers, but they really are not,” he said. “It’s not that common.”

Neither is Rebel, which since its founding in 2013 has firmly established itself as an outlier in a crowded industry.

According to IBISWorld, as of 2016 there were nearly 198,000 marketing consultant businesses in the United States. Yet, while Forbes magazine said last year it expected digital marketing growth to moderate, Rebel has been on a consistent upswing.

Its three-year, 184% revenue growth between 2016 and 2019 ranked it 2,269th on Inc. magazine’s latest list of the 5,000 fastest-growing U.S. companies.

“I’ve said for years that the wind is blowing in Rebel’s direction. Then COVID-19 came and it’s just a gale wind at our back now,” said Tindall, noting that he expects revenue this year to total about $15 million. “We were predominantly a Northeast company, but because of COVID-19, we are now in most states. … People will buy without meeting in person with you.”

Rebel offers a variety of services including advertising, marketing automation, branding and messaging, search-engine optimization, data analytics, web and app development, and business visualization and digitization.

Some of its growth can be attributed to a mid-2018 merger with Rocky Hill-based The Pita Group, but Tindall cites his firm’s branding and messaging as driving forces.

Curt Brey, director of sales business process for Rogers Corp., a specialty engineered materials manufacturer with an eastern Connecticut facility, said Rebel is a unique digital marketing company, “in the sense that it tends to take an entirely different approach to a problem you’re trying to solve.”

Rogers Corp.’s problem, Brey said, was creating so-called “use cases,” which explain to clients the technical applications for its high-tech products. Use cases were time-consuming and difficult to produce, he said, until Rebel developed a digital tool to gather and process the information.

“It cut our time down substantially to produce them,” Brey said.

Another example of Rebel’s outside-the-box approach is work it did for Farmington-based Otis Worldwide Corp. Otis was successful in selling elevators, but not in getting clients to also purchase a service contract, Tindall said.

“We realized that they actually had a bunch of really cool tools (to monitor elevator performance and maintenance needs) that most of their customers didn’t realize they made available,” Tindall said. “Like being able to go to an online portal and lock out elevator banks.”

Tindall said Otis offered the online portal, as well as a video-monitoring system and other useful services, separately. Rebel helped create a digital dashboard to make it easy for customers to access those tools in one location, making it more user friendly.

“But you only got that if you retained them for service,” Tindall said. “It doesn’t sound like a lot, but we created a shift.”

Tindall said Rebel’s strategy is not to take a cookie-cutter approach with clients.

“It’s the willingness and courage to step outside the norm that makes the difference,” he said.

That’s also the standard for his nearly 80 employees.

“We look for people who have a non-traditional background,” he said. “We want people who can figure it out, get it done and not make excuses.”

Rebel is also selective in choosing clients, which currently include major corporations such as Aetna, Bank of America, L’Oreal and Mercedes-Benz, and smaller ones like Lyman Orchards and, recently, the town of Southington.

“Do they think they know everything even though they’ve come to you to solve a problem?” he said. “Are they coming in to listen, or just to tell us what they want? Do they sincerely want to make a change? We look for customers who are tired of the same old.”

‘All things digital’

Tindall grew up in Denver, but attended Amherst College in Massachusetts. After graduating in 1993 with a bachelor’s degree in political science and economics, he was heading to Wall Street but made a detour at a digital marketing agency in Norwalk called Modem Media.

He helped Modem Media create its first e-store, with nine merchants.

“It was the grandfather of all things digital,” he said. “That opened my eyes to what this could be.”

Tindall later created homes.com, the world’s first real estate listing site, for Homes & Land Publishing. He founded nearly a dozen other digital ventures, including Horizon Marketing Group in 1998 to “teach people how to integrate technology and marketing.”

Then came Rebel, and in 2020, the pandemic. Rebel was prepared, though, because the Oct. 2011 snowstorm and other lengthy power outages were fresh in his mind.

“We set about to systematically build a business that could immediately change our processes,” he said. “We moved to the cloud, backed everything up. So, when this hit, nothing changed. We were literally set up for this.”

Originally published at HBJ

Mary Dinh: Scammer or Not?

