Earth Day is approaching and it’s great when businesses decide to go green. But if the “green” they have in mind is the hard-earned cash of consumers interested in making wiser environmental choices, companies should remember that well-settled truth-in-advertising principles apply. The FTC’s law enforcement action against the people behind the “Green Millionaire” promotion emphasizes that point.
Ads for the Green Millionaire book featured attention-grabbing claims like “how to get free gas for life,” “how to put solar panels on your roof for free,” and “how to make your electricity meter go backwards paying you.” How much did the book cost? According to the FTC, statements like “Now it’s FREE,” “FREE!,” and “This free offer won’t last.” — and the fact that the word “free” was displayed on the screen for all but five seconds of the defendants’ one- and two-minute commercials — led reasonable consumers to conclude that the book was, well, free.
What the defendants didn’t disclose (or didn’t disclose adequately) was that people who ordered the “free” book would be enrolled in a negative option program subscribing them to an e-magazine and billing their credit cards a recurring cost of $29.95 for a two-month “membership” or, more recently, $89.95 for a one-year membership, unless people canceled during a trial period, which was typically 14 days.
What about claims that the book would show readers how to get free gas for life, install solar panels at no charge, or get their electric meter to “run backwards paying you”? All false, said the FTC.
To settle the lawsuit, the defendants agreed to pay almost $2 million in refunds and are barred from making misleading product claims. For future online negative option offers, the proposed order requires them to provide a check box disclosing important terms of the negative option program, including all costs associated with it, that consumers are agreeing to pay the costs, the length of any trial period, and that people must cancel to avoid the charges. Consumers must then affirmatively select the check box for the defendants to process any billing information.
What pointers can companies take from a closer reading of the pleadings in the case?
Free means free. Whether you’re touting the cost-saving benefits of your product or what people will have to pay for it, don’t say “free” if you don’t mean “free.” It’s really that simple.
Silence isn’t golden. It should go without saying, but we’ll say it anyway: Assuming that a person’s silence or inaction gives you permission to bill them or charge their credit card is a sure-fire way to tick off a customer and invite law enforcement scrutiny.
“Buried lies”? Golfers hate buried lies when sand obscures their view of the golf ball. Consumers hate them when important terms and conditions are hidden in blocks of fine print, in hard-to-find hyperlinks — or both. The FTC charged that the defendants in the Green Millionaire case hid key terms and conditions in out-of-the-way places. Advertisers who want to stay on the right side of the law make an effort to disclose important info clearly and conspicuously.
Test your testimonials. The defendants conveyed some of their underlying environmental benefit claims through testimonials and endorsements. But if you’re claiming — expressly or by implication — that a person is a bona fide user of your product and achieved benefits as a result, you need a reasonable basis for making those representations.
The more the warier. The FTC complaint names four defendants:
- Green Millionaire, LLC,
- Syndero, Inc.,
- Scott Waltz, former CEO of Syndero who also participated in the business activities of Green Millionaire, and
- Nigel Williams, who wrote the Green Millionaire book, got royalties for sales of the book, was the on-air personality in ads challenged as deceptive, and provided consulting services to Green Millionaire.
The FTC Act is a versatile tool for challenging illegal activities by a wide variety of corporate entities and individuals. Savvy marketers understand that everyone has a role when it comes to compliance.
B(u)y the book? There’s a myth that makes the rounds that selling a publication is some sort of end-run around the FTC Act. Not so — and the FTC’s 2009 rescission of its often-misstated Mirror Image Doctrine should make that point crystal clear.