Surprise! There are laws that apply to Internet Marketing

38 replies
Did you know there are both federal and state laws governing small business advertising and marketing?

Here in the U.S., the Federal Trade Commission and various State commissions (depending upon where you advertise) have many consumer protections in place which are relevant to Internet marketing.

My purpose in bringing this to your attention is not to scare you or preach to you about being "legal" in your business; but, all too often newbies and even experienced marketers totally ignore the fact that there are laws applicable to our industry (IM) which could severely hamper or even shut down your business (not to mention the fines, penalties, and imprisonment that could be imposed).

I would suggest to all Warriors that they spend a few minutes and just review some of the issues the FTC is concerned about.

Here is just a sampling from the FTC Small Business FAQ's (in their own words):
  1. Advertising must be truthful and non-deceptive
  2. Advertisers must have evidence to back up their claims
  3. Advertisements cannot be unfair
  4. Every state has consumer protection laws that govern ads running in that state
  5. Advertisers must have proof to back up express and implied claims that consumers take from an ad
  6. The FTC looks at what the ad does not say - that is, if the failure to include information leaves consumers with a mis-impression about the product
  7. The law requires that advertisers have proof before the ad runs
  8. Ads that make health or safety claims must be supported by "competent and reliable scientific evidence" - tests, studies, or other scientific evidence
  9. Offering a money-back guarantee is not a substitute for substantiation. Advertisers still must have proof to support their claims.
  10. "Bait and switch" advertising - It's illegal to advertise a product when the company has no intention of selling that item, but instead plans to sell a consumer something else, usually at a higher price.
  11. My company distributes a catalog of products manufactured by other companies. Rather than just repeating what the manufacturer says about a product, catalog marketers (including companies with online catalogs) should ask for material to back up the claims.
  12. The FTC pays particular attention to ads aimed at children because children may be more vulnerable to certain kinds of deception. Advertising directed to children is evaluated from a child's point of view, not an adult's.
  13. A federal law requires websites to obtain verifiable parental consent before collecting, using, or disclosing personal information from children, including their names, home addresses, email addresses, or hobbies.
  14. The labeling and advertising of clothing and textiles are governed by special regulations. For example, websites must disclose whether the fabric was imported or made in the United States.
  15. Sweepstakes-type promotions that require a purchase by participants are illegal in the United States
  16. Ads for consumer credit must include certain disclosures about the terms and conditions of credit.
  17. Claims for dietary supplements and similar products must be truthful and advertisers must have substantiation for any objective product claims they make
  18. A fine-print disclosure at the bottom of a print ad, a disclaimer buried in a body of text unrelated to the claim being qualified, a brief video superscript in a television ad, or a disclaimer that is easily missed on a website are not likely to be effective. Nor can advertisers use fine print to contradict other statements in an ad or to clear up mis-impressions that the ad would leave otherwise
  19. Regardless of whether you advertise on TV or radio, in print ads, through direct mail or online, the law is the same
  20. Endorsements by consumers must reflect the typical experience of consumers who use the product, not the experience of just a few satisfied customers
  21. Advertisers also must disclose any material connection between a person endorsing a product and the company selling the product
  22. Energy efficiency claims in ads must be based on specific standardized tests.
  23. The "Franchise Rule" governs the sale of franchises and business opportunities. The law requires sellers to make specific disclosures, give prospective buyers a document containing certain key information about the business opportunity, and be able to substantiate any earnings claims
  24. If you're advertising a product as "free" or offering it at a low cost in conjunction with the purchase of another item, the ad should clearly and conspicuously disclose the terms and conditions of the offer. Disclose the most important information - like the terms affecting the cost of the offer - near the advertised price
  25. If an ad mentions that a product comes with a guarantee or warranty, the ad should clearly disclose how consumers can get the details. Any conditions or limits on the guarantee or warranty (such as a time limit or a requirement that the consumer return the product) also must be clearly disclosed in the ad. Finally, the law requires companies to make copies of any warranties available to consumers before the sale. This applies to retail sales, sales by phone or mail, and online transactions.
  26. Ad claims on the Internet must be truthful and substantiated.
    The FTC has taken action against hundreds of advertisers who have falsely promised easy weight loss. Marketers who promote diet products or services or who make representations about fat loss, weight loss, calorie burning, or the loss of inches or cellulite must make sure that their claims are backed up by sound scientific evidence.
The way I read the FTC documentation, marketing laws apply to all marketers including affiliates that do marketing in the U.S., not just product manufacturers or U.S. residents.


