1. Copyright© 2011 WeComply, Inc. All rights reserved. 5/3/2015 Marketing Compliance

2. Copyright© 2011 WeComply, Inc. All rights reserved. 5/3/2015 Marketing Compliance

3. Copyright© 2011 WeComply, Inc. All rights reserved. 3 Overview Vast array of laws and regulations governs marketing activities Intent is to protect consumers and competitors from deceptive and unfair marketing Laws and regulations cover — What we may say about our products/services What we may say about competitors and their products Marketing to consumers by phone, e-mail and Internet What information we can collect and how we can use it As an employee involved in our organization's marketing process, you need a basic understanding of these laws and regulations and how they impact your job responsibilities

4. Copyright© 2011 WeComply, Inc. All rights reserved. 4 Overview (Cont’d) Vast array of laws and regulations governs marketing activities Intent is to protect consumers and competitors from deceptive and unfair marketing Laws and regulations cover — What we may say about our products/services What we may say about competitors and their products Marketing to consumers by phone, e-mail and Internet What information we can collect and how we can use it As an employee involved in our organization's marketing process, you need a basic understanding of these laws and regulations and how they impact your job responsibilities

5. Copyright© 2011 WeComply, Inc. All rights reserved. 5 Truthful Representations Employees who do marketing must comply with all applicable legal requirements All marketing communications must be truthful, current and accurate Rule applies to representations that — Could influence a purchasing decision Are made by, attributable to or approved by us Are in external communications Are in internal communications that could be used externally

6. Copyright© 2011 WeComply, Inc. All rights reserved. 6 In the news… POM Not So Wonderful? POM Wonderful, which markets an expensive and popular pomegranate juice, has locked horns with the Federal Trade Commission (FTC) over the company's advertising claims about its juice. The FTC charged the company and its owners with making "false and unsubstantiated claims" that the juice prevents or treats heart disease, prostate cancer and erectile dysfunction. In its complaint, the FTC said that POM ignored evidence that contradicted its health claims. The FTC seeks to prevent POM from making further medical claims unless they are substantiated by the Food and Drug Administration. POM has also sued the FTC, claiming that the FTC's rules regarding deceptive advertising violate POM's constitutional free-speech rights. Competing Lawsuits Filed over Juice’s Advertising Claims

7. Copyright© 2011 WeComply, Inc. All rights reserved. 7 Deceptive or Unfair Claims We may not use deceptive or unfair claims and statements "Deceptive claim" is a material representation or omission that is likely to mislead or deceive Key concepts for deceptive claims: Materiality: degree of importance of information to audience Omissions: unstated information important to a purchasing decision Puffery: marketing "fluff" Unfairness is broader than deception

8. Copyright© 2011 WeComply, Inc. All rights reserved. 8 Deceptive or Unfair Claims (Cont’d) We may not use deceptive or unfair claims and statements "Deceptive claim" is a material representation or omission that is likely to mislead or deceive Key concepts for deceptive claims: Materiality: degree of importance of information to audience Omissions: unstated information important to a purchasing decision Puffery: marketing "fluff" Unfairness is broader than deception

9. Copyright© 2011 WeComply, Inc. All rights reserved. 9 Deceptive or Unfair Claims (Cont’d) We may not use deceptive or unfair claims and statements "Deceptive claim" is a material representation or omission that is likely to mislead or deceive Key concepts for deceptive claims: Materiality: degree of importance of information to audience Omissions: unstated information important to a purchasing decision Puffery: marketing "fluff" Unfairness is broader than deception

10. Copyright© 2011 WeComply, Inc. All rights reserved. 10 Deceptive or Unfair Claims (Cont’d) We may not use deceptive or unfair claims and statements "Deceptive claim" is a material representation or omission that is likely to mislead or deceive Key concepts for deceptive claims: Materiality: degree of importance of information to audience Omissions: unstated information important to a purchasing decision Puffery: marketing "fluff" Unfairness is broader than deception

11. Copyright© 2011 WeComply, Inc. All rights reserved. 11 Special Note… Avoiding Deceptive Claims with "Qualifying Statements" Qualifying statements are often appropriate and, indeed, necessary to make representations clear and accurate. Qualifying statements are words, phrases or sentences that explain or clarify the basis for a representation. They also prevent representations from being deceptive or misleading. The appropriate wording of a qualifying statement depends on the nature of the representation being made. Watch for these potentially misleading representations in your marketing materials: Untrue or not-quite-true statements: Modify the statements to match whatever substantiation you have for the representation. Superlatives: Make superlatives acceptable by using a modifier, such as "one of the best" or "virtually unmatched." Promises or assurances: Modify promises to be accurate — e.g., use "allows" instead of "guarantees" and "designed to" instead of "warrants."

