During the ERA Government Affairs Fly-In on May 20, the Electronic Retailing Self-Regulation Program (ERSP) celebrated the 10th anniversary of its inception. Ed Glynn, partner at Edwards Wildman Palmer LLP and current chair of the ERA Government Affairs Committee, was among those who attended the event in Washington, D.C., to commemorate ERSP’s significant milestone. ERA recently talked to Glynn about the genesis of the program and what he believes poses the biggest challenges for ERSP moving forward.
In the early 2000s, the direct response television industry was under heavy fire by the Federal Trade Commission (FTC) over questionable or unsubstantiated claims made by a small faction of dishonest marketers. Their actions not only polluted the airwaves, but also drew consumer complaints. This gave government regulators enough ammunition to place the entire direct response industry on notice.
The few years prior to the program’s creation proved difficult for the industry. Glynn explains that the FTC gave a bit of a nudge, urging the direct response industry to clean up its act or else. Enter ERA.
Glynn points out that we already had a private self-regulatory body that we could turn to, NAD - the National Advertising Division of the Advertising Self-Regulatory Council (ASRC), which is a division of the Council of Better Business Bureaus. However, ERA believed it needed a program that went beyond what NAD could provide the direct response industry.
For one thing, the NAD program deadlines took too long. “If there was a complaint about advertising, there would be a response, a reply by a challenger, and then an answer to the reply by the advertiser. So there were typically four pieces of paper going back and forth in the process and the deadlines for each were a bit long in the electronic DR context,” Glynn says.
With DRTV, he notes, “marketers would put ads on-air for a test on Friday and by Tuesday morning, they knew if they had a winner.” It was clear that the industry needed a more expedited process with a faster final resolution.
The other issue related to an undeclared vs. declared challenger. You couldn’t have an undisclosed challenger at NAD. The process worked in two ways: 1) A competitor, who was disclosed, could challenge the advertising of another competitor; and 2) If a person at NAD viewed a questionable advertisement, the staffer could self-initiate a complaint against that advertiser.
According to Glynn, the architects of the self-regulation program wanted to include another option that gave people a right to challenge a competitor’s ad anonymously. “There are pluses and minuses for that because the anonymous challenger—unlike the declared challenger—doesn’t get a look at the answer by the advertiser. So there’s an incentive to being a declared challenger,” he says.
These minor distinctions provided the blueprint for what would ultimately become ERSP and an ongoing joint partnership between ERA and NAD.
A ROUGH ROAD AHEAD
Although ERSP continues to evolve, Glynn foresees challenges looming for the program. The FTC is going beyond an ad’s substantiation and claims and increasing its focus on the back-end including upsells. This puts more pressure on ERSP to expand its services to address issues outside of the core advertising claims.
“ERSP and NAD work best when they focus on their core mission, which is to look at an ad and say, ‘What kind of substantiation does the advertiser have for the claims it’s making in the ad?’” says Glynn. The problem arises when you get into questions such as: What did the card processor know? What did the fulfillment company know? And, what about the inbound telemarketing script?
These are things that ERSP was never intended to deal with, but have come increasingly important, especially for the FTC.
“This is not unique to ERSP, however,” contends Glynn. “NAD has the same issue, but it deals with more [general] advertising.” The direct response industry tends to deal with cutting-edge technology that includes the integration of television and digital advertising. So, we’ll have to see.”
THE ERSP PHILOSOPHY
Challenges aside, Glynn believes ERSP remains in good hands with its director at the helm. “Everybody thought that Peter Marinello was a good choice,” he recalls. Marinello transitioned from his role as senior staff attorney at NAD to head ERSP during its launch.
“His philosophy is very similar to NAD’s philosophy: Listen to the evidence, look at what’s fair, and [determine] the kinds of things that we can take away from the case,” says Glynn. Plus, as the face of ERSP, he balances the roles of judge and diplomat.
He adds that ERSP is essentially for direct response companies that want to do the right thing, but may be uncertain where to draw the appropriate line with regard to claims and substantiation. “I think it became fairly clear early on that if you didn’t participate in ERSP, you would get in the crosshairs of the Federal Trade Commission pretty quickly. It was, obviously, a pretty strong incentive for people to participate.”