<i>Caveat Amicus</i>

Identity theft has emerged recently as one of the greatest customer risks in e-commerce. Certainly, no one will shop or do business at a site if he or she feels personal and financial information isn't secure on that site.

But the truth of it is that from the dawn of the e-commerce era, the identity of the 'other' person in a deal has always been an unknown risk. The identity of the person requesting a customer's personal information, whether the sender of a marketing e-mail or the owner of an e-commerce Web site, may never really be clear, even to those who read the fine-print terms and conditions in disclosures and contracts.

Although consumer advocates, government agencies and e-commerce trade groups have for years advocated caution when people shop online (see, for example, http://www.bbbonline.org/, http://www.safeshopping.org/ or www.ftc.gov/bcp/conline/edcams/holiday), in practice, most of us may just stick to established sites that we trust. This caution that gives online users peace of mind lets the Amazon.com's of the world prosper, but makes it harder for newer sites to comfortably maneuver into a lane and niche of their own on the Information Superhighway, unless they pay for a certification service ' and customers may not trust that, either. In other words, people patronize the sites they trust. When it's so easy for a seller to allow its online identity to be verified, why should customers do business with someone whose identity may cause them concern?

Well, Here's Why ' In Part

Recently, however, a series of well-publicized incidents have threatened that hard-earned trust and peace of mind. As a result, individuals and businesses alike conducting commerce online must display skepticism in virtually anything they do online ' especially when dealing with 'friends.' Although we all now expect ads on the Internet, just as when watching television or listening to radio, today they appear even when we don't even realize we should be wary of them.

For example, a recent special CNet news report highlighted the sophisticated marketing behind social networking sites such as MySpace (see, http://www.myspace.com/), Friendster (see, http://www.friendster.com/) and the collegiate phenomenon Facebook (see, http://www.facebook.com/) (see, http://news.com.com/2009-1025_3-6100176.html). Promotional content now appears not only in traditional, disclosed online ads, but also in invented 'profile' pages created to advertise a product or movie. These 'ads,' masquerading as members of 'friendly' online communities, are not surreptitiously inserted onto the site, but are created with 'partners' in close collaboration, a MySpace representative told News.com in the special report. That representative, who was not identified in the article, said: 'We work with advertisers to ensure their brand presence ' whether through profiles or otherwise ' is found on the areas of the site most interesting for that particular brand or product.' According to the report, current pseudo-profiles include characters created by fast-food chains, personal-care products companies, automobile manufacturers, soft-drink sellers and other marketers typically found in any medium teens will read. The article states, though, that MySpace pledged this summer that it would not target kids with what was described as 'age-inappropriate ads,' such as sexually oriented ones. The Web site also requires members to be at least 14 years old.

A similar expose in the Wall Street Journal highlighted 'the opportunity to make personal relationships with millions of actual young people' ' and potential customers, through 'real-looking profiles for fictional characters.' (See, http://online.wsj.com/public/article/SB115490611980828259-O4ZzrfhaMSxyhFoeMI1vn4UUfkc_20060905.html?mod=tff_main_tff_top.) A MySpace executive reports that the company has 'standards and practices' controlling explicit content on profile pages. And he added that although MySpace guards against what the article by Journal reporter Elizabeth Holmes describes as 'marketers creating pages for commercial products without striking an advertising deal,' some slip through.

Note, however, that these marketing-driven 'profiles' are in contrast to the extensive, traditional, 'disclosed' advertising also found at social networking sites. MySpace, for example, recently announced its own online music store to compete with Apple's i-Tunes.

The importance these tactics has assumed in marketing campaigns was highlighted by a Harvard Business School report about advertising on MySpace (see, http://hbswk.hbs.edu/item/5483.html). John Deighton, the HBS faculty member interviewed for the report, characterized MySpace (and sites like it) as 'an exciting marketing frontier, fertile with possibilities'.'

What's the Buzz?