12. Copyright© 2011 WeComply, Inc. All rights reserved. 12 Comparative Claims Comparative claim explicitly or implicitly compares one product/service to another Comparative claims are generally acceptable if they — Are true and not misleading Are fair comparison of similar properties Are objective, accurate and factual State basis for all comparisons Don't discredit the reputation of another

13. Copyright© 2011 WeComply, Inc. All rights reserved. 13 Special Offers Certain claims or offers have special considerations: Offers of "free" products or services: Use the word "free" only if there is no obligation to consumer Guarantees: Avoid saying "guarantee" or "promise" without qualifying statement Endorsements: Must be authorized by endorser and disclose any material connection with endorser

14. Copyright© 2011 WeComply, Inc. All rights reserved. 14 In the news… FTC Tackles Astroturfer The Federal Trade Commission (FTC) recently announced that it had reached a settlement with a California marketing company for the company's "astroturfing" activities — i.e., posting phony product endorsements online. The FTC charged that the company engaged in deceptive advertising by employing people to write and post phony product reviews in the Apple iTunes Store without disclosing that they were paid for these activities. The posts — four- and five-star reviews of games of the company's game-developer clients — were made under account names that made them appear to have been written by ordinary people. Under the settlement, the company agreed to remove all of the phony iTunes reviews and to refrain from making similar endorsements in the future. Marketing Firm Agrees To Stop Posting Fraudulent Reviews Online

15. Copyright© 2011 WeComply, Inc. All rights reserved. 15 Substantiation We must be able to substantiate every marketing representation we make Your responsibilities: Ensuring that substantiation directly supports the representation Finding substantiation from an acceptable source Verifying that substantiation is sufficient Documenting the substantiation for all representations Substantiation must exist before representation is made

16. Copyright© 2011 WeComply, Inc. All rights reserved. 16 Substantiation (Cont’d) We must be able to substantiate every marketing representation we make Your responsibilities: Ensuring that substantiation directly supports the representation Finding substantiation from an acceptable source Verifying that substantiation is sufficient Documenting the substantiation for all representations Substantiation must exist before representation is made

17. Copyright© 2011 WeComply, Inc. All rights reserved. 17 Sweepstakes and Contests Sweepstakes and other contests must be run properly to comply with requirements Participants may not be required to pay or make a purchase Promotional materials must — State that no purchase is required State that purchases will not increase chances of winning Clearly explain method for entering Advertise prizes clearly and accurately Clearly explain all terms and conditions

18. Copyright© 2011 WeComply, Inc. All rights reserved. 18 Sweepstakes and Contests (Cont’d) Sweepstakes and other contests must be run properly to comply with requirements Participants may not be required to pay or make a purchase Promotional materials must — State that no purchase is required State that purchases will not increase chances of winning Clearly explain method for entering Advertise prizes clearly and accurately Clearly explain all terms and conditions

19. Copyright© 2011 WeComply, Inc. All rights reserved. 19 Pop Quiz! Which of the following statements can you include in a sweepstakes entry form? A."Purchases will not increase your chances of winning." B."You're a winner!" C."Just buy any XYZ Inc. product to enter the sweepstakes!"

20. Copyright© 2011 WeComply, Inc. All rights reserved. 20 Negative-Option Marketing Negative-option marketing: seller interprets consumer's silence as consent Four types of plans: Pre-notification: consumers must return rejection form before shipment Continuity: consumers must tell sellers to stop (no rejection form) Automatic renewals: seller renews until consumer cancels Free-to-pay conversions: consumers receive free merchandise for trial period and then are charged a fee Sellers must inform consumers of terms and obtain consent

21. Copyright© 2011 WeComply, Inc. All rights reserved. 21 Digital Marketing Digital marketing: promotion of goods and services through digital media General rules: E-mail: message must — 1.Not use false or misleading information 2.Identify itself as an ad 3.Identify seller as sender 4.Use accurate subject line 5.Include seller's physical address 6.Give opt-out instructions Mobile: seller must obtain recipient's express prior authorization Social media: seller must — 1.Obtain consumer's consent 2.Provide means of opting out

22. Copyright© 2011 WeComply, Inc. All rights reserved. 22 Digital Marketing (Cont’d) Digital marketing: promotion of goods and services through digital media General rules: E-mail: message must — 1.Not use false or misleading information 2.Identify itself as an ad 3.Identify seller as sender 4.Use accurate subject line 5.Include seller's physical address 6.Give opt-out instructions Mobile: seller must obtain recipient's express prior authorization Social media: seller must — 1.Obtain consumer's consent 2.Provide means of opting out