This is just a sampling of a few issues that should be relevant to online marketers. There are many others at the FTC web site.


In order to make your research into these issues easier, I am listing some of the FTC free pdfs that might help you. There are others at the FTC web site. If you do marketing in the U.S., please pay attention to U.S. law.


Advertising and Marketing on the Internet: Rules of the Road

.com Disclosures: How to Make Effective Disclosures in Digital Advertising

Selling on the Internet: Prompt Delivery Rules

Electronic Commerce: Selling Internationally A Guide for Businesses

The best to all of you,


Steve
#apply #internet #laws #marketing #surprise
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  • Profile picture of the author ForumGuru
    Banned
    Nice post.

    Unfortunately, for the general public and marketers alike, many so-called marketers either don't have the time or the mental capacity for small things like rules, guidelines, ToS statements and laws etc., or they just don't care. Yeah, a percentage of marketers are ignorant about these things and are willing to comply when educated or caught, but I believe a large percentage of IMers choose to intentionally ignore many or all laws to make a buck.

    Some of the stuff you see is so crazy it's like a great many of these peeps came straight from diapers to internet marketing skipping morality, ethics, education and experience along the way.

    Cheers

    -don
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    • Profile picture of the author Zodiax
      Most people becoming wealthy through internet marketing fraud don't get caught, because the FTC normally has better things to do.

      Look at Empower Network for example.
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      • Profile picture of the author Sid Hale
        Originally Posted by Zodiax View Post

        Most people becoming wealthy through internet marketing fraud don't get caught, because the FTC normally has better things to do.

        Look at Empower Network for example.
        You are apparently too young to remember Frank Kern's initial foray into the IM arena
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        • Profile picture of the author JohnMcCabe
          Originally Posted by Sid Hale View Post

          You are apparently too young to remember Frank Kern's initial foray into the IM arena
          Yep. There's a saying that "it's easier to ask forgiveness than permission." When dealing with governmental alphabet soup, like the FTC and IRS, forgiveness only comes after a hefty fine and/or jail term.
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      • Profile picture of the author DrewS
        Originally Posted by Zodiax View Post

        Most people becoming wealthy through internet marketing fraud don't get caught, because the FTC normally has better things to do.

        Look at Empower Network for example.
        Not that I support Empower (I used to be an affiliate) but they actually have some of the strongest compliance training in the entire IM field. They take it seriously. You can't sell their stuff without going through the training. They've cut loose several of their top affiliates for FTC non-compliance. They also have an in house lawyer who oversees their compliance department. In other words, they do it right and you can learn something from how they do it.
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  • Profile picture of the author salegurus
    That's great if you live in the USA or even Europe but those living in other parts of the globe don't give a rats a__ about FTC regulations....
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    • Profile picture of the author Steve B
      Originally Posted by salegurus View Post

      That's great if you live in the USA or even Europe but those living in other parts of the globe don't give a rats a__ about FTC regulations....

      Salesgurus,

      That's fine. Anyone that wants to ignore the thread certainly will. I'm sure there are those that live outside the U.S. but advertise here that might want to become familiar with U.S. law. Whether the FTC would ever go after them for violations (since they reside in other countries) . . . I don't know.

      Steve
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      • Profile picture of the author salegurus
        Originally Posted by Steve B View Post

        Salesgurus,

        Whether the FTC would ever go after them for violations (since they reside in other countries) . . . I don't know.

        Steve
        That's exactly my point Steve and they know the FTC is not going after every third world wanna-be IM'er living in some rathole somewhere....
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        Think of how stupid the average person is, and realize half of them are stupider than that.

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        • Profile picture of the author CityCowboy
          Originally Posted by salegurus View Post



          That's exactly my point Steve and they know the FTC is not going after every third world wanna-be IM'er living in some rathole somewhere....
          Wannabe IMers!!! I know some who are very successful in what they do, far more successful than those who live in the US, just because someone is outside the US or Europe doesn't mean they are ignorant of the Law or don't have a life.
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          • Profile picture of the author Zodiax
            Originally Posted by CityCowboy View Post

            Wannabe IMers!!! I know some who are very successful in what they do, far more successful than those who live in the US, just because someone is outside the US or Europe doesn't mean they are ignorant of the Law or don't have a life.
            Are you attractive enough?
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  • Profile picture of the author Janice Sperry
    Good reminders and thanks for the extra links. This would make a good sticky.