These marketing techniques are known by several labels, and began online long before social networking sites: viral marketing, buzz marketing and peer-to-peer marketing. Also, a simple online search under any of these terms will reveal many advertising agencies claiming expertise in the art.

Besides created profiles, other marketing tools of this type include:

• Instant-messaging campaigns (see, www.articleinsider.com/article/100149);
• Chat-room promotions (see, www.internetretailer.com/dailyNews.asp?id=11542);
• Pseudo-commercials (see, http://online.wsj.com/public/article/SB115445510092123608-o9zQKLeXtt_9y8e3oKQwoY6UPL8_20060901.html?mod=tff_main_tff_top);
• Blog advertising (see, www.blogads.com/); and
• Online films at sites such as http://www.youtube.com/.

They have even spawned law review articles exploring this form of marketing (written by recent graduates, who may be in the best position to research the subject from having grown up online at these sites): 'Online Undercover Marketing ' A Reminder of the FTC's Unique Position to Combat Deceptive Practices' (see, http://blj.ucdavis.edu/article/637/), and 'Undercover Marketing: If Omission is the Mission, Where is the Federal Trade Commission?' (see, 13 Journal of Law and Policy 2005).

But as knowledge spreads about how advertisers have invaded these 'private' online spaces, marketers on social sites may generate their own backlash (see, www.mediabuyerplanner.com/2006/08/28/myspace_members_poke_fun_at_pho). 'MySpace users are growing disenchanted with the social networking site because it's 'becoming too corporate, overrun with ads, and less authentic,” MediaPost, a Web site for professionals in media, marketing and advertising, observes. '(This is) a dilemma that publishers of similar sites face: the measure of their success is advertising revenue, but granting marketers extensive access can undermine the authenticity and appeal that made the site attractive to users, and therefore advertisers, in the first place.' Advertisers may even find themselves facing third-party spoofs and mocking versions of their own ads ' ads that sometimes take on a harder edge. (See, for instance, 'Agencies Are Watching as Ads Go Online' in The New York Times, at www.nytimes.com/2006/08/15/business/media/15adco.html?ei=5090&en=fe84457901ae59fd&ex=1313294400&adxnnl=1&partner=rssuserland&emc=rss&adxnnlx=1157414901-yLGmjrlTJD7WMjw/ZpiSNw.)

Yet despite all the publicity these techniques have received, the concepts behind marketing through social networking sites are certainly not 'brand' new. Indeed, advertisers have always been quick to adopt the latest technology to their purposes, from radio and television to the Internet. It wasn't all that long ago, remember, that the world first saw infomercials and, a bit later, 'educational' Web sites that were really ads. While social networking may be among advertising's most recent, high-profile uses, the practice was mainstream as early as 2001, when it hit the cover of Business Week ' a publication far from the bleeding edge of online culture (see, www.businessweek.com/magazine/content/01_31/b3743001.htm?chan=search).

As a society, however, we may have learned that infomercials and marketing Web sites were ads, and treated them as such ' without the trust implicitly placed in the social networking sites. In contrast, advertising under the guise of online buddies and 'friends' hasn't yet reached that level of public consciousness. While we do not expect to receive marketing pitches from online 'friends,' we may unthinkingly place more trust in what we see and read than if we knew we were receiving ads explicitly labeled as such. Advertisers, then, who choose these latest methods must be prepared for a negative reaction from consumers that become upset if they feel that their trust has been violated.

On the other hand, as a society, we haven't granted a level of trust to most real-world social clubs ' so why have we instinctively done so for social networking sites? After all, anyone can attend 'meet-and-greet' functions for any purpose, including handing out business cards and other business promotion. The real reason for the existence of Chambers of Commerce and other bastions of Main Street U.S.A. and small-business networking is nothing other than marketing. Yet while we may feel better about picking a handyman or vendor because we have eaten or played golf with him or her at one of these events, the membership process isn't equivalent to vetting ' nor does anyone consider it as such, if the matter is given some thought. While some elite social clubs may provide some screening of members, even that is no guarantee of a member's trustworthiness. Perhaps, then, our legal response to the social-networking experience ' like much of life online ' should be purely caveat amicus: beware of your friends.