23. Copyright© 2011 WeComply, Inc. All rights reserved. 23 Telemarketing Telemarketing is subject to detailed laws and regulations Basic rules: Callers must honor "do-not-call" rules Callers must identify themselves and their organization and inform consumer of purpose of call Callers must generate caller-identification information Callers may not use automated dialers unless they check do-not-call list before dialing Callers generally may not abandon calls they initiate

24. Copyright© 2011 WeComply, Inc. All rights reserved. 24 Telemarketing (Cont’d) Telemarketing is subject to detailed laws and regulations Basic rules: Callers must honor "do-not-call" rules Callers must identify themselves and their organization and inform consumer of purpose of call Callers must generate caller-identification information Callers may not use automated dialers unless they check do-not-call list before dialing Callers generally may not abandon calls they initiate

25. Copyright© 2011 WeComply, Inc. All rights reserved. 25 In the news… Recruiters Ring Up Abuse Recently, the U.S. Government Accountability Office (GAO) conducted an undercover investigation of 15 for- profit colleges to determine whether their representatives engaged in fraudulent or questionable marketing practices, including telemarketing practices. Four GAO representatives who registered with Web sites designed to link for-profit colleges with prospective students received numerous, repetitive calls from the colleges — in some cases, within five minutes of registering. One fictitious prospective student received 182 recruiting phone calls in one month. The for-profit college recruiters placed calls to the fictitious prospective students at all hours of the day and as late as 11 pm. Attorneys general in ten states have since launched a coordinated investigation into allegations of deceptive marketing and consumer-fraud concerns at for-profit colleges. GAO Probe Reveals Abusive Telemarketing Practices at For-Profits

26. Copyright© 2011 WeComply, Inc. All rights reserved. 26 Policy Abusive Telemarketing Practices The following types of conduct are considered abusive telemarketing practices and violate most telemarketing laws and regulations: Calling a person's residence before 8:00 a.m. or after 9:00 p.m. local time without the person's prior consent; Calling a person or engaging a person in telephone conversations repeatedly with the intent to annoy or harass that person; Calling a person who has previously stated that he/she does not wish to receive calls from the company whose goods or services are being offered; Using threats, intimidation or the use of profane or obscene language; Disclosing or receiving unencrypted consumer account numbers for use in telemarketing (subject to an exception for charities); Causing billing information to be processed for payment without the express informed consent of the customer; and Using a fax machine, computer or other device to send an unsolicited advertisement to a fax machine.

27. Copyright© 2011 WeComply, Inc. All rights reserved. 27 Marketing to Children COPPA gives parents control over information collected from their children Prohibits knowing collection of personal information from children under 13 without parents' consent May require specific steps to — 1.Collect children's personal information appropriately 2.Protect information we collect 3.Guard against misuse COPPA prohibits us from conditioning participation on collection of more personal information than is reasonably necessary

28. Copyright© 2011 WeComply, Inc. All rights reserved. 28 Marketing to Children (Cont’d) COPPA gives parents control over information collected from their children Prohibits knowing collection of personal information from children under 13 without parents' consent May require specific steps to — 1.Collect children's personal information appropriately 2.Protect information we collect 3.Guard against misuse COPPA prohibits us from conditioning participation on collection of more personal information than is reasonably necessary

29. Copyright© 2011 WeComply, Inc. All rights reserved. 29 Collection and Use of Marketing Data We want to be able to use data we collect in promotional campaigns and programs Law restricts how we collect and use personally identifiable information (PII) about consumers Follow these guidelines: Give notice of details of our privacy policy and practices Give consumers choice to opt in or out of receiving marketing communications Provide our contact information Honor representations in our privacy policy regarding consumers' access to their data

30. Copyright© 2011 WeComply, Inc. All rights reserved. 30 Costs of Noncompliance Potential costs: Penalties for violations of law — fines, injunctions and prison terms Civil lawsuits seeking actual and possibly punitive damages Bad publicity and negative impact on our brand, reputation and stock Report all questionable or improper activities to your supervisor, Director of Marketing or Legal Department

31. Copyright© 2011 WeComply, Inc. All rights reserved. 5/3/2015 Final Quiz

32. Copyright© 2011 WeComply, Inc. All rights reserved. 5/3/2015 Questions?

33. Copyright© 2011 WeComply, Inc. All rights reserved. 5/3/2015 Thank you for participating! This course and the related materials were developed by WeComply, Inc. and the Association of Corporate Counsel.