Madison Reed has raised $32.1 million since launching 15 months ago.
Under a program due to start May 1, marketers who make misleading marketing pitches will lose their ERA membership and be subject to federal fines of up to $10,000.
The Electronic Retailing Association is getting tough with members who make misleading or unsubstantiated marketing pitches. Starting May 1, marketers found at fault will lose their ERA membership and be subject to federal fines of up to $10,000. “When making claims that you can’t substantiate, you need to be concerned with this program,” says president and CEO Barbara Tulipane. “Unsubstantiated claims give all of our members a bad name.”
The new ERA Self Regulatory Program provides an enforcement mechanism that had been lacking in the organization’s efforts to get marketers to comply with its guidelines on fair marketing policies, Tulipane says. The guidelines, now mandatory, require ERA members, which include infomercial marketers, web merchants and others, to make marketing claims based on real products and services without any misleading advertising content.
The program will be completely funded by the ERA but operated by a staff consisting of an attorney and one administrative person, both hired by the National Advertising Review Council, which is a unit of the Better Business Bureau. The ERA will not get directly involved in administering the program, and will not directly file claims against any marketers so as to remain independent of the program’s enforcement, Tulipane says.
The program allows challenges to marketing campaigns to be filed by ERA members as well as individuals and groups not associated with the ERA. Once a claim is filed with the program, the targeted marketer must provide adequate substantiation of marketing claims within 15 days of a request for evidence. The program staff will be charged with completing all reviews within 60 days. If the claims are found to have inadequate support and the marketer does not either cancel the program or make necessary alterations within the specified time period, the NARC will refer the case to the Federal Trade Commission or another federal agency such as the Food and Drug Administration, an ERA spokeswoman says, adding that federal agencies may impose fines up to $10,000.
"I am very encouraged by the voluntary self regulatory efforts of the Electronic Retailing Association and the direct response industry as a whole," says Timothy Muris, chairman of the FTC. "The ERA Self Regulatory Program can be an important step forward for consumers and business alike.”