Preserving Trust Is Not a New Idea

Although preserving customer trust may be more of a marketing concern than a legal one, the law often protects victims against their own misplaced trust ' and resulting bad decisions. Again, because the questions that viral marketing poses aren't new ones, looking to established law for answers may be helpful.

Traditionally, the law has had a technical term for a violation of trust: fraud, in all its incarnations (fraudulent inducement, misrepresentation and garden-variety fraud). These offenses have been punishable by civil and criminal law for centuries. Black's Law Dictionary defines fraud as '[a]n intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing ' or to surrender a legal right.'

But application of traditional fraud concepts to these latest online practices is complicated by the last element of the definition. While a violation of trust by disguising an ad as a 'friend's' profile is certainly an 'intentional perversion of truth,' where is the parting with 'some valuable thing' or the 'surrender a legal right' from that deception? Certainly, inducing purchasers to buy with false information at a Web site with direct sales meets that definition, but the common law breaks down when applied to brand-building or image-building campaigns. Sales may ultimately result from a customer's reliance on recommendations from 'friends' at such a site, but the connection is generally not as direct, and probably harder to prove.

And who but the most vigilant consumer watchdog would have any incentive to pursue such fraud claims? In most cases, an individual's or business's losses from relying on advertiser-placed information at a 'friend's' site would not cover the cost of just saying hello to the attorney that would have to be hired to file the claim, much less of prosecuting it to a court-ordered award.

Fortunately, government regulators at all levels exist to protect the public against such conduct. The Federal Trade Commission (FTC), in particular, has been in the forefront of attempting to regulate potentially deceptive marketing in new media (see, www.ftc.gov/bcp/guides/guides.htm), from the 'Deception Policy Statement' (see, www.ftc.gov/bcp/policystmt/ad-decept.htm) in 1983, to the publication of 'Dot Com Disclosures: Information About Online Advertising' (see, www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf) at the height of the dot-com boom, and 'Advertising and Marketing on the Internet: Rules of the Road' (see, www.ftc.gov/bcp/conline/pubs/buspubs/ruleroad.htm), to a series of less formal rulings. As stated in 'Dot Com Disclosures': 'The same consumer protection laws that apply to commercial activities in other media apply online. The FTC Act's prohibition on unfair or deceptive acts or practices encompasses Internet advertising, marketing and sales. Also, many Commission rules and guides are not limited to any particular medium used to disseminate claims or advertising, and therefore, apply to online activities.'

For example, in 'Commercial Alert Complaint Requesting Investigation of Various Internet Search Engine Com-panies for Paid Placement and Paid Inclusion Programs' (see, www.ftc.gov/os/closings/staff/commercialalertattatch.htm), the FTC reiterated its strong preference for full disclosure (in its evaluation of whether search engines must disclose paid placements). The Commission says: 'As a general matter, clear and conspicuous disclosures would put consumers in a position to better determine the importance of these practices in their choice of search engines to use.' The FTC has also long issued 'Guides' for advertisers requiring disclosure of significant relationships with those making endorsements (see, www.ftc.gov/bcp/guides/endorse.htm): 'When there exists a connection between the endorser and the seller of the advertised product which might materially affect the weight or credibility of the endorsement (ie, the connection is not reasonably expected by the audience) such connection must be fully
disclosed.'

In fact, in mid-2005, Commercial Alert, the advocacy group that obtained the search-engine ruling, requested FTC action concerning these new forms of undisclosed marketing (see, http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=35303). 'Fraud is fraud, and a harmless-sounding name such as 'buzz marketing' doesn't change that,' Gary Ruskin, one of Commercial Alert's founders, says on MediaPost Publications' Online Media Daily Web site. 'We think the issue here is that shills aren't disclosing that they're shills. If shills are disclosing that they're shills, then they're not running afoul of the law.'