By
Ricky Chapin
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I met Mary Dinh during the ASE party sponsored by EngageBDR/A4D and as luck/fate would have it – she lives not more than 15 minutes from me in Northern Va. She is one of the most cerebral women I have met and totally driven by success and relationships. I wanted to dig a little deeper and truly find out about her and her background so here it is…

Mary, if you would be so kind, please tell us about yourself and what you are currently doing. 

I am a member of the Business Development team at Meritus Payment Solutions and focus on creating strategic and sustainable business relationships with our clients– with the interest to help grow business for our clients.

You are a USC grad and have a Masters from Harvard, how did you find yourself working in the Affiliate Marketing industry?  

Ricky, you haven’t heard of Affiliate Marketing 101 at Harvard?  [smile]  I have found that my start in this industry has been similar to the start of many other endeavors in my life– my academic studies included.  I’ve been fortunate to align myself with extremely talented, intelligent, and ambitious individuals in this arena whom extended me a unique opportunity.  I find great intrinsic reward in helping people.  In our business environment, my clients provide me with the opportunity to achieve this satisfaction through serving as a resource for them to grow business.  For some of my clients, getting approved for payment processing is the first step in achieving their longtime dream of owning a successful business.  And for my seasoned clients, the approved account can mean business expansion they never thought was possible.  I pride myself in sharing these victories with all my clients.

How have you found this industry to be? Was it what you thought it to be? 

I’m a firm believer that talented people are the key drivers of success behind every thriving endeavor. And in this regard, this industry has been everything I imagined it would be.  My goal in each relationship is to understand what the business owners are looking to achieve, and then identifying where Meritus has the possibility to add value– this is truly where synergy and win-win outcomes are achieved.

There are more and more women playing a significant role in this industry, what do you attribute that to and more importantly – do you think that to be the case going forward?  

More and more women are playing a significant in many industries and I think this will continue to be the trend moving into the future.

Talk to me a bit about the payment processing landscape, with all the FTC and compliance issues, how has that affected your business?

Meritus plays a very proactive role in working with our clients to navigate the increasing regulations mandated by FTC, and to maintain compliance for long term viability and growth.  We work closely with our clients to develop online presences that promote honest marketing, clear communication, and we pride ourselves in working with clients who have an interesting in staying in business with us for years to come.

We recently launched a Chargeback Management System tool which enables our in-house team to monitor client accounts for trends in processing which should be flagged, essentially enabling our clients to see any clouds before a potential storm arrives.  The tool also allows clients to view their processing activity and address charge backs on real time, anywhere in the world from a mobile device.  I feel great knowing that my clients are confident their accounts are safe with us, and at any given time can reach out to me through all communication channels to address any potential concerns or issues.

What are your favorite must read industry blogs or websites?

www.rickyahuja.com and Performance Marketing Insider!  There are no others.

Now for a few FUN questions:

You are fluent in Italian, Spanish, Vietnamese, Chinese and English – If you could go and retire in any of these associated countries, which would it be and why?

It has been a dream of mine to own a vacation home in Italy for a very long time, Ricky.  Having said this, I would love to retire right here in America, with the ability and resources to travel the world– and perhaps more time at this future vacation home in Italy than I would in other foreign countries.  My entire family is in America and home is where the heart is.  The stupendous coastline, great food, and warm culture in Southern Italian home would make a very fun base to enable all of my family and friends to enjoy vacations with me.

I have heard some of the best affiliate marketing strategies have been conjured while vacationing in Italy.   You’re welcome to visit any time, Ricky!

If you could pick the brains of anyone – dead or alive, who would it be and why? 

Just one person?  Oh my.  Could I narrow it down to individuals from a specific genre or category in history?  I would like to ask all the legendary religious and political leaders if they are satisfied with the impact their existence has made on modern-day humanity– and why.  I would also like to ask them what they would have done differently during their time in this realm.

What advice do you have for my female readers who are looking to get into affiliate or online marketing?  

I would share that this is an extremely fun space which invites creativity, seeks innovation, and is a wealth of resources for ideas and talent to learn from.  Keep an open mind, always be willing and ready to learn, and never underestimate the value of any individual met or relationship created.

Who is Killing Affiliate Marketing?

By
Robert Glazer
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0

Recently, Impact’s Matt Moore authored a byline — one part explainer and one part future vision — on the affiliate marketing space, relative to marketing as a whole. Meant to advise the modern marketer, it was provocative. But was it accurate?