    Some of the state and federal laws here in the U.S. may seem like a hassle for an Internet business owner but they protect us also in many ways. In the long run, it pays off to just simply follow them to the best of your ability. Getting sloppy or flagrantly ignoring them could very well lead to a very expensive and time-consuming lesson or even the complete ruin of your business.
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  • Profile picture of the author nicolasmd2112
    Fantastic post Steve.

    I agree that most people who make decent amounts of money online, probably never get caught either scamming, or paying taxes. But why would you risk it? It's an easy way to to lose everything you have, even after years of work, so to take the chance to no follow the cyber laws in place would be risky to say the least. However, we all know that internet is a dynamic, rapidly changing place, so who know's, as time goes by, perhaps more platforms and methods will emerge that make it easier for people to get away with breaking the law....


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  • Profile picture of the author Brent Stangel
    In my experience (from the consumer side) unless someone is doing multi-millions or there is a class action suit, then you really can't get any relief.
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  • Profile picture of the author art72
    Having just learned about Frank Kern's early beginnings, I'd say it's definitely better to "comply than deny" so it doesn't costs you in the long run.

    Thanks Steve, I subscribed to the thread, so I can use it as a reference later... I don't have the time required to really dig into this right now, and since I'm not exactly 'banking' yet... definitely appreciate the heads up!

    -Art
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  • Profile picture of the author tantrikbabaindelhi
    Banned
    [DELETED]
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  • Profile picture of the author discrat
    Tons of Marketers in some way, shape, or form are ether directly or in a roundabout way not complying with these laws
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  • Profile picture of the author jc0708
    Originally Posted by Steve B View Post

    Did you know there are both federal and state laws governing small business advertising and marketing?

    Here in the U.S., the Federal Trade Commission and various State commissions (depending upon where you advertise) have many consumer protections in place which are relevant to Internet marketing.

    My purpose in bringing this to your attention is not to scare you or preach to you about being "legal" in your business; but, all too often newbies and even experienced marketers totally ignore the fact that there are laws applicable to our industry (IM) which could severely hamper or even shut down your business (not to mention the fines, penalties, and imprisonment that could be imposed).

    I would suggest to all Warriors that they spend a few minutes and just review some of the issues the FTC is concerned about.

    Here is just a sampling from the FTC Small Business FAQ's (in their own words):
    1. Advertising must be truthful and non-deceptive
    2. Advertisers must have evidence to back up their claims
    3. Advertisements cannot be unfair
    4. Every state has consumer protection laws that govern ads running in that state
    5. Advertisers must have proof to back up express and implied claims that consumers take from an ad
    6. The FTC looks at what the ad does not say - that is, if the failure to include information leaves consumers with a mis-impression about the product
    7. The law requires that advertisers have proof before the ad runs
    8. Ads that make health or safety claims must be supported by "competent and reliable scientific evidence" - tests, studies, or other scientific evidence
    9. Offering a money-back guarantee is not a substitute for substantiation. Advertisers still must have proof to support their claims.
    10. "Bait and switch" advertising - It's illegal to advertise a product when the company has no intention of selling that item, but instead plans to sell a consumer something else, usually at a higher price.
    11. My company distributes a catalog of products manufactured by other companies. Rather than just repeating what the manufacturer says about a product, catalog marketers (including companies with online catalogs) should ask for material to back up the claims.
    12. The FTC pays particular attention to ads aimed at children because children may be more vulnerable to certain kinds of deception. Advertising directed to children is evaluated from a child's point of view, not an adult's.
    13. A federal law requires websites to obtain verifiable parental consent before collecting, using, or disclosing personal information from children, including their names, home addresses, email addresses, or hobbies.
    14. The labeling and advertising of clothing and textiles are governed by special regulations. For example, websites must disclose whether the fabric was imported or made in the United States.
    15. Sweepstakes-type promotions that require a purchase by participants are illegal in the United States
    16. Ads for consumer credit must include certain disclosures about the terms and conditions of credit.
    17. Claims for dietary supplements and similar products must be truthful and advertisers must have substantiation for any objective product claims they make
    18. A fine-print disclosure at the bottom of a print ad, a disclaimer buried in a body of text unrelated to the claim being qualified, a brief video superscript in a television ad, or a disclaimer that is easily missed on a website are not likely to be effective. Nor can advertisers use fine print to contradict other statements in an ad or to clear up mis-impressions that the ad would leave otherwise
    19. Regardless of whether you advertise on TV or radio, in print ads, through direct mail or online, the law is the same
    20. Endorsements by consumers must reflect the typical experience of consumers who use the product, not the experience of just a few satisfied customers
    21. Advertisers also must disclose any material connection between a person endorsing a product and the company selling the product
    22. Energy efficiency claims in ads must be based on specific standardized tests.
    23. The "Franchise Rule" governs the sale of franchises and business opportunities. The law requires sellers to make specific disclosures, give prospective buyers a document containing certain key information about the business opportunity, and be able to substantiate any earnings claims
    24. If you're advertising a product as "free" or offering it at a low cost in conjunction with the purchase of another item, the ad should clearly and conspicuously disclose the terms and conditions of the offer. Disclose the most important information - like the terms affecting the cost of the offer - near the advertised price
    25. If an ad mentions that a product comes with a guarantee or warranty, the ad should clearly disclose how consumers can get the details. Any conditions or limits on the guarantee or warranty (such as a time limit or a requirement that the consumer return the product) also must be clearly disclosed in the ad. Finally, the law requires companies to make copies of any warranties available to consumers before the sale. This applies to retail sales, sales by phone or mail, and online transactions.
    26. Ad claims on the Internet must be truthful and substantiated.
      The FTC has taken action against hundreds of advertisers who have falsely promised easy weight loss. Marketers who promote diet products or services or who make representations about fat loss, weight loss, calorie burning, or the loss of inches or cellulite must make sure that their claims are backed up by sound scientific evidence.
    The way I read the FTC documentation, marketing laws apply to all marketers including affiliates that do marketing in the U.S., not just product manufacturers or U.S. residents.


