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Press releases 2012 -

OFT secures improved transparency from affiliate marketing businesses

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35/12    25 April 2012

The OFT has accepted legal undertakings from MoreNiche Limited (MoreNiche), a company which runs an online network bringing together 30 product merchant businesses (merchants) and over 149,000 affiliate marketing businesses (affiliates) worldwide. These undertakings address concerns about the way the affiliates market and promote health and beauty products sold by the merchants.

Affiliates operate their own websites marketing products such as diet aids and teeth whitening products to consumers. The OFT was concerned that:

  • reviews and product endorsements running on some affiliates' websites were presented as independent consumer reviews when they were actually commercial promotions
  • some affiliates' websites did not make clear that the affiliate would be financially rewarded for purchases made by consumers they introduced to MoreNiche merchants.The OFT believes that consumers are more likely to be influenced to buy products having read apparently unbiased reviews, rather than reviews which are in fact clearly a form of advertising.

As a result of the OFT investigation, MoreNiche and its director have signed undertakings under the Enterprise Act 2002 which require the company to make improvements to the way its affiliate network operates. The company will review its affiliates' websites to ensure that their affiliate status is clear so that consumers who visit such websites are not misled. MoreNiche has also agreed to provide further guidance to its affiliates on their legal responsibilities, and to act on complaints about misleading product claims on affiliate websites which are not consistent with product claims approved by the merchant. If the affiliate does not take corrective action, their account with MoreNiche will be suspended.

MoreNiche has cooperated fully with the OFT and will ensure that all changes to their network agreed with the OFT are implemented by 23 September 2012.

Cavendish Elithorn, Senior Director of the Goods and Consumer Group at the OFT said: 'When looking at online reviews and comments, it is important that consumers are not misled about the status of what they are reading - who has written it and why it has been written. In particular, they need to know whether that reviewer is receiving any form of payment for promoting the product. 

'Innovative and vibrant businesses drive our economy but it is important that online businesses develop without compromising consumer protection. Ensuring transparency and fairness in online transactions is a key priority for the OFT and we will continue to take action when appropriate.'

NOTES

  1. Following an OFT investigation, undertakings under Part 8 of the Enterprise Act 2002 were given by MoreNiche and its director. The undertakings relate to alleged breaches of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). View the case closure summary for this investigation.
  2. MoreNiche has a registered office at Foxhall Lodge, Foxhall Road, Nottingham, NG7 6LH, UK. It claims to have over 149,000 affiliates worldwide.
  3. Under the Enterprise Act 2002 if these undertakings are breached the OFT can apply to the courts for an enforcement order, which, if disobeyed, could result in proceedings for contempt of court.
  4. The CPRs contain a general prohibition against unfair commercial practices and, in particular, prohibitions against misleading actions, misleading omissions and aggressive commercial practices. The CPRs are enforceable through the civil and criminal courts. In particular it is a banned practice to use editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer. It is also a banned practice to falsely claim or create the impression that a trader is not acting for purposes relating to his trade, business, call or profession, or falsely represent oneself as a consumer.



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