For example, according to the ruling request, 'an online campaign that involves marketers creating a blog that looks like it's written by a consumer might be troubling 'because it would be omitting the key fact that it's a product of the marketing department,” according to the article.

We can hope that, when released, the FTC's answer will clarify the application of its large body of advertising law and guidance to current marketing practices. But the clear policy in favor of full disclosure across the many advertising guides it has already issued suggests that the hidden marketing on social networking sites won't remain hidden for long. Perhaps that is why the ad industry didn't wait for the FTC to act on buzz marketing. Even before the Commercial Alert inquiry, the Word of Mouth Marketing Association (WOMMA) had proposed its own 'Code of Ethics' (see, www.womma.org/ethicscode.htm).

Not All of This Is New

Unfortunately, even before the Internet, there was far more conduct against which we needed protection than regulators to provide that protection, even if it appears that existing FTC and other regulations provide safeguarding rules that may not be honored today in practice. The prevalence of potentially deceptive conduct in social networking sites, and its rapid expansion fueled by a teen generation addicted to electronic devices, cannot change that reality. The same problem hinders regulation through long-established state consumer-protection laws that could also be used to regulate social networking activity. Absent a crusading prosecutor, state agencies have often been stymied by inadequate budgets, overwhelming caseloads and legal roadblocks created by federal pre-emption of state action.

Despite these practical limits on regulators, our societal attention to protecting children online, even if not always put into practice, nonetheless may provide the greatest deterrent to violating these laws ' sped along by fickle users who can, and do, shift rapidly to new interests. Sites perceived as allowing abusive or illegal conduct ' or that are just accused of it ' could fall as far behind in the race for eyeballs as once mighty sites such as Napster, or even AOL. That pressure has historically been the inspiration for 'voluntary' codes of ethics such as one recently proposed by WOMMA.

Even if more forceful regulatory enforcement is neither likely nor funded, legal duties for full disclosure of 'paid friends' could at least heighten public awareness of these marketing techniques, and instill in consumers some caution when using these friendship sites. Such duties could arise by formal government action, or just by widespread industry adoption of the practice, so that firms that don't disclose would face pressure to do so.

An online ad, whether fully disclosed in an ad placement, or buried in a created profile, or even in a 'customer' review written by a seller, is still an ad. Online buyers, whether consumers or businesses, are entitled to know that. To paraphrase Gertrude Stein: 'An online ad is an ad is an ad,' wherever it may appear ' and the law should treat it as such.

Sidebar

Helpful Backgrounders, and Beyond

The following Internet sites, all of which are mentioned in Jaskiewicz's article, offer a wealth of information on online marketing, new advertising tactics and how these modes of information distribution are affecting the public. Some also provide direct or indirect guidance, and ideas, for companies and consumers ' and for lawyers who advise e-commerce ventures.

' The Better Business Bureau: www.bbbonline.org

' Safe Shopping: www.safeshopping.org

A Q&A on MySpace profile advertising in the Harvard Business School publication Working Knowledge for Business Leaders:

' http://hbswk.hbs.edu/item/5483.html

In-depth definitions and discussions of alternative advertising tactics from Article Insider:

' www.articleinsider.com/article/100149

A discussion of chat room merchandising, from Internet Retailer ' Strategies for Multi-channel Retailing:

' www.internetretailer.com/dailyNews.asp?id=11542

' Information on Web log ads: www.blogads.com

' Ads in online films: www.youtube.com

Alternative advertising media code of ethics:

' www.womma.org/ethicscode.htm

Social-networking Web sites:

' Facebook: www.facebook.com

Friendster:

' www.friendster.com

MySpace:

' www.myspace.com

Identity theft has emerged recently as one of the greatest customer risks in e-commerce. Certainly, no one will shop or do business at a site if he or she feels personal and financial information isn't secure on that site.

