An update on the latest rules and regulations put forth by the FTC, FCC, federal government and international governing bodies. A can’t miss for mobile marketers and anyone who does business online. Experience level: Beginner Target audience: Affiliates/Publishers, Merchants/Advertisers, Networks Niche/vertical: Compliance John Monarch, CEO, Connexus Inc. (Twitter @papajohn56) (Moderator) Aaron Kelly, Attorney, Kelly / Warner, PLLC (Twitter @aaronklaw) CJ Montgomery, Attorney at Law, Online Legal Group

2. Kelly / Warner Law
Phoenix, AZ
-Internet Law -Defamation
Law
-IP Law -Business
Law
-Privacy Law -Marketing
Law
www.kellywarnerlaw.com
www.aaronkellylaw.com

3. Connexus Inc.
Greenville, SC
 Direct Response firm specializing in
Product launches, media buying, and
offer consulting.
 Corporate formation consultant
www.connexus.us

4. Online Legal
Group.
Portland, OR
 Direct Response merchant
specializing in international CPA/CPL
offers in health and beauty industry.
 Corporate & Taxation Attorney:
Compliance, Tax and Contractual
attorney for affiliate marketing clients

5. ONLINE BUSINESS & MARKETING LEGAL UPDATE
Today we’re going to do a review of the current
compliance standards for online marketing &
business.
 FTC Update – We’ll start off with a quick
round-up of what the FTC has been up to over the
past 12 months.
 Corporate Structuring– From
there we’ll dive into why most affiliates and advertisers
really aren’t protecting themselves properly.

6. ONLINE BUSINESS & MARKETING LEGAL UPDATE
After the general compliance update, we’ll take a look at current legal
issues regarding social media, in addition to newer marketing and
business models.
 Social Media - In recent months, much has happened in terms of
social media rulings and regulation reform. We’ll do an overview of those
issues and touch on a few points every online advertiser should remember
about using social media to solicit customers.
 Mobile/SMS- With mobile getting white-hot, many affiliates are
diving into the gray area in what is now considered the new “wild west” of
internet marketing, mobile. We’ll discuss the legal ramifications, and how you
can stay compliant in a scary world of shortcode cramming, paths, and SMS.
 Privacy – We’ll take a quick look at developments in online privacy
legislation – both domestically and internationally.

7. ONLINE BUSINESS & MARKETING LEGAL UPDATE
We’ll then spend a few minutes exploring a few proposed and new
laws, lawsuits and government hearings that could affect the industry (and
the way you do business) in the coming months.
 What’s on the Horizon
 Probable New FTC Regulations for Social Media and Mobile Devices
 On The Franken Front
 Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
 Do Not Track
 CALEA
 Online Sales Tax Issues
 Von Kohorn Patent

8. ONLINE BUSINESS & MARKETING LEGAL UPDATE
And we’ll end with a quick rundown of the most important regulations, laws
and statutes every online business person should keep in mind when
developing new campaigns or dealing with online legal issues.
 Online Business Bill & Regulation Rundown
 DMCA
 CDA
 Dot Com Disclosures
 COPPA
 GLB
 California Privacy Protection Act (Default national standard)
 UK Cookie Law
 FACTA/FCRA (For Daily Deal Operators)

9. FTC UPDATE
For the past 12 months, the FTC has
been rocking and rolling to their usual
tune of arguably inconsistent rulings
and ineffective bans.
And they still have an affinity for
doling out high fines.

10. NOTABLE FTC CASES OF THE PAST 12 MONTHS
Date Case Outcome Significance
October 2011 Swish Marketing Fined $4.8 Million and If they had had a
Negative Option banned from using pay-day-loan
Pay Day Loan misleading friendly privacy
Program advertising in the policy, they may
future; must monitor have escaped
their affiliates. punishment.
December 2011 HCG Weight FDA (Not FTC) If you were/are
Loss Product declared HGC promoting them,
Ban products illegal. you may want to
reconsider.
March 2012 Jesse Willms Fined $358 Million International effort;
Negative Option and banned from Willms is
Marketing – using negative option Canadian.
International marketing and other Solidified FTC’s
misleading strong interest in
advertising. negative option
marketing issues.

11. NOTABLE FTC CASES OF THE PAST 12 MONTHS
Date Case Outcome Significance
May 2012 Jeff Paul’s Fined $450 Million Warning to all
Shortcuts to and banned from marketers who
Internet Millions, engaging in various use “continuity
John Alexander’s marketing techniques, programs”
Real Estate mainly negative (charging clients
Riches In 14 option rebills. each month for
Days, and John various services)
Beck’s Free & who don’t make
Clear Real Estate that clear in
System. advertising or
“get rick quick” disclosures.
businesses
July 2012 Google Safari Fined $22.5 Million Warning that the
Snafu – cookies FTC is serious
illegally about mal-
circumvented intentioned
safari privacy cookies and are
measures getting better at
spotting them.

12. OTHER IMPORTANT FTC DEVELOPMENTS
New Rules For Kids Apps
A study revealed that a large percentage of apps in the
Apple and Android Marketplaces did not comply with
COPPA privacy standards. Developers now required to
provide more information when submitting apps
targeted at kids. Expect to see more formal regulations
in the upcoming year.
Social Media and Mobile
Disclosure Workshop
At the end of May, the FTC held a workshop on the
challenges social media and mobile devices present
with regards to marketing disclosures. Explored various
options including graphic disclosures, the effect of a link
that can be read at a later time (on a larger screen) and
the timing of when disclosures should be made with
geo-location, mobile marketing.