    This is just a sampling of a few issues that should be relevant to online marketers. There are many others at the FTC web site.


    In order to make your research into these issues easier, I am listing some of the FTC free pdfs that might help you. There are others at the FTC web site. If you do marketing in the U.S., please pay attention to U.S. law.


    Advertising and Marketing on the Internet: Rules of the Road

    .com Disclosures: How to Make Effective Disclosures in Digital Advertising

    Selling on the Internet: Prompt Delivery Rules

    Electronic Commerce: Selling Internationally A Guide for Businesses

    The best to all of you,


    Steve
    Thanks for the FTC info Steve. FTC does not mess around so
    take this info seriously.
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    • Profile picture of the author VaibhaviJasmin
      Thanks for the info. steve. I am a newbiew and it is really helpful to know such legal laws for internet so we won´t make silly mistakes and be more careful in what we are offering online. I personally believe in taking personal responsibili
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  • Profile picture of the author CityCowboy
    It seems this Federal Trade Commission is really making it hard for Internet Marketers to make a living, of course Consumer protection is a must in any place in the world in regard to any product or service promoted online.
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  • Profile picture of the author CityCowboy
    Outside the US, there are no FTC or anything, there is the heaven of Internet Marketers,
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    • Profile picture of the author Regional Warrior
      Originally Posted by CityCowboy View Post

      Outside the US, there are no FTC or anything, there is the heaven of Internet Marketers,
      This is so wrong in so many ways please do not buy into this

      (Outside the US, there are no FTC or anything,)

      For one if they do go after you and you have some affiliation with the US I.E Pay Pal , web host, Ebay , Ad-sense etc etc
      They will shut down the accounts or freeze them so they do have an affect on you online business and money dries up as you have access

      So think before you try to game a system "How screwed am I if I do this"

      Jason
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      • Profile picture of the author CityCowboy
        Originally Posted by Regional Warrior View Post

        This is so wrong in so many ways please do not buy into this

        (Outside the US, there are no FTC or anything,)

        For one if they do go after you and you have some affiliation with the US I.E Pay Pal , web host, Ebay , Ad-sense etc etc
        They will shut down the accounts or freeze them so they do have an affect on you online business and money dries up as you have access

        So think before you try to game a system "How screwed am I if I do this"

        Jason
        That might be true, however for US residents, they might even go to jail for stupid shit like posting copyright images on your website, ******* joke
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  • Profile picture of the author JohnMcCabe
    Originally Posted by CityCowboy View Post