Rather than dissecting the author’s premise and narrative, instead, in the spirit of actually serving the marketer, it’s worth examining the definitions and vision expressed — and offering a counter if not better primer as a whole.

To start, the piece enters the very blunt premise that putting affiliate inside marketing limits its import and therefore its power. Affiliate as an ecosystem — which it very much is — deserves a detailed look, so that we can understand key connections across practices and methodologies.

The legacy ecosystem

Within the affiliate space, there is a core group of category experts, an “inside circle” of high-integrity, intelligent, and entrepreneurial professionals. They are “in category” founders, or they are OPM (outsourced program management) agency founders that have bootstrapped their success over a sustained period of years.

There also exists a comparatively small, relative to paid search, paid social, and programmatic, but dedicated group of skilled workers who execute the day-to-day operation of affiliate programs.

These skilled practitioners have been held back and unfairly limited from increasing their ability to contribute strategically, by a category that has deliberately and systematically segregated itself from the broader marketing ecosystem due to measurement fears. That blatant fear is corroborated by self-indulgent rallying cries like “we proved it!”

Here, in the confines of this insular pocket of the industry, we also see continued dependence on the last-click attribution models that inequitably reward the cash-back and coupon publishers who have defined the category since its inception. This does marketers a profound disservice.

The limitation of this category, and as a consequence the professionals within it, stems directly from elitist, status quo operating principles fueled by insecurities that have manifested themselves in a “grading our own homework” approach to incrementality measurement.

We have systematically built our own walled garden of attribution without even having the consolidated power of a Facebook or Google to shield us. This ignores the fact that transparency is the only path to legitimacy.

The stark truth is that the skill set required to elevate the category is rooted in an understanding, respect, and operational embrace of an approach that recognizes that our channel needs to work in tandem with primary sales and marketing channels.

To enable that requires a collective move beyond the status quo and a universal commitment to supporting the development of a cross discipline or T-shaped professional.

This category has not historically embraced that equalized approach and that myopic failure by resident Founder elites, not its association with the marketing discipline, is the primary limitation to the careers of our most deeply qualified professionals.

Similarities to the paid search agency ecosystem of old

Interestingly, when I entered the affiliate category in January of 2018, I was immediately struck by the similarities to the paid search agency ecosystem of the mid 2000s.

During this period, SEM subject matter expertise was largely concentrated in two places; (1) the limited managed services function of the paid search publishers (GOOG, ASKJ, MSN, YHOO), and; (2) a concentrated cohort of boutique specialists that emerged and thrived based on the marketer’s need for channel expertise in both the strategy and day to day management of a rapidly scaling paid marketing channel driving material increases in customer acquisition.

But something interesting happened in paid search that has not yet happened in affiliate, even though I’m here to tell you it should. The channel earned its seat at the CMO’s table.

If you’re looking for a lagging indicator of that ascension and the related influence on the specialist ecosystem, look no further than my industry colleague, David Rodnitzky’s, thoughtful view of what happens when the boutique agency starts to die.

As David states, “Scarcity was at its height in the early days of SEM, when SEM was still a ‘nice to have’ for most companies…” So, the real question to ask is why hasn’t this dynamic taken off in affiliate marketing yet? Why have we not seen a wave of consolidation of OPMs akin to the holding company feeding frenzy on SEM agencies over a decade ago?

It’s not as Moore’s article suggests, because we are putting “affiliate marketing programs in the marketing bucket,” or because “keywords don’t have feelings, but partners do.” It is because affiliate marketing has historically failed to address the core challenges that today’s marketer faces.

That is ironically, a problem perpetuated by legacy affiliate providers. Because of that bias, affiliate marketing simply hasn’t yet earned its uncontested right to ascend in the marketing category (or any other for that matter).

Among numerous failures of inaction, our legacy network incumbents have largely failed to address the partner diversification challenge at scale, effectively hindering innovation as larger corporate parents siphon off cash flow for other operating businesses.

They are holding steadfast against opening up the black box of attribution, and reluctant to provide both supply chain transparency and brand safety and compliance solutions on par with what has been achieved in other paid marketing channels.

Conversely, companies like the author’s have focused solely on software as the catalyst for change, emphasizing shiny product features and marketing narratives that portend a new category, without any measurable commitment to the transitional work that must be done to elevate the category from “nice to have” to this mythic visionary “promised land.”

