Direct to Direct

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These articles by Barbara Fox were published in U.S. 1 Newspaper on September 2, 1998. All rights reserved.

Defending Direct Mailers

An ad agency can be held liable for a client’s false

claim, says Charles B. Chernofsky, who has opened an office

concerned with direct mail, advertising, and regulatory compliance

in Suite 505 at 47 Hulfish Street (609-279-0445; fax, 609-279-0448).

"The biggest mistake you can make is thinking that you are small

and that no one will notice you," says Chernofsky. If the bad

claim is made by direct mail, "you’re toast." The Postal Service

really likes to attack the little guys, he says, "because they

don’t put up a fight."

A partner in the New York City law firm of Chernofsky & deNoyelles,

Chernofsky has 30 years experience in the legal ramifications of direct

mail and advertising. He grew up on Long Island, where his father

had a clothing store chain. An alumnus of Hofstra, 1963, he went to

law school at Syracuse.

He has concentrated on direct mail since 1973. He reviews print and

television advertising for compliance with federal and state laws

and regulations. He represents mailers and advertisers before virtually

every state attorney general and such federal agencies as the Federal

Trade Commission, Food and Drug Administration, Department of Agriculture,

Environmental Protection Agency, and the United States Postal Service.

Among the areas he covers: direct mail, television spots, infomercials,

space, franchise and business opportunities, telemarketing, door to

door sales, sweepstakes, and Internet/web offers. Chernofsky practices

in New York and Pennsylvania and has argued cases before the Supreme

Court of the United States. He does not practice law in New Jersey

— but for clients whose chief opponent is the federal government,

that doesn’t matter.

"The Federal Trade Commission has become much more active in going

after the advertising agency as well as the manufacturer of the product

on the grounds that, as a reasonable businessman, the ad agency has

a duty to check out the claims made in advertising," says Chernofsky,

who often has clients that sell dietary supplements.

Recently he defended a seller of health products, Bogdana, and a Los

Angeles-based ad agency, Western Direct Media. "You are supposed

to ask the manufacturer for substantiation before you make the claim,"

he says. "I tell my clients which statements in the advertisement

require substantiation. I would have said to get supporting letters

before the advertisement appeared."

The ad agency did not have to make restitution or pay any fines because

he was able to prove sufficient substantiation for the claims made

for a cholesterol-lowering dietary supplement, Cholestaway. After

two years and a five-figure legal fee, the case was resolved by consent

decree with the Federal Trade Commission.

Bait and switch — switching customers into other products because

of higher profit margins — is another tactic that might provoke

legal action. "To protect from a bait and switch suit, the store

must have product for sale in reasonably anticipated quantities and,

if not, have a rain check, or give them something else," he says.

"If you had a reasonable quantity and sold out of it, it is OK

to upsell to a different product, but you need the product invoices

to prove it."

A typical bait and switch scheme would be the storm window store that

advertised a cheap model but upsold to a higher product. "There

is nothing wrong with upselling, and if they had had the inventory

they would have been OK, but the only ones ever produced were the

ones on display. They settled with the FTC."

A merchant can, nevertheless, limit the quantity in

an advertisement, such as "only five per store" or "floor

samples only."

It’s not just the FTC that hassles merchants. Though it is hard to

believe, the EPA has power over certain products, he says. "Electronic

mosquito repellents that send out a sound wave were good only for

certain kinds of mosquitoes. The EPA sued my client on the basis of

noise pollution that was disturbing birds and dogs. My client just

packed it in. The whole case was a joke to me."

Another federal agency, the Food and Drug Administration, operates

under the amazing powers of admiralty law. "If they have a problem

with a product, they `arrest’ it. Then you file a claim for the product

and get to the heart of the lawsuit."

But people in the direct response industry should be most concerned

with postal regulations, Chernofsky says. "I had a client who

advertised on the back of the Sunday funny papers, and he ran into

problems because an assistant attorney general in New Mexico saw an

advertisement while his kid was reading the funnies at the breakfast

table." To protect yourself in a direct mail or sweepstakes enterprise:

Be very careful about free offers. Don’t make the rules

so complicated they can’t be enumerated.

Be prepared to prove the percentages of winners by getting

documents from the printer.

Give an adequate description of the product being sold.

He is now involved in litigation for a sweepstakes company that supposedly

had a less than adequate description of a discount booklet.

Chernofsky cites the two theories of consumer stupidity law:

"The credulous consumer is to be protected." And, more recent,

"The reasonable consumer standard," what a reasonable consumer

who read the entire advertisement would conclude.

"What the court would like surveys," he says. He is commissioning

a survey now to go to people who purchased a product to see what they

expected when they read the advertisement. How high the hypothetical

consumer’s IQ should be is up to the judge.

— Barbara Fox

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Direct to Direct

If you are the wronged consumer and can’t get satisfaction

from a firm’s customer service department write to the Direct Marketing

Association, Mail Order Action Line, 1111 19th Street NW, Suite

1100, Washington DC 20036-3603.

The DMA also offers a service to reduce the amount of national advertising

mail you receive. Send name, address, and zip code to Mail Preference

Service, DMA, Box 9008, Farmingdale NY 11735-9008. Similarly to receive

fewer telephone sales calls, send name, address, and phone number

with area code to Telephone Preference Service at the same address

except use Box 9014.

It usually takes four to six months for the decrease to show.

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