How Two FTC Actions Affect E-Mail Marketing

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E-mail marketing was one of the few remaining advertising frontiers in December 2003. While industry experts floated concepts on how e-mail marketing should be conducted, marketers applied different standards and practices to how they collected e-mail addresses, what disclosures were made, what options they offered recipients and how they honored recipient choices.

With the signing of the CAN-SPAM Act on Dec. 16, 2003, the fencing in of that frontier began. Federal standards began being applied to e-mail sent within the United States, and case law coupled with subsequent regulation gave us a clearer understanding of what marketers were required to do when undertaking an e-mail campaign

Since the end of 2004, e-mail marketing has grown tremendously, becoming a respected sub-segment within interactive marketing. With this industry-wide growth came a certain frontier mentality among some individual players. Perhaps this is a reason the Federal Trade Commission gave marketers indirect guidance on e-mail marketing in the post-CAN-SPAM era in the form of two recent actions.

The FTC concluded actions against Jumpstart Technologies and Optin Global that should leave our industry with a clear, concise checklist of the do's and don'ts in e-mail marketing. Though many of the practices alleged in the FTC complaints are bad acts, some are strikingly similar to those undertaken by the most reputable marketing organizations. Below are five FTC-targeted practices that should concern companies and mold how e-mail marketing efforts are conducted.

 Subject lines. The FTC alleged in the Jumpstart Technologies and Optin Global cases that subject lines reliant upon appearances of "personal familiarity" with the recipient or a catchy tag line are likely to be considered misleading. Subject lines that falsely suggest a personal relationship with the recipient, such as "hello" or "hi friend," or an existing business relationship with the recipient, such as "Mortgage Application" or "Confirmation number," are the types of practices the FTC specifically targeted.

Legitimate companies should view the FTC settlements as a sign that subject lines failing to indicate truthfully and clearly what is advertised within the body of the e-mail may be deemed deceptive. Avoid subject lines that appear to indicate some personal relationship with a recipient or suggest something not supported by the content of the e-mail. Marketers should ensure that their subject lines accurately inform recipients of the content of the e-mail.

 Notice that a commercial e-mail was an ad.  In both cases, the FTC identified the lack of notice that the e-mail was an ad as a cause of action. CAN-SPAM requires that marketers clearly and conspicuously identify a commercial e-mail as an ad if the marketer lacks the affirmative consent of the recipient.

Marketers should be cautious when sending commercial e-mails without an "Advertisement" notice. Despite a marketer's belief that it may have recipients' affirmative consent, the difficulty in demonstrating this consent should deter one from forgoing the notice. Marketers should clearly and conspicuously note that their commercial e-mails are ads. In doing so, they avoid questions around adequacy of notice and permission levels.

 Clear and conspicuous notice of opportunity to opt out.  The FTC in both cases alleged that the defendants failed "to provide clear and conspicuous notice of the opportunity to decline to receive further e-mail messages from the defendant" as required by CAN-SPAM. Some of the opt-out notices found inadequate in these cases were "Why wait? You can stop getting mail at any time," and "Reference options."

Review your opt-out notices to confirm they are "clear and conspicuous." In the settlement agreement with Optin Global, the FTC suggested a form of an opt-out notice that would constitute a "clear and conspicuous notice of opportunity to opt out." In short, the FTC required that Optin Global begin its opt-out notice with, "to stop commercial e-mail from us..." Marketers who are not confident in the sufficiency of their opt-out notice should use this as a model.

Honoring of opt-out requests.  The FTC also alleged that the two defendants failed to honor recipient opt-out requests within CAN-SPAM's 10 business-day window. These two cases reinforce the need to audit opt-out practices and ensure opt outs are processed effectively. All companies, especially those with multi-faceted marketing organizations, need to ensure that opt outs are being processed and applied effectively to all aspects of a line of business' marketing effort.

"From" lines.  The FTC, in the Jumpstart case, claimed that the defendant's use of a friend's e-mail address, in an e-mail sent to a recipient who was referred to the company by the friend, resulted in header information that was false or deceptive under CAN-SPAM. The FTC's assertion that the placement of the friend's e-mail address in the "from" line constituted the initiation of a commercial e-mail with deceptive header information suggests that the FTC does not believe the referring friend is an "initiator," as defined under CAN-SPAM.

Many legitimate marketers leverage "refer-a-friend" functionality as a way to conduct viral marketing. Marketers need to evaluate existing referral programs to ensure compliance. Marketers that send "refer-a-friend" e-mails from their own mail solution and under the referring friend's e-mail address need to reconsider this practice.

E-mail marketers need a clear understanding not just of CAN-SPAM, but also how the FTC treats these five tactical elements of any e-mail campaign in its enforcement of CAN-SPAM.

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