But the truth of it is that from the dawn of the e-commerce era, the identity of the 'other' person in a deal has always been an unknown risk. The identity of the person requesting a customer's personal information, whether the sender of a marketing e-mail or the owner of an e-commerce Web site, may never really be clear, even to those who read the fine-print terms and conditions in disclosures and contracts.

Although consumer advocates, government agencies and e-commerce trade groups have for years advocated caution when people shop online (see, for example, http://www.bbbonline.org/, http://www.safeshopping.org/ or www.ftc.gov/bcp/conline/edcams/holiday), in practice, most of us may just stick to established sites that we trust. This caution that gives online users peace of mind lets the Amazon.com's of the world prosper, but makes it harder for newer sites to comfortably maneuver into a lane and niche of their own on the Information Superhighway, unless they pay for a certification service ' and customers may not trust that, either. In other words, people patronize the sites they trust. When it's so easy for a seller to allow its online identity to be verified, why should customers do business with someone whose identity may cause them concern?

Well, Here's Why ' In Part

Recently, however, a series of well-publicized incidents have threatened that hard-earned trust and peace of mind. As a result, individuals and businesses alike conducting commerce online must display skepticism in virtually anything they do online ' especially when dealing with 'friends.' Although we all now expect ads on the Internet, just as when watching television or listening to radio, today they appear even when we don't even realize we should be wary of them.

For example, a recent special CNet news report highlighted the sophisticated marketing behind social networking sites such as MySpace (see, http://www.myspace.com/), Friendster (see, http://www.friendster.com/) and the collegiate phenomenon Facebook (see, http://www.facebook.com/) (see, http://news.com.com/2009-1025_3-6100176.html). Promotional content now appears not only in traditional, disclosed online ads, but also in invented 'profile' pages created to advertise a product or movie. These 'ads,' masquerading as members of 'friendly' online communities, are not surreptitiously inserted onto the site, but are created with 'partners' in close collaboration, a MySpace representative told News.com in the special report. That representative, who was not identified in the article, said: 'We work with advertisers to ensure their brand presence ' whether through profiles or otherwise ' is found on the areas of the site most interesting for that particular brand or product.' According to the report, current pseudo-profiles include characters created by fast-food chains, personal-care products companies, automobile manufacturers, soft-drink sellers and other marketers typically found in any medium teens will read. The article states, though, that MySpace pledged this summer that it would not target kids with what was described as 'age-inappropriate ads,' such as sexually oriented ones. The Web site also requires members to be at least 14 years old.

A similar expose in the Wall Street Journal highlighted 'the opportunity to make personal relationships with millions of actual young people' ' and potential customers, through 'real-looking profiles for fictional characters.' (See, http://online.wsj.com/public/article/SB115490611980828259-O4ZzrfhaMSxyhFoeMI1vn4UUfkc_20060905.html?mod=tff_main_tff_top.) A MySpace executive reports that the company has 'standards and practices' controlling explicit content on profile pages. And he added that although MySpace guards against what the article by Journal reporter Elizabeth Holmes describes as 'marketers creating pages for commercial products without striking an advertising deal,' some slip through.

Note, however, that these marketing-driven 'profiles' are in contrast to the extensive, traditional, 'disclosed' advertising also found at social networking sites. MySpace, for example, recently announced its own online music store to compete with Apple's i-Tunes.

The importance these tactics has assumed in marketing campaigns was highlighted by a Harvard Business School report about advertising on MySpace (see, http://hbswk.hbs.edu/item/5483.html). John Deighton, the HBS faculty member interviewed for the report, characterized MySpace (and sites like it) as 'an exciting marketing frontier, fertile with possibilities'.'

What's the Buzz?