Learning from past mistakes

The key point that Moore’s article misses is that you don’t just get to skip over the inherent obligation to do the hard work along the way by recasting a value proposition to appeal to the CEO. There are no shortcuts and the ecosystem will not be fooled into believing otherwise.

We can’t just pen bylines to attempt to divert attention away from prior failures. As evolution in our space persists, that won’t age well. And, it does the modern marketer a disservice. Owning historic failures and the learnings they deliver are the key to overcoming them.

Expanding the addressable market, opening up larger budgets, shifting the vision forward over the horizon away from shortcomings for which we haven’t made contrition is on some level very smart. It’s a big idea and big ideas certainly matter.

In time, with hard work, we agree that those markets will ultimately be activated. But, the unapologetic attempt to shift the category away from the marketing discipline, the very discipline and budget that underpins their livelihood and future growth opportunities, does damage because, quite simply, it hinders progress.

What matters are the results themselves and earning the right to appeal credibly for market expansion that is predicated on a foundation of repeatable, scalable, and verifiable success in our core market.

Final thoughts

So what does that mean? The CMOs I know (and Chief Growth Officers or Digital Officers for the matter) understand the need to create operating leverage in their unit economics, and know that the place that occurs is at the intersection of scale, automation, and outcome- based commercial models.

What they seek is an affiliate channel that allows them to accomplish that through transparency, automation, and service, not to mention actually solving the business problem not just blatantly changing the industry narrative.

Not one of them has ever expressed particular concern over the semantics of category naming conventions that Moore seems to unduly rail against. Our chief marketers need help and our collective opportunity is to finally deliver on our potential.

Afterall, as Forrester states in its recent 2021 predictions, “Strong CMOs Will Own Their Companies’ Regrowth.”

The 2021 CMO is exactly where this category should be focused. According to Forrester, “CMO leaders don’t supervise from afar. They don’t hope that tools, processes, and structures set up for another time with a different economy will get them through. And they don’t wait for someone else at their company to figure out the answers.”

What that means is that businesses need to be omni-present. Every opportunity to convey a brand impression integrated with a performance opportunity must be capitalized upon. This is an expensive proposition and our category is perfectly positioned to deliver a critical subsidy to other primary sales and marketing channels.

We should worry less about recasting a narrative and much more about demonstrating that we are a rock solid strategic category built on integrity, having learned from our history and the history of other channels, that is ready to elevate and become the partner that CEOs, CMOs, Chief Growth Officers, Chief Partnership Officers and anyone facing and marketing to the consumer can count on to create operating leverage and fuel sustainable growth around the world.

That is the enduring partnership ecosystem vision and practical application on which we should all unite and aspire to deliver.

How To Start an Affiliate Program

By
Pesach Lattin
-
0
Derek Lester (first from left) at Affiliate Summit, along with JJ Allen

What if you could pay someone else to market your product without breaking the bank?

The idea might not be as crazy as it sounds. Customers are increasingly skeptical of brands when it comes to doing their own product research. Affiliate marketing has become a powerhouse marketing strategy for companies looking to find a new way to market their products to consumers.

Affiliate marketing is a digital marketing strategy where brands partner with digital creators to promote their products online. Businesses can sign up as affiliate marketing merchants via an affiliate network and connect with individuals who will market their products for a set commission rate.

Affiliate marketing merchant

An affiliate marketing merchant refers to any business that leverages an affiliate network to increase sales and brand awareness for their products or services. These brands often use affiliate platforms and software to find affiliates to market their products.

Once the brand believes they’ve found the right fit, the business and the creator agree upon a set commission rate. The affiliate then promotes the products to their audience using a special affiliate referral link. Commission rates are then calculated based on the number of items sold.

Affiliate marketing is popular among ecommerce retailers and online businesses, but brands across any industry can reap the benefits.

How to become an affiliate marketing merchant

When a business enters into an affiliate program agreement with a creator, they are paying for access to that influencer’s built-in audience. These affiliates are often bloggers, social media influencers, websites with large digital platforms, and any other digital creator with a large audience.

Building an audience around your product is time consuming and it takes patience. For some marketers, it makes more sense to partner with creators who already have a platform consistent with their ideal customer.

