Lessons From Recent FTC/State AG Collaborations – By Rachel Hirsch

by Sara Szado on November 21, 2015

We have all seen the headlines that start with the same ominous language: “FTC Takes Action Against…,” or “FTC Sues to Stop…,” or even the dreaded: “At FTC’s Request, Court Shuts Down….” These headlines generally signal new enforcement measures that the FTC has deemed a priority for that fiscal year, such as shutting down illegal robocallers or stopping supplement makers from deceptive advertising and illegally debiting consumers’ accounts.

Lately, however, the FTC has been sharing the spotlight with other agencies, which pair up with the FTC to flex their respective enforcement muscle. Notably, in recent months, there have been quite a few press releases regarding collaborations between the FTC and State AGs offices.

The most newsworthy pairing between the FTC and State AGs offices was announced in May when the FTC and all 50 states and D.C. charged four cancer charities with bilking over $187 million from consumers.

In the context of FTC/State AG collaborations, the consumer complaints resulting in enforcement actions usually emanate from the State AGs offices, which are the first responders to any illegal or deceptive marketing practices. So what lessons should affiliate marketers learn from recent dual-enforcement cases?

1. Respond. The first course of action, when confronted with a State AG complaint, is to respond, and to respond thoughtfully. Make sure you investigate the claims being presented, and your formal written response reflects the findings of your investigation and your overall commitment to customer care. In most cases, a full customer refund will do the trick.

2. Re-Evaluate. If your company is receiving multiple consumer complaints, especially from the same State AG office, it may be time to examine and re-evaluate your customer policies. Typically, your terms and conditions and refund policies will likely need to be revamped to ensure that material terms are disclosed clearly and conspicuously and are written in a customer-friendly format.

3. Train. Most State AG complaints arise from customers dissatisfied with their ability to cancel future shipments of a product or to obtain refunds of past product purchases. These types of problems can be the result of unqualified customer services representatives. Make sure that all customer service representatives are trained to respond to these requests efficiently and effectively.

4. Monitor. Sometimes consumer complaints do not emanate from your business practices, but rather, the business practices of your partners. Make sure to monitor your partners to ensure compliance with all applicable laws through periodic auditing and iron-clad agreements.

5.Maintain. To the extent you respond to a customer complaint, make sure you maintain thorough records of your responses. And, if your company has received any positive customer feedback, keep track of those records as well to demonstrate good business practices if you are ever the subject of any investigation.
Remember, there is only one FTC, but there are 50 State AG offices (plus, the District of Columbia). Keeping their offices happy can be key to avoiding future collaborations that will put your company in the headlines.

Rachel Hirsch is a Senior Associate at Ifrah PLLC, a law firm in Washington, D.C.

This article appeared in issue 31 of FeedFront Magazine, which was published in August 2015. http://issuu.com/affiliatesummit/docs/feedfront-31

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