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October 13, 2014

What Would You Give Up in Exchange for Free Wi-Fi?

Filed under: Internet — Edgar (aka MrConsumer) @ 5:30 am

 When you are offered free Wi-Fi in a public area, you usually have to agree to some terms and conditions statement. Most people don’t read them, and simply scroll past the fine print to the “ok” or “I agree” button.

Some folks in London a few months ago were subjected to a little experiment where an unusual requirement was tucked into the fine print.

*MOUSE PRINT:

‘in return for free wi-fi access the recipient agrees to assign their first born child to us for the duration of eternity.’

Did anyone fall for it? Yep. Half a dozen people clicked the “I agree” button.

The Finnish company that organized the research said it will be returning the children to their rightful parents.

For more details, here is the experimenters’ report summary and full report.

• • •

September 29, 2014

FTC Warns Sellers to Make Disclosures “Clear and Conspicuous”

Filed under: Internet,Retail — Edgar (aka MrConsumer) @ 5:08 am

 For the past two weeks MrConsumer has been ranting about retailers that don’t disclose key information in their ads in a “clear and conspicuous” manner. Last Tuesday, the FTC must have heard his yelling and screaming, and sent letters to over 60 companies warning them to clean up their ads. (We asked the FTC for a copy of the letter, but they refused.)

From their blog, here (only slightly excerpted) is the FTC’s message to companies about their obligation to make disclosures in their ads “clear and conspicuous.”

If the disclosure of information is necessary to prevent an ad from being deceptive, the disclosure has to be clear and conspicuous. That shouldn’t be news to any advertiser and certainly not to the 60+ companies – including 20 of the 100 biggest advertisers in the U.S. – that received warning letters as a part of the FTC’s Operation Full Disclosure. But whether your company heard from us or not, there are lessons to learn from our latest effort to ensure advertisers abide by time-honored legal principles.

Operation Full Disclosure included TV ads, print ads, ads in Spanish, and ads for a wide range of products and services – food, drugs, household items, consumer electronics, personal care products, weight loss products. It ran the gamut. And here’s what we found: A lot of ads included potentially misleading statements that advertisers tried to “fix” with problematic fine print.

Some ads quoted prices, but didn’t adequately disclose the strings that were attached. Others showed optional accessories, but didn’t adequately disclose that people had to buy extras to get the advertised benefit. Still others featured best-case-scenario consumer testimonials, but didn’t adequately disclose the results people could generally expect to achieve. We also spotted ads that included on-camera demonstrations without adequately disclosing material alterations. And that’s just for starters.

Here’s a practical way to think of it. If a disclosure is truly clear and conspicuous, consumers don’t have to hunt for it. It reaches out and grabs their attention. One mnemonic we use – The 4Ps – can help sharpen advertisers’ focus on four key considerations:

Prominence. Is the disclosure big enough for consumers to read easily? The fine-print “disclosure” and its TV cousin, the fleeting super, have long been the subjects of FTC law enforcement. Consumers shouldn’t have to scan an ad with a magnifying glass to pick up on material details of the deal. TV advertisers face the additional wild card of varying screen sizes. Regardless of whether a person is looking at the ad on a home theater system or a handheld device, small type can be easy to overlook. Furthermore, consumers shouldn’t have to be speed readers to grasp the message. FTC cases have challenged supers that flashed for just a brief period, lines of fine print on a single screen, and hard-to-read sentences over multiple screens. Consider contrast, too. White text on a light or variegated background isn’t likely to be noticed. Nor will a fine-print statement that has to compete with a dynamic and distracting image.

Presentation. Is the disclosure worded in a way that consumers can easily understand? Using legalese or technical terminology reduces the likelihood that consumers will get the message. Burying important information in a dense block of text is another common tactic that signals “don’t read me.” In one FTC settlement, for example, material information about the terms of the transaction appeared after an advertiser’s long litany of trademark information. In another case, a company used an intricately embellished all-caps font. That may be fine for the logo of a heavy metal band, but it’s not a presentation designed to convey critical information to consumers.

Placement. Geography matters. Is the disclosure where consumers are likely to look? An FTC settlement challenged as ineffective a key disclosure that ran down the side of a print ad perpendicular to the main text. Another case dealt with information conveyed in small type in the upper left corner of a full-page newspaper ad. And given all the talk about footnotes, the bottom of the page or screen isn’t a place most consumers will look.

Proximity. Is the disclosure close to the claim it modifies? Tiny type aside, another problem with footnotes is their distance from the prominent headline or splashy text designed to draw the consumer in. If you need to include key qualifications or conditions, remember this maxim: What the headline giveth, the footnote cannot taketh away. And don’t think an asterisk will always solve the problem. There’s a reason it’s called an aste-risk.

Now for the nitty-gritty. So just how big does a disclosure have to be? 4 point, 8 point, 12 point? What’s better: Times New Roman? Helvetica? How many seconds does it have to be on the screen? We get those questions all the time. But there are three reasons why advertisers who focus on the details may be missing the big picture.