Affiliate marketing requires three different groups of people to work together:

  • Affiliate marketers: creators with a sizable audience that promote these products
  • Affiliate merchants: businesses that sell a product or service
  • Consumers: potential customers that fall within a target audience

This strategy works to the advantage of both affiliate marketers and businesses. Businesses can save themselves the trouble of finding the right customer by tapping into their affiliate’s built-in network. And because affiliate marketers only get paid based on the number of sales they make, businesses can be sure they’re only paying for qualified leads.

For the affiliate marketer, it’s an easy way to monetize their platform. Many affiliate marketers have created large followings for their blog, social media platforms, or other personal channels. Affiliate marketing is an easy way for affiliates to generate passive income by sponsoring products.

Over the years, it’s become much easier for businesses to find and collaborate on brand partnerships with affiliates. While your approach to building your affiliate marketing program might be different depending on your brand, product, and industry, there are some key steps every business should start with.

1. Choose the right affiliate marketing platform

Affiliate merchants often want to know: how do I find affiliates to partner with on promoting my product? The best place to start is by finding an affiliate marketing platform where you can connect with affiliates and start building relationships.

An affiliate network is a third-party platform that connects affiliate publishers and affiliate merchants. These platforms make it easier for brands to find influencers with the right audience for their products. It also gives affiliate marketers the chance to find sponsorship opportunities in a single location.

Here are some popular affiliate marketing platforms you can use to begin your search:

  • AffiliateNetwork
  • Amazon Associates
  • AvantLink
  • CJ by Conversant
  • ClickBank
  • FlexOffers
  • LinkConnector
  • RevenueWire
  • Rakuten
  • ShareASale
  • ShopStyle Collective
  • Shopify Affiliate Program
  • Skimlinks
  • YouTube Affiliate Program

Affiliate networks offer merchants a variety of benefits, including tracking and reporting tools, payment processing, and access to a large number of publishers looking for work. For an affiliate marketer, it saves them time having to look for brands to partner with.

No matter which side of the publishing process you’re on, affiliate networks are the gold standard for finding partnerships.

2. Partner with the right affiliates

A great affiliate marketing partnership relies a lot on cultivating relationships with the right affiliates. Paying for access to an affiliate’s audience won’t do you much good if your product isn’t the right fit.

Always check for similarities between your target audience and the affiliate’s audience to ensure they are the right fit for your product.

60% 

of large merchants generated affiliate marketing earnings amounting to $5 million or more by investing smartly in the right affiliates.

You should also take the time to check out how experienced the marketers you’re partnering with are. The success of an affiliate marketing campaign depends on how the affiliate promotes your product on their channels. It would be smart to check out their social media platforms and look for previous affiliate work.

Ask yourself these questions before choosing affiliate partners:

  • Does this affiliate’s audience look like my target audience? Will their audience yield high-quality leads?
  • How experienced is this affiliate? Does this affiliate seem responsive and willing to work with you?
  • What is their expertise with digital marketing concepts like blogging, email marketing, and SEO?

3. Decide on your affiliate commission rates

Once you’ve found the affiliates you want to partner with, you’ll need to agree to the terms of payment. Affiliate marketing payment structures vary depending on who you work with.

Merchants who are just starting out with affiliate marketing can choose the payment method that works best for their business. Some businesses use simple payout systems like Paypal, while others have a dedicated affiliate manager managing commissions.

After you’ve decided on the rates, you’ll need to agree on how payments will be distributed. Some affiliate marketing software solutions have built in tracking for affiliate commissions, making it easy to track how much money you owe each affiliate.

It’s also a great way to track the ROI of affiliate marketing. Simply tracking how much you spend on affiliate commissions vs. how much revenue you generate from affiliate leads can help show the effectiveness of your campaign.

Most creators get paid commission based on one of the following payment structures:

  • Pay per sale: the affiliate makes commission based on the number of sales made using their affiliate link or website (measured via cost-per-acquisition CPA).
  • Pay per lead: the affiliate makes commission based on the number of leads generated through their affiliate link or website (measured via conversion rates).
  • Pay per click: the affiliate makes commission based on the number of times their affiliate link or website is clicked by consumers (measured via cost-per-click CPC).

No matter which system you use, it’s important to make this information available to affiliates up front. so they can decide if your affiliate program is right for them as well.

4. Create a clear terms of service

One of the big risks with affiliate marketing is trusting someone outside of your business to promote your product. There’s a chance new affiliates don’t know your brand language or tone as well as your internal employees do. Providing your affiliates with clear terms of service ensures affiliates have distinct guidelines for marketing your product.

