In my last Early to Rise article , I regaled you with a personal story about the potential scary legal issues that can crop up when you work for (or with) less-than-honest marketers. I also outlined the 3 “Golden Rules” that I always follow when working with my own clients.
Unfortunately, in today’s highly regulated, lawsuit-crazy world, it’s not enough to simply follow my Golden Rules. So here are 4 more legal secrets designed to help you avoid legal entanglements …
1. Memorize everything you see on the U.S. Federal Trade Commission website at http://www.ftc.gov/.
The FTC is the arm of the government that sets the rules for all advertising, marketing, and sales conducted in this country. The Commission’s main purpose is to protect consumers from scammers and scoundrels.
For the most part, the FTC wants to make sure you follow my 3 Golden Rules. If you do, you’ll be miles ahead of the game – but NOT home free. There are other little wrinkles you need to be aware of … like the “reasonable person” rule.
In a nutshell, it goes like this: As a business owner, marketing exec, or copywriter, you are not only required to tell the objective truth. You must also avoid giving your prospect a false impression about your product by omitting or failing to mention a key fact about it.
To learn more, I strongly recommend you spend a few hours at: http://www.ftc.gov/bcp/guides/guides.shtm That’s where the FTC keeps its “Plain English” guides for advertisers and marketers. To avoid potential legal hot water, I suggest you visit them often.
2. Carefully study the regulations governed by any regulatory agency that has jurisdiction over your clients or products.
While the FTC watches marketers in nearly every industry, some types of businesses are also governed by their own sets of regulators.
If, for example, you (or your client) are selling stocks, mutual funds, and other kinds of securities investments, you’ll need to understand the ground rules set out by the Securities & Exchange Commission as well as the National Association of Securities Dealers.
If you’re involved in the selling of commodity futures or futures options, you need to study the Commodity Futures Trading Commission site
And if you sell nutritional supplements, you should study FDA.gov for guidance in preparing your advertising and marketing materials.
If you don’t know which agency regulates the industry you’re working in, check out this list at the U.S. government’s Web portal:
3. Keep your legal antennae tuned.
Unfortunately, the laws and regulations governing the advertising and marketing of products and services are not carved in stone. So, to keep on top of shifts in the legal landscape, it’s absolutely crucial to have an attorney review your sales copy before it’s mailed.
Many years ago, for example, the SEC hauled in a guy named Chris Lowe. He wasn’t selling regulated securities – just publishing a monthly investment advisory newsletter offering his opinions and recommendations.
The way Chris saw it, sharing his opinions and recommendations was free speech – protected under the First Amendment. And so he blissfully ignored the SEC’s prohibitions against using testimonials, his track record, and other credibility devices when promoting his newsletter.
The SEC did not appreciate being ignored. They promptly shut down his operation and seized his bank account.
Chris fought back all the way to the Supreme Court, where they determined that he was indeed operating under his First Amendment rights. A major victory was won for financial publishers!
Ever since the famous “Lowe Decision,” marketers of investment and financial information products have been pretty much free to operate under the far more liberal FTC guidelines. Nevertheless, the SEC or CFTC still takes a run at a financial publisher every few years. (And something similar happened with the FDA not too long ago.)
So always keep your ear to the ground. The rules for marketing regulated products are constantly changing – and when they do, you do NOT want to be the last one to know.
4. In our lawsuit-happy country, anyone can sue you at any time and for any reason. And even if you win, the suit is going to cost you tens of thousands – perhaps hundreds of thousands – of dollars.
Here are just a couple ridiculous examples …
January 2000: Kathleen Robertson of Austin, Texas was awarded $780,000 after she tripped over a toddler who was running amok inside a furniture store.
The out-of-control kid was Ms. Robertson’s own son!
October 1998: Terrence Dickson of Bristol, Pennsylvania was awarded more than $500,000 when a faulty door opener trapped him inside a garage and forced him to subsist on Pepsi and dog food for 8 days.
Mr. Dickson had been robbing the house before he got trapped in the garage!
You can’t make this stuff up.
Business owners should buy insurance to protect themselves against these kinds of things
and if you’re a copywriter or a marketing consultant, consider adding the following to your contracts:
A. A clause that says your client takes full responsibility for determining the accuracy, legality, and regulatory compliance of all statements in the copy before it is used.
B. A “Hold Harmless” clause that says if your client is sued for any reason, he can’t turn around and sue YOU.
C. An “Indemnification” clause that says if YOU are named as a party in any regulatory or legal action against your client, he will reimburse you for any legal fees or awards assessed against you.
Pretty scary stuff … but absolutely CRUCIAL to your success.
As you can see, it’s one thing to make big money as a business owner or copywriter or marketer. HOLDING ON to the money you make is another matter entirely.
So follow my 3 Golden Rules … follow your industry’s regulatory guidelines … get a lawyer’s help when appropriate … CYA with contract provisions that protect you when the worst happens … and you have a good shot at both getting rich and staying that way.
Legal Disclaimer: My lawyer felt it was important to tell you that I am NOT an attorney. His advice: Disregard anything in the above article that smacks of legal advice – except, of course, that you should hire a lawyer. Preferably him.
“A countryman between two lawyers is like a fish between two cats.”– Benjamin Franklin
(Ed. Note: Clayton Makepeace offers help in reaping maximum profits through the Internet, direct mail, and print advertising every week in his free e-zine, The Total Package.)