    Outside the US, there are no FTC or anything, there is the heaven of Internet Marketers,
    If you're playing the affiliate game, the vendors will have much to say even if the FTC deems you small fry. What happens if you ignore the law of the land where your vendor lives, you get a nice cash flow going, and they cut you off to cover their own backsides?
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  • Profile picture of the author Randall Magwood
    Along with Steve said, you should make sure you also have a valid business license, and sometimes.... a zoning permit for wherever you conduct your online business at. Some counties require it, some don't.
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  • Profile picture of the author 3wCorner
    Thanks for the info. Unfortunately, some rules applied to a particular country while the others are not applicable to some country. It is best to be updated and knowledgeable to local laws also.
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  • Profile picture of the author Karlb
    Good post. Though having examples of each point would be awesome. Of course, some are self-explanatory but there's a gray area that can confuse people. When I wrote sales letters for a media company that did informational and physical products I quickly learned that Google ads was a pain and that I needed to replace 'you will' with 'you can'. :-)
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  • Profile picture of the author Jasmine Carter
    Thank you for this post. I just started trying to make money on the internet and did not know any of this. Unfortunately learning all this for newbies like me could have been a challenge and may still be on this road to success. But the truth about it is that you must be honest in any business and if you aren't then eventually you will suffer the consequences. Thank you again I printed out this post and am going to try and remember and apply these rules.
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  • Profile picture of the author Eric the K
    Do not forget your competitors. If they see you are not in compliance, and they send screenshots to the FTC of your website, then the FTC is far more likely to come calling. Construction companies do this to each other all the time, calling up Occupational Health if they see their competitors' workers are not in compliance.
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  • Profile picture of the author zoeyamey
    That was one great post. Thanks for sharing it. I definitely learned something new. Very informative post.
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  • Profile picture of the author Profit Traveler
    What is sad is that USA corporations can literally get away with killing their own consumers and get away with it. They actually factor in the Government penalties as a cost to do business.

    No Accident: Inside GM’s deadly ignition switch scandal
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    • Profile picture of the author discrat
      Originally Posted by Profit Traveler View Post

      What is sad is that USA corporations can literally get away with killing their own consumers and get away with it. They actually factor in the Government penalties as a cost to do business.

      No Accident: Inside GM's deadly ignition switch scandal
      Yep ...Big Pharma and companies like Monsanto
      Sick really


      - Robert Andrew
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  • If everyone complied with these rules, almost noone would be making a living
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  • Profile picture of the author djtrillian
    I know this is an old thread but figured it's probably better to ask my question here in the context of an existing discussion. I have browsed the FTC website and even tried speaking to someone via their chat thing but still have a couple questions, so maybe someone here knows the answer:

    1. Regarding earnings disclaimers, if you have a sales video that is pretty much guaranteeing or at the very least strongly implying a certain income. What I gather from reading above is that you cannot expect your 'disclaimer' link at the bottom of the page to function as your ace up the sleeve, 'get out of jail free' card.

    2. Reading the FTC's 'business opportunity rule' they cite a few examples of the kinds of business offers that qualify but it's a bit vague. So, for example, if you are offering an online training teaching people how to start an online business, does that fall under the FTC's definition of a biz opp?
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  • Profile picture of the author Steve B
    DJ,

    My guesses would be Yes and Yes.

    Honestly, I am only guessing and if you have questions I would suggest speaking with the folks at the FTC (even if they are only semi-responsive). Another, more expensive route, would be to seek competent legal advice about your specific circumstances and issues.

    Legal questions in a public forum are always dangerous propositions.

    The best to you,

    Steve
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    • Profile picture of the author OptedIn
      Originally Posted by Steve B View Post

      I would suggest speaking with the folks at the FTC (even if they are only semi-responsive).
      Better move fast. Another Federal Agency destined to be tossed on the trash heap of history in the name of ending "burdensome, business stifling regulation."

      I'm sure we'll all be better off without it. Sarcasm!
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  • Each company has their own policy, and that is good for them.
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  • Profile picture of the author djtrillian
    Ummmm, 'good for them'... not if they're doing something that falls foul of the law.
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  • Profile picture of the author JohnMcCabe
    DJT. my own guesses echo Steve's.

    1) 'Hiding' the disclaimer by putting it at the bottom of the page, usually in small type, would not be acceptable. By my reading, said disclaimer must be both obvious and visible. In the past, many US ads on TV would have the disclaimer (usually a paid endorser notice) flash across the screen for less than a second, often in type that almost blended with the background. Now they remain on screen long enough to be read, and in positions and typefaces that make reading possible.

    2) In a similar vein, whether it's a biz-opp, training, or even a medical claim for a supplement, the "results not typical" disclaimer must be obvious. You can use anecdotal evidence ("Jack lost 50# in 30 seconds with no dieting or exercise") as long as you can document the facts and you disclose that Jack is not 'normal'.

    In my earlier post in this thread, I noted that while it may be easier to ask forgiveness than permission, it can be a lot more expensive...
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