Creating your own terms of service ensures that you have control over the perception of your brand. This is especially important for large companies that manage hundreds of affiliates at once. If all of your affiliates are following the same guidelines, you can ensure that all of the user-generated content they are creating has the same look and feel as your branded content.

What should be included in your affiliate terms of service?

  • Detailed outline of affiliate partnership requirements
  • Overview of expectations for the affiliate
  • Necessary brand language or guidelines required of the affiliate
  • Clear commission structure and payout schedule

Finally, terms of service protect your brand from bad affiliate partnerships.

There’s always the chance that an affiliate doesn’t hold up their end of the bargain, spams your affiliate links in a way that damages your reputation, or does something else out of your control. With clear guidelines in place before deals are made, your business has an easy way to reference that expectations weren’t met. This makes it easier for your team to end bad partnerships without a mess.

Many businesses experienced with affiliate marketing opt to have a specific landing page outlining their affiliate program. These web pages give merchants a singular location to display their new affiliate products, terms of service, and other affiliate details.

Best affiliate software

Proving the ROI of affiliate marketing can be tricky for beginners. Affiliate software makes it easy to collect all of your affiliate marketing data in one centralized location. With affiliate software, it’s easy to track and manage affiliate marketing campaigns, as well as the commissions made by each affiliate partner.

In order to be included in this list, a product must:

  • Provide marketers a platform to manage multiple affiliate campaigns
  • Internal capabilities to track the performance of different partnerships
  • Manage tracking of affiliate commissions

*Below are the top six leading affiliate software solutions from G2’s Fall 2020 Grid® Report. Some reviews may be edited for clarity.

1. Impact

Impact is a partnership automation platform that helps marketers accelerate brand growth. Impact’s cloud-based system provides automation and integration along every stage of the partner lifecycle. Easily manage all of your partner recruitment, onboarding, and attribution in one easy-to-use platform.

What users like:

“Impact has an intuitive user interface that provides performance transparency between you and your affiliate partners. Reporting and analytics by partner, device and content that all track based on your customer acquisition stages. It also hosts a variety of ad formats that suit your partners needs and mix (banner ads, text links, email templates, etc). Impact also provides a flexible contract management platform so we can dynamically set commission structures by partner and manage at scale.”

– Impact Review, Yuri D.

What users dislike:

“The reporting section can be difficult to navigate at times but this is common with similar platforms. Sometimes loading issues affect the speed that the reports load and on rare occasions, this can make the dashboard time-out.”

– Impact Review, Matt H.

2. PartnerStack

PartnerStack is a partner management platform that helps companies manage all of their external partner marketing in one easy to use platform. Leverage partnerships in order to grow revenue, increase the reach and distribution of your marketing, and go to market quicker and more efficiently with PartnerStack.

What users like:

“It was great onboarding experience – we have received a detailed plan and step-by-step guidance and were able to go live without any major issues. My favourite PartnerStack feature is the emails. It allows you to engage with your partners automatically, based on their activity or non-activity, and saves quite a lot of time, especially when you have to deal with a large pool of partners.

Groups feature is also great and helps to segregate your partners by type (Affiliates, Resellers etc). Another time saver is the option to send messages from within PartnerStack interface directly to partners (it will also send an email to notify them).

– PartnerStack Review, Sergei D.

What users dislike:

“The reporting function is good, but creating custom reports on specific advertisers has proven to be a little painful. Otherwise, there is much to like about PartnerStack. Hopefully they continue to add more advertisers; perhaps they could win some from the bigger competitors.”

– PartnerStack Review, James C.

3. TUNE

TUNE is a partner marketing platform that provides flexible solutions for SaaS marketing managers. With TUNE, you can build, manage, and grow your affiliate marketing partnerships. TUNE is trusted by some of the largest global performance advertising networks, including Shopify, Groupon, and Grammarly.

What users like:

“Most people I’ve spoken with on the advertising side use them to provide attribution for their campaigns. In that sense it does a good job, but it can be used for much more. What I like best [about TUNE] is the level of control you have over every event and where it can be sent to.

I can send events to my publishing partners, but I can also send events to my data warehouse for further analysis and correlation to the rest of my data. With that, I’m able to link my customers’ journey through my product, towards engagement and revenue generation, and determine where those customers came from.”