These marketing techniques are known by several labels, and began online long before social networking sites: viral marketing, buzz marketing and peer-to-peer marketing. Also, a simple online search under any of these terms will reveal many advertising agencies claiming expertise in the art.

Besides created profiles, other marketing tools of this type include:

• Instant-messaging campaigns (see, www.articleinsider.com/article/100149);
• Chat-room promotions (see, www.internetretailer.com/dailyNews.asp?id=11542);
• Pseudo-commercials (see, http://online.wsj.com/public/article/SB115445510092123608-o9zQKLeXtt_9y8e3oKQwoY6UPL8_20060901.html?mod=tff_main_tff_top);
• Blog advertising (see, www.blogads.com/); and
• Online films at sites such as http://www.youtube.com/.

They have even spawned law review articles exploring this form of marketing (written by recent graduates, who may be in the best position to research the subject from having grown up online at these sites): 'Online Undercover Marketing ' A Reminder of the FTC's Unique Position to Combat Deceptive Practices' (see, http://blj.ucdavis.edu/article/637/), and 'Undercover Marketing: If Omission is the Mission, Where is the Federal Trade Commission?' (see, 13 Journal of Law and Policy 2005).

But as knowledge spreads about how advertisers have invaded these 'private' online spaces, marketers on social sites may generate their own backlash (see, www.mediabuyerplanner.com/2006/08/28/myspace_members_poke_fun_at_pho). 'MySpace users are growing disenchanted with the social networking site because it's 'becoming too corporate, overrun with ads, and less authentic,” MediaPost, a Web site for professionals in media, marketing and advertising, observes. '(This is) a dilemma that publishers of similar sites face: the measure of their success is advertising revenue, but granting marketers extensive access can undermine the authenticity and appeal that made the site attractive to users, and therefore advertisers, in the first place.' Advertisers may even find themselves facing third-party spoofs and mocking versions of their own ads ' ads that sometimes take on a harder edge. (See, for instance, 'Agencies Are Watching as Ads Go Online' in The New York Times, at www.nytimes.com/2006/08/15/business/media/15adco.html?ei=5090&en=fe84457901ae59fd&ex=1313294400&adxnnl=1&partner=rssuserland&emc=rss&adxnnlx=1157414901-yLGmjrlTJD7WMjw/ZpiSNw.)

Yet despite all the publicity these techniques have received, the concepts behind marketing through social networking sites are certainly not 'brand' new. Indeed, advertisers have always been quick to adopt the latest technology to their purposes, from radio and television to the Internet. It wasn't all that long ago, remember, that the world first saw infomercials and, a bit later, 'educational' Web sites that were really ads. While social networking may be among advertising's most recent, high-profile uses, the practice was mainstream as early as 2001, when it hit the cover of Business Week ' a publication far from the bleeding edge of online culture (see, www.businessweek.com/magazine/content/01_31/b3743001.htm?chan=search).

As a society, however, we may have learned that infomercials and marketing Web sites were ads, and treated them as such ' without the trust implicitly placed in the social networking sites. In contrast, advertising under the guise of online buddies and 'friends' hasn't yet reached that level of public consciousness. While we do not expect to receive marketing pitches from online 'friends,' we may unthinkingly place more trust in what we see and read than if we knew we were receiving ads explicitly labeled as such. Advertisers, then, who choose these latest methods must be prepared for a negative reaction from consumers that become upset if they feel that their trust has been violated.

On the other hand, as a society, we haven't granted a level of trust to most real-world social clubs ' so why have we instinctively done so for social networking sites? After all, anyone can attend 'meet-and-greet' functions for any purpose, including handing out business cards and other business promotion. The real reason for the existence of Chambers of Commerce and other bastions of Main Street U.S.A. and small-business networking is nothing other than marketing. Yet while we may feel better about picking a handyman or vendor because we have eaten or played golf with him or her at one of these events, the membership process isn't equivalent to vetting ' nor does anyone consider it as such, if the matter is given some thought. While some elite social clubs may provide some screening of members, even that is no guarantee of a member's trustworthiness. Perhaps, then, our legal response to the social-networking experience ' like much of life online ' should be purely caveat amicus: beware of your friends.

