The Emerging Presence of Advertising Self-Regulation in a Direct Response World

By Peter Marinello

As the direct response industry continues its dynamic progression within the advertising marketplace, the Electronic Retailing Self-Regulation Program (ERSP) has similarly attempted to keep pace with the ever-changing trends. The commitment of the DR industry to meaningful self-regulation has become more discernable in ERSP's three-plus years of existence, and it is clear that this forum of advertising self-regulation must continue its concerted effort to grow with the industry and provide it with a stronger, more robust mechanism to resolve advertising claim disputes.

AN OVERVIEW
As ERSP approaches the commencement of its 200th case sometime early this year, let me take a moment to share with you some of the more exciting things that have recently transpired:

• ERSP took a big step toward improving its accessibility to the public in 2007, implementing a public search mechanism on its website (www.narcpartners.org/ers) that allows users to search through ERSP's archive of closed cases and press releases. It's now possible to find cases of interest by searching through ERSP's three-year history of cases by participant, legal issue and subject matter.
• Membership is said to have its privileges, and this statement was reinforced further in 2007 by the introduction of case filing fees ($2,500) for non-members of the Electronic Retailing Association (ERA). This fee will not only help increase program resources for ERSP, but should strengthen the incentive for marketers to join ERA. Several ERA members have availed themselves of the anonymous case filing opportunity with ERSP, meaning that you can bring a case to us without running the risk of being subject to a retaliatory challenge. This procedural method of filing anonymous cases with ERSP has proven to be popular among both consumers and companies.
• In December 2007, the National Advertising Review Board (NARC) approved the inclusion of an ERSP Appeal Panel to the self-regulatory process. Working with ERA, this expedited appeal process features a 50-business-day timeframe, a three-person ERSP review panel, a telephonic review hearing--which does not require panel members to be present in NARC offices--and a $10,000 appellate filing fee. I will continue to apprise ERA members regarding the implementation of this significant undertaking, as we take the appropriate steps to incorporate this appellate mechanism into the ERSP Policy & Procedures.
• In one of the more significant developments of 2007 regarding direct marketers, the Federal Trade Commission (FTC) demonstrated its support of advertising self-regulation by pursuing a matter that was referred to it by ERSP in late 2006. More specifically, ERSP referred advertising disseminated in a spam e-mail for the HoodiaLife diet patch after it had declined to participate in the self-regulatory program. The ensuing referral was part of the FTC's first law enforcement action pursuant to the U.S. SAFE WEB ACT, which improves the FTC's ability to protect consumers from international fraud by: (1) improving the FTC's ability to gather information and coordinate investigation efforts with foreign counterparts; and (2) enhancing the FTC's ability to obtain monetary consumer redress in cases involving spam, spyware and Internet fraud and deception.
• At the request of the FTC's International Consumer Protection Office of International Affairs, ERSP was selected as one of the industry-led regulatory schemes to participate in a case survey put together by the Organization for Economic Cooperation and Development. This survey focused on self-regulation programs in various industries, which were intended to generate a sufficient body of knowledge from which to draw more general lessons about good practices for industry-led regulation.

In 2007, ERSP also conducted its third annual comprehensive review and evaluation of live shopping programming. It's important to remember that while this type of live advertising is different from ERSP's review of traditional (i.e., stagnant) advertising, ERSP similarly endeavors to ensure that these messages are communicated truthfully and accurately. This 2007 review was aimed at expanding the scope of review of this non-traditional sector of the direct response industry and entailed a three-month analysis of the five major live shopping channels in the United States, as well as reviewing the emerging online component of interactive live shopping. ERSP is also tinkering with ways to conduct a similar analysis for other, non-traditional sectors of the direct response industry.

A CASE-BY-CASE BASIS
In addition to the important undertakings noted above, ERSP also completed nearly 75 case reviews in 2007, with 28 of these cases coming as a result of competitive challenges. ERSP initiated 26 advertising cases directly with marketers as a result of its ongoing monitoring program and ERSP also handled 15 cases brought forward by consumers. All told, ERSP cases took an average of 65 calendar days with an average caseload of about six cases a month. Cases in 2007 came to ERSP through various vehicles of new media, including Internet search engine results, online website banner advertisements, media sharing platforms, and, of course, product websites including streaming video. In addition to its continued review of dietary supplement and cosmetic fields, ERSP handled cases involving DR advertising in the fields of financial lending, probiotic research and cancer treatment.

In our attempt to keep pace with the trends in the ever-changing world of direct response advertising, ERSP will continue to rely on the primary factors that are truly responsible for the success of the program--the recognition and support of the direct response advertisers and marketers. With that being said, ERSP needs more of your help in the upcoming year to make this program an even better one. If you sense an emerging area of direct response advertising where ERSP can make its presence felt, let us know. If you see a competitor making an unsupported, egregious claim, forward it on to us. As cliché as it may sound, we welcome your input and constructive criticisms and have the industry's best interests in mind, so please, do not hesitate to reach out to us. After all, ERSP is truly your partner in ensuring that direct response advertising is communicated in a truthful and accurate manner.

Peter Marinello is the director of ERA's Electronic Retailing Self-Regulatory Program. He can be reached at pmarinello@narc.bbb.org.