Court Cases & Rulings that Changed Compliance in 2016

By Joe LaskowskiFebruary 15, 2017

The new year has just begun and there already seems to be an underlying theme for 2017: change. And what we’re seeing with regard to compliance is certainly influencing both the higher education and lead generation industries.

With the regulatory future yet to unfold, here are a few important court cases that shaped 2016 and the lessons lead generators can take moving forward.

Impact: Penalties
A new 2015 Act amended the Federal Civil Penalties Inflation Adjustment Act, which was first put into place in 1990. As civil penalties had not been adjusted since 1978, the 2015 Act helped bridge a 37-year gap. It required federal agencies to increase initial penalty amounts utilizing a “catch-up” inflation adjustment methodology and continue to make annual adjustments for inflation. The changes went into effect in August 2016 and more than doubled maximum civil penalty amounts.

Here, for example, are a few noteworthy civil penalty increases within the Federal Trade Commission Act:

  • Section 5 outlines unfair or deceptive acts or practices, such as a representation, omission or practice with the potential to mislead the consumer. Associated violations have increased from $16,000 up to $40,000
  • Section 10 details the failure to file required reports. Such violations have gone up from $210 to $525.

In all, it’s important for lead generators to recognize that penalty risk likely doubled in 2016 and will continue to change each year.

Impact: Advertising
In October 2016,  federal agencies determined that the job placement claims on one university’s website were unsubstantiated and violated the FTC Act. The higher education institution was required to remove employment and earnings claims and pay in the millions to settle with the FTC. In its judgment and other writings, the FTC underscored the importance of providing “solid evidence” to back up marketing statements, particularly in higher education where many consumers will be making one of the largest investments of their lifetime. It’s more important than ever before for higher education marketers to provide total transparency and leverage every opportunity to capture data and properly communicate findings.

Impact: Affiliate Marketing
A case involving an affiliate network marketer went to the U.S. Court of Appeals in October 2016. It was determined that the marketer recruited affiliates and used fake news sites to drive traffic to the website of its client. One of the main questions presented in court was: If a marketer does not directly create or publish a deceptive ad, are they still responsible for it? The FTC said: Yes. The agency outlined five main reasons, including the act of purchasing ad space on more credible news sites to give the impression of authenticity. Among the many lessons, this case certainly underscored the importance of choosing marketing partners wisely.

Impact: Online Privacy
There was a great deal of movement in October. Case in point: The FCC concluded a landmark ruling in support of online privacy. In a 3-2 vote, the FCC moved toward placing limits on how much personal user data an Internet provider can use or sell. The ruling also required providers to acquire user consent prior to sharing browsing history, location information and other online activities with third-party marketers. For the lead generation industry, this could have a major impact on targeted advertising.

Impact: Omnichannel Customer Communications
Marketers continue to expand their reach on channels that consumers use most, like text messaging. At the same time, however, the FCC continues to tighten its rules around omnichannel communications. The agency reminded marketers in November that “robotexts” are held to the same standards as “robocalls,” and companies that overstep regulations will be faced with the same penalties: a warning citation and penalties close to $19,000 per subsequent violation. Marketers should note that texting is expected to remain a focus of regulators moving forward.

More Changes to Come in 2017
The industry is likely to see big changes within the FCC this year. On April 10, 2017, a new FCC commissioner will be selected and likely tip the balance of power in a different direction. This could mean changes to the 25-year-old TCPA. Until then, the industry is able to reflect on the rulings from 2016 in an effort to better understand where regulations are heading and take time to identify opportunities to enhance transparency.

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