Preserving Trust Is Not a New Idea

Although preserving customer trust may be more of a marketing concern than a legal one, the law often protects victims against their own misplaced trust ' and resulting bad decisions. Again, because the questions that viral marketing poses aren't new ones, looking to established law for answers may be helpful.

Traditionally, the law has had a technical term for a violation of trust: fraud, in all its incarnations (fraudulent inducement, misrepresentation and garden-variety fraud). These offenses have been punishable by civil and criminal law for centuries. Black's Law Dictionary defines fraud as '[a]n intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing ' or to surrender a legal right.'

But application of traditional fraud concepts to these latest online practices is complicated by the last element of the definition. While a violation of trust by disguising an ad as a 'friend's' profile is certainly an 'intentional perversion of truth,' where is the parting with 'some valuable thing' or the 'surrender a legal right' from that deception? Certainly, inducing purchasers to buy with false information at a Web site with direct sales meets that definition, but the common law breaks down when applied to brand-building or image-building campaigns. Sales may ultimately result from a customer's reliance on recommendations from 'friends' at such a site, but the connection is generally not as direct, and probably harder to prove.

And who but the most vigilant consumer watchdog would have any incentive to pursue such fraud claims? In most cases, an individual's or business's losses from relying on advertiser-placed information at a 'friend's' site would not cover the cost of just saying hello to the attorney that would have to be hired to file the claim, much less of prosecuting it to a court-ordered award.

Fortunately, government regulators at all levels exist to protect the public against such conduct. The Federal Trade Commission (FTC), in particular, has been in the forefront of attempting to regulate potentially deceptive marketing in new media (see, www.ftc.gov/bcp/guides/guides.htm), from the 'Deception Policy Statement' (see, www.ftc.gov/bcp/policystmt/ad-decept.htm) in 1983, to the publication of 'Dot Com Disclosures: Information About Online Advertising' (see, www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf) at the height of the dot-com boom, and 'Advertising and Marketing on the Internet: Rules of the Road' (see, www.ftc.gov/bcp/conline/pubs/buspubs/ruleroad.htm), to a series of less formal rulings. As stated in 'Dot Com Disclosures': 'The same consumer protection laws that apply to commercial activities in other media apply online. The FTC Act's prohibition on unfair or deceptive acts or practices encompasses Internet advertising, marketing and sales. Also, many Commission rules and guides are not limited to any particular medium used to disseminate claims or advertising, and therefore, apply to online activities.'

For example, in 'Commercial Alert Complaint Requesting Investigation of Various Internet Search Engine Com-panies for Paid Placement and Paid Inclusion Programs' (see, www.ftc.gov/os/closings/staff/commercialalertattatch.htm), the FTC reiterated its strong preference for full disclosure (in its evaluation of whether search engines must disclose paid placements). The Commission says: 'As a general matter, clear and conspicuous disclosures would put consumers in a position to better determine the importance of these practices in their choice of search engines to use.' The FTC has also long issued 'Guides' for advertisers requiring disclosure of significant relationships with those making endorsements (see, www.ftc.gov/bcp/guides/endorse.htm): 'When there exists a connection between the endorser and the seller of the advertised product which might materially affect the weight or credibility of the endorsement (ie, the connection is not reasonably expected by the audience) such connection must be fully
disclosed.'

In fact, in mid-2005, Commercial Alert, the advocacy group that obtained the search-engine ruling, requested FTC action concerning these new forms of undisclosed marketing (see, http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=35303). 'Fraud is fraud, and a harmless-sounding name such as 'buzz marketing' doesn't change that,' Gary Ruskin, one of Commercial Alert's founders, says on MediaPost Publications' Online Media Daily Web site. 'We think the issue here is that shills aren't disclosing that they're shills. If shills are disclosing that they're shills, then they're not running afoul of the law.'

