Customers were snapping up copies of a DVD featuring guitar lessons that had been getting high marks from online reviewers and bloggers. The sales success for Legacy Learning Systems, the DVD’s distributor, showcased the promotional reach and power of the Web.
But the Nashville company also drew a federal complaint under truth-in-advertising laws — a business risk that is constantly evolving as the Internet revolutionizes communications. The Federal Trade Commission claimed that Legacy's $5 million surge of orders stemmed from deceptive advertising. Bloggers touting the guitar lessons were posing as ordinary consumers expressing independent views, but were actually company marketing affiliates working on commission, the agency alleged.
Small business owners can run afoul of advertising regulations if they assume that online communications, such as blogs and Twitter, are so informal that they don't amount to advertising messages, said attorney Randall Miller, who has represented companies of all sizes in marketing cases.
"Facebook, bloggers, e-mail — it's all advertising,'' said Miller, a partner at Arnold & Porter LLP. "There's no question that all of that stuff is potentially actionable.''Page 1 of 7 | Next Page