“Clear and conspicuous” is a performance standard, not a font size. A disclosure is clear and conspicuous if consumers notice it, read it, and understand it. Do you really want the FTC staff dictating the specifics of your ad campaign? We didn’t think so. Aside from a few rules that mandate detailed disclosure standards, the “clear and conspicuous” ball is in the advertiser’s court. As long as consumers looking at the ad come away with an accurate understanding, companies have substantial leeway in how they communicate their marketing message. That’s why we think it would be a mistake to impose a one-size-fits-all approach.

Who knows better than advertisers how to convey information clearly and conspicuously? The “clear and conspicuous” standard allows advertisers to use their limitless creativity to integrate important information into the overall campaign. Even so, we often hear them say “But we don’t know how to make a disclosure clear and conspicuous.” Our response: Really? Really? Advertisers’ stock in trade is the ability to use the tools at their fingertips – text, sound, visuals, contrast, or color, to name just a few – to convey information effectively. One practical observation: Consider looking at it from another perspective. How would you send the message if you really wanted to, rather than because you think you have to? Approaching the disclosure as a key piece of information you want to convey may make it easier to ensure it’s clear and conspicuous.

When in doubt, rethink your ad claim. If you find yourself struggling with how to craft an effective disclosure, why not take a step back and consider what the need for a disclosure may be telling you. Perhaps it’s pointing to a potential for underlying deception in your ad claim. Sometimes all it takes is a slight wording change to make a disclosure unnecessary in the first place. And just think how refreshing consumers would find an ad free of fine print.

• • •

September 15, 2014

Oh, Did We Forget to Say You Need a $50 Minimum Purchase?

Filed under: Electronics,Internet,Retail — Edgar (aka MrConsumer) @ 6:28 am

  In the last few weeks, Staples.com appears to have begun misleading customers about the price of some of its back to school sale items. Here is one of their recent advertisements:

Staples ad

When one clicks on that thumbdrive, for example, it takes you to a page like this:

lexar thumbdrive

Wow, you think it must be your lucky day, it is actually only $7 instead of $8. You are promised “instant savings” of $12.99, so you add it to your cart.

Upon going to your cart to check out, you get a nasty surprise.

*MOUSE PRINT:

Staples cart

The price is almost three times what you expected. Why? It says you didn’t make the required $50 purchase. What $50 purchase? If you look carefully at the middle graphic above, you will see a box that states that the thumbdrive “special buy” only applies with a minimum $50 purchase. Where did that come from? It wasn’t in the original ad!

Similarly, the other paper items in the ad above are more expensive without the $50 purchase, as are a few others on its website.

That’s not all. Let’s say you had not seen the ad, but had just gone to Staples.com looking for a 16-gig Lexar thumbdrive. You search for it and find this product listing in the search results.

*MOUSE PRINT:

Lexar 3

You were even smart enough to click the “see details” link, and you’re told the item is $7 and there is no mention of any required $50 minimum purchase. So, you add it to your cart. And just as above, when you go to checkout, you will see that you are being charged $19.99, the full regular price, because you did not make a $50 minimum purchase that you were never told was required.

In our view, this practice is reprehensible, if done deliberately. We can only hope it was a careless oversight on Staples’ part.

Under Massachusetts law, sellers are responsible for clearly and conspicuously disclosing all material facts in their advertising the omission of which might mislead a consumer. “A disclosure is not clear and conspicuous if any material terms of the offer that affect the price of an item, impose conditions on acceptance of the offer, … are not disclosed in the advertisement itself, but require reference to an outside source..”.

It is certainly misleading in our view to fail to disclose upfront that a particular sale price only applies when a $50 minimum purchase of other goods is required.

We asked the company to explain why they created these misleading price representations and whether they would automatically refund money to customers who bought these items and unknowingly paid full price during the sale period.

Staples’ senior PR manager responded late yesterday:

“Staples works hard to ensure our customers have the information they need to make informed purchasing decisions. In the examples provided, the terms and conditions of our Less List offers were clearly displayed prior to the customer checking out.”

Staples indicated that it might update its comment today, so please check back here later today.

• • •

September 8, 2014

Honestly, Could They Make the Disclosure Any Smaller?

Filed under: Health,Internet,Retail — Edgar (aka MrConsumer) @ 5:36 am

 While watching TV the other night, MrConsumer saw a tiny disclosure at the end of a baby products commercial for The Honest Company. (That’s really their name.) It went by so quickly, and was so small and faint in color, it was very hard to read:

The Honest Company
Click ad to see commercial.

Here is what it says about their “free” trial.

*MOUSE PRINT:

*Only $5.95 for shipping and handling. You’ll be automatically enrolled in our monthly service. Cancel the service at anytime.

Their website gives more details.

*MOUSE PRINT:

*With your Discovery Kit, you’ll be enrolled as a member of The Honest Company. You have 7 days following receipt of your Discovery Kit to cancel your membership at any time, for any reason. We will remind you about your membership options. If you choose to not cancel, you’ll be charged $79.95 /month for the Diapers & Wipes Bundle, $35.95/month for the Essentials Bundle, or $39.95/month for your Health & Wellness Bundle (plus shipping & handling).