13. OTHER FTC DEVELOPMENTS
New Bizopp (Business Opportunity) Rules
On March 1, 2012, new bizopp disclosure requirements went into
effect. The new rules stated aim is to allow for greater transparency
and reduce costs.
 Sellers of work-at-home opportunities are now, officially, considered
bizopps.
 New cover sheet required with specific information.
 Disclosure of past buyers, their contact info, your bizopp history, plus any
fraud or illegal marketing legal actions (within the last 10 years) wherein
you were found complicit.
 Financial disclosure statement.
 Clarification on what constitutes fraud when it comes to marketing
bizopps

14. PICKING THE RIGHT ENTITY
The process of choosing to become an LLC, S-
Corporation, C-Corporation, Partnership, LLP,
LLLP, PLLC, can save you a lot of trouble and
money. A brief overview of each entity type can
really clear up several misconceptions.
Am I Safe?
No entity is 100% safe from veil piercing. Even
Fortune 500 Corporations have had their veil
pierced in extreme cases, and the C-level
executives and Board of Directors have been
found personally liable for the actions of the
company. Keeping everything separate as
possible as previously mentioned will reduce the
risk.

15. Corporate Structuring
Think your single member LLC is enough to
protect you from civil liability from
consumers, trade associations, and
government? Think again. The corporate veil
is being pierced with regularity due to
inconsistencies in structuring, improper
organization, bad bookkeeping, and mixing
personal spending with business.
Best Practices
Whether you’re a partnership, single member
LLC, all the way up to a C-corporation with
VC, treat everything you do completely
separately. Having your business pay your
home electric bill is a bad idea, it should be
accounted for properly and paid out of your
salary. Everything should be as separated as
possible.

16. BUT WHAT IF…
No entity will protect you from criminal liability.
Period. If you are committing a criminal act, such
as the catch-all Wire Fraud, nothing will protect you
from government interference.
What about Offshore?
Offshore corporate formation is a highly complex
topic, and very difficult to keep in compliance
without proper guidance. One wrong move can
inadvertently put you in bad graces with the
IRS, even if your purpose wasn’t to dodge taxes.
On the positive side, in many cases offshoring can
indeed reduce your civil suit liability dramatically.
Caution: Don’t try this at home. This is not for
novices, consult your experienced attorney (wink
wink).

17. Social Media
Social media is no longer new – it’s
nearly a requirement these days. As
such, law-makers are now getting
around to drafting and passing laws
that govern privacy, data security
and marketing on social media
platforms. Judges are also making
rulings which are helping to shape
legal precedence when it comes to
social media law.

18. Mobile Marketing
Mobile marketing is a powerful tool that is finally
coming into its own. The most personal form of
communication a person has is their cell phone, and
access to market to this key device has proven to
be a goldmine for marketers.
The Many Pitfalls
Being that it is relatively new, the guidelines for
marketing to this platform are still very vague and
largely not determined. A recent report showed that
the FTC itself is highly limited in its ability to enforce
Mobile, as in the field the Federal government only
allows Blackberry devices, and the FTC mobile lab
is a limited amount of devices, without carrier
access.

19. MAJOR MOBILE TOPICS
Cramming
Shortcode cramming is a very hot topic, as many
carriers have recently shut down many shortcodes.
Cramming multiple billing paths into one PIN submit
offer is a functional equivalent of merchant cross-
selling, which is highly non-compliant.
SMS Spamming
While many assume that SMS spam is covered under
CAN-SPAM, it isn’t fully yet. If a message is sent via
carrier email (ie 8885551212@vzwpix.com) it is
covered by CAN-SPAM. However, if it is sent directly
over the network, the FCC takes jurisdiction here, and
is still vague in enforcement. Consumers are allowed
to sue in small claims court for at least $1 per spam
SMS message received – has been as high as $175
per SMS.

20. Privacy and Data
Security Issues
Online privacy and data security are a hot topic. While there is not currently
a universal privacy policy in the U.S. there are COPPA rules, plus the EU
does have a universal law. Moreover, California codified a set of online
privacy laws, which have become the de facto national standard. FTC
enforcement of Identity Theft laws has also been ubiquitous, however
industry enforcement leads the way.

21. PROTECTING CONSUMER PRIVACY
• Data Retention Security
• Industry Standards: PCI Compliance
• Reselling of lists and data

22. THINGS TO KEEP
AN EYE ON
What are the legal issues and
lawsuits that every online business
person and marketer should keep an
eye on over the next few months?

23. ISSUES & PEOPLE TO WATCH
• US National • Fraley v.
Online Privacy Facebook
Law
• Private “Scam
• FTC Enforcement
of Claims in Ads Report” sites
• FCC enforcement
and
with Mobile Defamation

24. QUICK LAW LIST OF WHICH EVERY ONLINE BUSINESS
SHOULD BE AWARE
 Dot Com Disclosure
 New EU Privacy Laws – Cookie Law
 New Business Opportunity (BizOpp) Rules from the
FTC
 New updates to the FCC Telemarketing Rule
 FDA Labeling Compliance

25. QUICK LAW LIST OF WHICH EVERY ONLINE BUSINESS
SHOULD BE AWARE
 CDA – Communications decency act – protection for website owners for non-ip
claims like defamation, taking down not required for protection
 DMCA – safe harbor to “service providers’ who remove infringing content –
must designate a Copyright Agent that is registered with the US Copyright
Office – notice requirements: evidence of authorization, identification of
copyright work claimed to have been infringed, complaining parties contact
info, good faith statement of belief; provisions may not be available to those
who have knowledge of infringement and do nothing about it, aware of facts or
circumstances from which infringing activity is obvious.

26. QUESTION
AND
ANSWER