For example, according to the ruling request, 'an online campaign that involves marketers creating a blog that looks like it's written by a consumer might be troubling 'because it would be omitting the key fact that it's a product of the marketing department,” according to the article.

We can hope that, when released, the FTC's answer will clarify the application of its large body of advertising law and guidance to current marketing practices. But the clear policy in favor of full disclosure across the many advertising guides it has already issued suggests that the hidden marketing on social networking sites won't remain hidden for long. Perhaps that is why the ad industry didn't wait for the FTC to act on buzz marketing. Even before the Commercial Alert inquiry, the Word of Mouth Marketing Association (WOMMA) had proposed its own 'Code of Ethics' (see, www.womma.org/ethicscode.htm).

Not All of This Is New

Unfortunately, even before the Internet, there was far more conduct against which we needed protection than regulators to provide that protection, even if it appears that existing FTC and other regulations provide safeguarding rules that may not be honored today in practice. The prevalence of potentially deceptive conduct in social networking sites, and its rapid expansion fueled by a teen generation addicted to electronic devices, cannot change that reality. The same problem hinders regulation through long-established state consumer-protection laws that could also be used to regulate social networking activity. Absent a crusading prosecutor, state agencies have often been stymied by inadequate budgets, overwhelming caseloads and legal roadblocks created by federal pre-emption of state action.

Despite these practical limits on regulators, our societal attention to protecting children online, even if not always put into practice, nonetheless may provide the greatest deterrent to violating these laws ' sped along by fickle users who can, and do, shift rapidly to new interests. Sites perceived as allowing abusive or illegal conduct ' or that are just accused of it ' could fall as far behind in the race for eyeballs as once mighty sites such as Napster, or even AOL. That pressure has historically been the inspiration for 'voluntary' codes of ethics such as one recently proposed by WOMMA.

Even if more forceful regulatory enforcement is neither likely nor funded, legal duties for full disclosure of 'paid friends' could at least heighten public awareness of these marketing techniques, and instill in consumers some caution when using these friendship sites. Such duties could arise by formal government action, or just by widespread industry adoption of the practice, so that firms that don't disclose would face pressure to do so.

An online ad, whether fully disclosed in an ad placement, or buried in a created profile, or even in a 'customer' review written by a seller, is still an ad. Online buyers, whether consumers or businesses, are entitled to know that. To paraphrase Gertrude Stein: 'An online ad is an ad is an ad,' wherever it may appear ' and the law should treat it as such.

Sidebar

Helpful Backgrounders, and Beyond

The following Internet sites, all of which are mentioned in Jaskiewicz's article, offer a wealth of information on online marketing, new advertising tactics and how these modes of information distribution are affecting the public. Some also provide direct or indirect guidance, and ideas, for companies and consumers ' and for lawyers who advise e-commerce ventures.

' The Better Business Bureau: www.bbbonline.org

' Safe Shopping: www.safeshopping.org

A Q&A on MySpace profile advertising in the Harvard Business School publication Working Knowledge for Business Leaders:

' http://hbswk.hbs.edu/item/5483.html

In-depth definitions and discussions of alternative advertising tactics from Article Insider:

' www.articleinsider.com/article/100149

A discussion of chat room merchandising, from Internet Retailer ' Strategies for Multi-channel Retailing:

' www.internetretailer.com/dailyNews.asp?id=11542

' Information on Web log ads: www.blogads.com

' Ads in online films: www.youtube.com

Alternative advertising media code of ethics:

' www.womma.org/ethicscode.htm

Social-networking Web sites:

' Facebook: www.facebook.com

Friendster:

' www.friendster.com

MySpace:

' www.myspace.com