– TUNE Review, George M.

What users dislike:

“Reporting can be a bit slow having to jump between conversion reports, event tracer logs, and other pages, but this has been partly addressed with the conversion data now available with a click in the reports. The datalog time restrictions can also be annoying, but we set up an auto download of the zips, so we can store our data offline.”

– TUNE Review, Steven M.

4. Post Affiliate Pro

Post Affiliate Pro is a top to bottom affiliate marketing platform. Marketers can manage all of their partnerships in one place while tracking the impact of their individual affiliate campaigns. Post Affiliate Pro integrates with over 200 CMS systems and payment processors, making it easy to integrate into your current tech stack.

What users like:

Post Affiliate Pro has top-notch customer service. Every time I reach out, either through email or their excellent 24-hour live chat, I receive a quick and friendly reply. They even offered to help me change the font and colors on the affiliate sign up page when I couldn’t do it myself. That was a huge weight off my shoulders!

The tracking function is very accurate. It is a little complicated for someone who is not tech-savvy, such as myself. I’d say it takes a little time to learn how to use it, but there are a lot of helpful tutorials to walk you through the process.”

– Post Affiliate Pro Review, Connie R.

What users dislike:

“I think the price is too overpriced, especially for smaller affiliate programs like ours. We have less than less than 200 affiliates and less than 50 sales per month. There should be a package for small to medium affiliates companies”

– Post Affiliate Pro Review, Kerapetsi M.

5. Affise

Affise is a performance marketing software for creating and managing partnership programs and advertising campaigns. Affise makes it easy for advertisers, agencies, and affiliate merchants to create customizable dashboards to manage their affiliate marketing initiatives.

What users like:

“Being a small company, we got lucky to be Affise customers. Our onboarding manager helped us to set everything up, import the existing profiles of advertisers and affiliates we had, showed us a great demo and even gave our team training calls.

Thanks to Affise and its customer-oriented approach, we are able to develop our network and aim even higher.”

– Affise Review, Myles H.

What users dislike:

“The integration with third-party applications or platforms is more complex than expected and offers a disaggregated experience, which implies a lack of link between the integrations. I also think there are other functions that [Affise] can improve their integration with the end user.”

– Affise Review, Eric H.

6. Partnerize

Partnerize is a leader in partnership automation. Powered by AI and machine learning, Partnerize helps marketing teams optimize their affiliate marketing efforts and drive faster, better results. More than 200 businesses globally trust Partnerize to drive and manage partner sales and payments.

What users like:

“Aside from how user-friendly the platform is, we really love how much support they provide. I have bi-weekly calls with our rep to discuss any issues we’re having and to learn about new features coming down the pipeline.

They also have a support email that our affiliates can reach out to if they’re having any issues with the platform or need help navigating it. Our team is very lean so this support allows us to focus on other areas.”

– Partnerize Review, Blake A.

What users dislike:

“If I had to be nitpicky and choose something it would likely be something along the lines of the reporting.

The more advanced reporting is somewhat limited when it comes to pivoting the data with certain attributes.You’re only allowed to create report pivots with some of the standard attributes, not with custom data, like publisher references.

Not the end of the world though. Simply exporting the data from the Partnerize platform and opening it in Excel will let you achieve the same thing.

– Partnerize Review, Will M.

 

Racist Nazi Scammer: Paige Thompson of Silverline CRM

By
Pesach Lattin
-
0

Do not do business with Silverline CRM until they get rid of this employee: she is posting anti-Jewish, pro-racist, nazi-like posts all over the internet. And worse: she is a covid19 denier and posting ridiculous claims about covid19.

Alessandro Benigni: Racist, Money Launderer and Scammer Bitcoin

By
Pesach Lattin
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0

Unfortunately, Bitcoin scams are probably the vast majority of “bitcoin investments” and this guy is no different. Not only is he hawking bitcoin investment scams, but seems to be a bit on the racist side, making rude comments all over LinkedIn about black folks.

Not only is he pushing offshore Bitcoin money laundering, but for whatever reasons he keeps on wandering into racist politics from “Europe” where he claims to currently live.

Seems like this Italian national, who is wanted in his home country of Italy for bitcoin scams and money launderer is currently in the UK, trying to keep away from authorities.

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