A Caseful of Briefs

Highlights from the PMA Law conference. Privacy and the Internet were hot topics at the Promotion Marketing Association’s annual Law Conference, held last November in Chicago. “The law is being pressed into a new mold to deal with Internet marketing,” says Stephen Durchslag, partner with Winston & Strawn, Chicago.

Among marketer concerns: Potential legislation of Internet privacy, protection of consumer privacy among marketing partners, and scrutiny of marketing via wireless technology. Here are some snapshots.

Confidential information: Internet privacy regulation is likely to come this year, Durchslag says. While states including New York and California mull statutes, “the real battle is on the federal level,” he says. Of the 50 bills pending in the House and Senate, Durchslag says the most likely to pass is the McCain Bill (S. 2928), the Consumer Internet Privacy Enhancement Act. The bill would make it illegal for Web sites to collect personally identifiable information from consumers without notice or an opportunity to control use for marketing and disclosure to third parties. The bill also calls for a study of online privacy issues within 90 days of it becoming law. Committee hearings were held in October.

Mired in Wireless: The FTC and Congress will look at wireless issues next. The Wireless Telephone Spam Protection Act (H.R. 5300), introduced in the House on Sept. 26, would amend the Communications Act of 1934 to make it unlawful to send unsolicited ads via wireless phone messaging systems. It was sent to the Subcommittee on Telecommunications, Trade, and Consumer Protection in October. The FTC held hearings on wireless privacy in December.

AMOE.com: Online-only sweeps can get away with offering no offline alternative method of entry (AMOE), but traditional sweeps still need online and offline components. Now that Internet access is widespread, hard-liner Florida has stopped considering access to be consideration, but marketers should still offer mail/phone entry for offline sweeps so no one can accuse them of inducing consumers to get Internet access solely to enter. Also, don’t offer on-pack gamepieces free online: If some consumers bought product to play and others can get a gamepiece free online, that’s too much disparity.

Integration alert: As marketers do more on-pack/online combinations (get a gamepiece on pack, go online to see if you’ve won), regulators will be on guard against consideration in the form of making consumers work too hard to play. “We’re entering uncharted waters,” says Linda Goldstein, partner with Hall Dickler Kent Goldstein & Wood, New York City. The risk is requiring consumers to take two steps: Buy the product (or get a free gamepiece) in store, then go online to play. “I can’t help thinking of my grandmother, who might buy something at the supermarket to get the gamepiece without realizing there’s another step involved to participate,” Goldstein says. “It’s critical to disclose in all ads and materials that online entry is necessary.”

Master of domain names: The Internet Corporation for Assigned Names and Numbers (ICANN) in November approved seven new top-level domain names (the “dot-something” part). They are: aero, biz, coop, info, museum, name, and pro. ICANN expects to recommend registry operators (one to handle registration for each domain name) to the Department of Commerce early this year.

The thrill of skill: State attorneys general will take a hard look at games of skill that consumers must pay to play. Skill games, governed by lottery laws, are allowed only if there’s no element of chance. “Attorneys general aren’t impressed with lottery laws,” Goldstein says. “They don’t think consumers should have to pay anything to compete for prizes.”

FTC eyes sample subscriptions: The FTC is expected to scrutinize free-trial offers that automatically convert to paid purchases after the trial period ends. Catalog merchants offer “free” magazine trials when shoppers phone in orders; unless cancelled when the trial period ends, subscriptions kick in and magazines automatically charge the credit card used for the initial catalog purchase.

Sunnier in Florida: The bulldog state that led the charge against direct-mail sweeps has shifted jurisdiction over sweepstakes from the Department of State to the Department of Agriculture. “They’re getting very lazy over there as they see the end in sight,” says Durchslag.

Another reason to skip Jersey: Goldstein pegged New Jersey as “the new problem state” because it’s “taking a hard line on skill games” and being very strict that games have no element of chance. Goldstein says PMA is watching developments and may get involved to argue on behalf of the industry.

FTC, at your service: One attendee asked a panel discussing Web-site privacy policies what a marketer can do if his business team sells subscriber information in violation of the company’s own privacy policy. The panel blanched. “It happens all the time,” the questioner shrugged. Joel Winston, FTC’s acting associate director of financial practices, offered, “Let me leave you my phone, e-mail, address, and fax number. Just let me know and we’ll take care of it.”