December 19, 2014

David Adler: Legal Risks Facing Affiliate Marketers Today #AMDays

David Adler, a partner at Leavens, Strand, Glover & Adler, LLC, and a seasoned lawyer focused on counseling businesses across the interrelated areas of intellectual property law, media & entertainment, information technology and corporate law will be speaking at Affiliate Management Days SF 2013 (April 16-17, 2013) on the topic of “Managing Risk: Legal Issues for Merchants & Affiliate Managers.” This is a pre-interview with David.

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legal risks affiliate marketingQuestion: It isn’t unusual to hear one describe affiliate marketing as a “risk-free channel?” Looking at it as a lawyer, wouldn’t you say that it should be called a “high-risk” industry? 

David Adler: As a lawyer, I consider affiliate marketing to be fairly “high risk,” if not done properly. This is due to several factors related to ease of setup, creation and use of marketing content, marketing tactics and lack of oversight.

First, it is relatively easy and inexpensive to get into affiliate marketing. Therefore, it can attract unsophisticated, misinformed and unscrupulous people looking to make a fast buck. The speed and ease with which websites and landing pages can be launched, taken down, and relaunched elsewhere leads to a never ending game of “whack-a-mole” for companies trying to protect their products and brand from illegitimate or unscrupulous marketers.

Second, the purpose of affiliate marketing is to drive traffic to a sales channel. This works best when marketers use compelling, eye catching content that attracts visitors. This means using trademarks, keywords and content that people are seeking.

Affiliates frequently use a network of landing pages with content customized for different audiences. The risk is that, often, the responsibility for creation and use of such content lies with the affiliate. Unscrupulous affiliate marketers have been known to use text, photos and videos of others and even “celebrity endorsements” without permission.  The most notable case involves the unauthorized use of Dr. Oz in connection with efforts to market acai berry health products.

Third, marketing channels such as email and social networking pose risks as well. Again, since the goal of affiliate marketing is to drive Web traffic, it only makes sense to go where the users are. However, many affiliate marketers are unfamiliar with state and federal laws that regulate the use of email for marketing purposes. Likewise, many social networking platforms have terms of service that directly address not only marketing, but affiliate marketing specifically. In addition, marketers must stay within the bounds of truth-in-advertising laws, privacy disclosure requirements and tax laws.

Lastly, Affiliate Marketing depends on thin, almost anonymous relationships with third parties. Because companies often have no direct relationship with the affiliate marketers who are promoting their products and brands, it is difficult to police these marketers activities to ensure that they are not creating an unreasonable risk of liability by using unauthorized content or improper methods.

Question: What steps can an online advertiser take today to avoid some of the key problem areas, minimizing risk and liability?

David Adler:  The first step that anyone in the affiliate marketing ecosystem should take is to do “due diligence.” This means checking out the publisher network and the products being offered to make sure they are established and reputable.

For brands, this means doing “background” checks on the proposed marketing partners and making sure the legal risks outline above, such as intellectual property rights and approved marketing methods, are addressed in the parties contracts.

Question: What do you see as the main challenges for affiliate managers and advertisers with affiliate programs?

David Adler:  The biggest challenges that I see facing the industry are two-fold. First, the rapid adoption of mobile technologies means that marketers must address this platform. In addition to traditional laws and regulations, the mobile platform faces additional hurdles from industry groups issuing their own guidelines in an effort to preempt ever more government regulation.

Second, privacy and security of information gathered and shared on and across mobile devices has heightened concerns among consumers and lawmakers alike. The challenge to marketers is connecting with mobile consumers using content optimized for a smaller screen and driving consumers to make purchases. Marketers now have access to a wide range of personal information never before available. How they choose to access, store and share that info will affect both individual marketers and the industry as a whole.

The upside, of course, is that unlike desktop computers which are stationary, consumers with smartphones are able to make purchases any time, any where. Even with the increased challenges, there are increased opportunities.

Question: What do you think 2013 holds in store for us abd how do you expect the legal landscape to change in relation to e-commerce and online advertising?

David Adler:  As the mobile platform continues to mature, the risks and uncertainties will continue to shift. For e-commerce and online advertising, I see new developments in two fronts, privacy and consumer protection.

First, state and federal government agencies are keenly aware of the privacy concerns raised through use of mobile platforms, such as location data and access to information like contact lists and photos.  This year will continue to see FTC and state enforcement of privacy policies, and violations of those policies, by all parties in the mobile advertising and commerce area.

Second, be on the lookout for more actions in the name of consumer protection that are aimed at unfair or deceptive business practices, particularly with respect to how marketers gather, cross reference and share consumer information for more targeted advertising or behavioral advertising.

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The Affiliate Management Days conference, where David Adler will be speaking on managing risk in affiliate marketing, takes place April 16-17, 2013. Follow @AMDays or #AMDays on Twitter. Early bird registration runs until February 22, 2013. When registering, make sure to use the code SBTAM250 to receive an additional $250.00 off your two-day (or combo) pass.

The rest of the interview series from #AMDays may be found here.

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Geno Prussakov


Geno Prussakov Geno Prussakov is the Founder & Chair of Affiliate Management Days and the CEO & founder of AM Navigator LLC. As an award-winning affiliate marketing expert, he has contributed to the online marketing success of such top brands as Forbes, Nokia, Hallmark, Warner Music, Skype, Forex Club, and hundreds of small businesses.

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