Basically, this company founded by actress Jessica Alba offers (among other things) a book-of-the-month-type service for baby supplies, shampoo and detergent, and vitamins. You will keep getting automatic deliveries every month, starting after seven days following receipt of your samples unless you cancel.

While their website makes clear that this is a monthly plan with monthly charges for these packages of goods, why do their TV commercials hide that fact particularly when they call themselves The Honest Company? Their television ad also seems to run counter to what their statement of principles claims:

Create a Culture of Honesty

We are serious about honesty – both as it applies to the integrity of our relationships and in being true to you. And, it’s a standard we encourage throughout our staff, stakeholders, and customers. But, that’s just the beginning. In all we do, we want to make each day a little more fulfilling, inspired, and downright better.

Mouse Print* asked the company twice to comment about their use of such a small disclosure and on this seeming contradiction of their corporate philosophy. We are still waiting for their response and will post it here… honestly.

• • •

August 25, 2014

When Good Rebates Go Bad, Part 2

Filed under: Internet,Retail — Edgar (aka MrConsumer) @ 5:58 am

 At the beginning of July, we told you about a major rebate snafu at Newegg.com (see original story). In short, Newegg advertised a crazy low price (after rebate) for a reconditioned Samsung HDTV. The form for the $30 rebate, however, listed an incorrect UPC code for this television, which would likely mean that all consumers who bought the TV would have their rebate submissions denied.

MrConsumer swung into action, writing to the PR folks at Newegg, hoping that they would notify the rebate fulfillment house of the error so as to avoid the inevitable rebate denials that would follow. Newegg stepped up to the plate, and sent reassuring emails to all purchasers of this TV that their rebate would be honored despite the fact that the UPC code on their box didn’t match the number requested on the rebate form.

End of story.

In true Ronald Reagan “trust but verify” mode, MrConsumer submitted the rebate form, managing somehow to remove the huge UPS sticker the Newegg shipping department had placed over the TV’s actual UPC code. As expected, that UPC code did not match what was stated on the rebate form.

Several weeks later, the rebate fulfillment house sent MrConsumer an email entitled “Newegg Eligibility Confirmation.” Good news, right? Not so fast.

The email said that my submission had been processed and that I should receive their “response” by September 17. What do you mean “response,” don’t you mean your “check” was mailed? A call to the rebate fulfillment house revealed that the rebate had been rejected because the UPC submitted did not match the UPC requested on the rebate form. No kidding, but that was supposed to have been fixed, right? Not.

*MOUSE PRINT:

Newegg rejection

The customer service person at the rebate fulfillment house said she is getting calls like this every day, and instructing people to call Newegg because they will send out the correct UPC for resubmission. Both a call and a chat session with Newegg customer service was met with shrugs, with them not knowing anything about sending out a correct UPC. Enough.

MrConsumer emailed the PR guy at Newegg, explaining the situation, noting that Mouse Print* was going to do a follow-up story on the company failing to live up to its promised correction. Apparently that email sent shock waves throughout the company. By the end of the business day, Newegg explained what happened in a most candid way, and outlined how it was going to fix the problem, and put in place procedures to prevent its recurrence:

Your note really shook us up and we pulled together a number of teams to make sure this doesn’t happen again. Here is our plan of action and how we plan to never let this kind of thing slip through again. As always, we do appreciate your notes. Customer satisfaction is something we proclaim, so when we fall short, we like to know about it and get it resolved. In today’s process, we learned there was a critical communication gap between our product managers and our customer service team that led to this problem. Once we understood the problem (a technical way in which rebate codes get passed from product managers to customer service reps so the reps can validate them), which cut off about a third of the certificates that were being given to customer service–we set about making good for our customers and then updating our process so it doesn’t happen again. Here is our plan.

1. We learned that 3 rebate periods needed to be adjusted
* 5/20-6/8 $30
* 6/20-6/23 $30
* 7/4-7/21 $40

2. We will check the following for those periods
* Submitted rebate
* If rebate submitted with wrong UPC, honor rebate and notify customer of processing.

3. In the event that no rebate was submitted
* For those customers who have not submitted a rebate, we will contact them and have them submit it with the UPC code that they have.
* For those customer who state the shipping label is covering the UPC code or do not have a UPC code, we will honor the rebate either as a Newegg GC or credit back to original payment

We will make sure that all denied customers get their rebate.

Now to make sure this never happens again, our customer service team has set up a meeting with our product management team to review the proper application of rebates and how to make sure they appear in the customer service agents’ validation work flow.

This outline of steps is being put into action now. We are crafting the email being sent and it should go out this week. The new process and meetings should also take place this week. I will keep you posted on our progress.

Wow. In reply, we thanked Newegg for their swift action, but gently pointed out other related lapses they hadn’t acknowledged. We urged the company to incentivize their customer service agents to spot and report problems raised by individual consumer complaints that might be affecting other customers. That way a global solution could be implemented, and complaints reduced.

• • •
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