Making sure your marketing team is following the law
As a tech startup you probably are either outsourcing your marketing and advertising, or have an in house marketing manager and team.
This is of course necessary to grow your business and to increase brand awareness and image.
While your marketing and advertising team will be experts in this area, they are not experts in the law, and it is for this reason that you need to ensure their marketing and advertising strategies comply with the law and that they are trained in this area.
What is marketing and advertising?
Marketing and advertising are often used interchangeably, however they are two different concepts that work together.
Marketing is the process of understanding what products or services a customer needs or values, and creating, communicating and delivering that product or service to satisfy the consumer needs.
Advertising is the process of communicating the said products or services to customers, by providing customers with information, promoting characteristics of their products and services, and competing with other firms.
As you can see advertising and marketing work together to improve brand performance.
How is advertising regulated?
It is illegal to make statements or claims that are likely to cause a false impression on customers. For example, making false or misleading claims about the quality, value or benefits of a good or service.
What should I do to ensure my advertising is not illegal?
- You use correct information – do not guess facts or omit relevant information
- Word the advertisement using simple terms
- Ensure that the overall impression is not misleading
- Be prepared to substantiate any claims
- Pricing should include all aspects of the product or service, not just the price of a component of the product or service
- Where there are multiple different prices, the customer is entitled to the product at the lowest price
- You should only include one price in advertisements
- Comparisons must be accurate (e.g. comparing goods with a competitors pricing, or comparing to the wholesale cost)
- Ensure you are using IP correctly
- Ensure that any new IP is properly protected
- If you are using third party IP, ensure you have permission and use it correctly
How do we protect personal information?
Personal information is information whereby a person’s identity can be reasonably established.
You may be collecting and using personal information as a result of your advertising and marketing strategy. For example, you might be using an email or text message campaign using the details of previous customers, or using online behavioural advertising.
The Australian privacy principles must be applied to any organisation that has an annual turnover of greater than $3 million, with some exceptions.
What laws apply to digital and online marketing?
What are the requirements of the Spam Act?
You will be required to comply with the following when sending out commercial electronic messages:
- Must have the consent of the recipient
- Must include a functional unsubscribe facility
- The recipient must be able to identify the sender
What is the Do Not Call Register (DNCR)?
The DNCR, needs to be considered if you are planning on making telephone calls to promote your technology business.
There are some circumstances in which telemarketers are permitted to call consumers or businesses even if they have registered with the DNCR:
- The recipient has expressly consented
- Consent can be reasonably inferred
- The purpose of the call is in the public interest (e.g. the call is coming from a government body)
- Must comply with industry standards regarding the times calls are made
What are the consequences of breaching these Acts?
The ACMA has the ability to do the following if the Spam Act or DNCR Act is not followed by your business:
- Issue a formal warning or infringement notice
- Search your premises & seize equipment
- Require an enforceable undertaking
- Apply for an injunction to stop the alleged breach
- Commence federal court proceedings seeking remedies including compensation for victims.
What is Search Marketing?
Search marketing is a strategy used to increase your online presence and gain online traffic for your business. The two main tactics used are search engine marketing (SEM), and search engine optimisation (SEO).
What are the possible legal implications?
There could be possible breaches under the Trade Marks Act and the Australian Consumer Law when using search marketing. For example, were a business uses keywords that relate to a competitor in their SEM, it could be alleged that this is infringing the competitors trade marks, or misleading users to believe there is a relationship between the advertiser and competitor.
What are the risks of social media marketing?
There are a number of legal risks to using social media to advertise your business.
- Copyright – You often see businesses advertising their products using images, videos and music, did you know you may need a license to use these creatives for commercial use? Ensure that you have clearance to use any third-party material in your advertising, to avoid a copyright infringement.
- Misleading conduct – Ensure that you comply with the consumer protection laws previously mentioned, and do not make any false or misleading statements about the product or service.
- Privacy and Confidentiality – Ensure that you comply with the privacy act if required to do so, and company privacy policies.
- Defamation – This is the principle of damaging a third party’s reputation, it is relevant particularly to social media marketing as liking or sharing a person’s comment could constitute defamation. This is why it is important to have a social media policy in place.
- Some other areas of law that should be considered: unlawful disclosure actions, advertising industry codes, AANA Code of ethics and IP laws.
It is recommended that businesses have a social media and digital communications policy in place, which will provide rules for users who post or upload on social media.
As well as this campaigns should be subject to legal review and clearances particularly in relation to copyright.
What other types of marketing are regulated?
You may decide to enter into a sponsorship agreement, where either you or the other party makes a payment or provides some kind of good or service to the other.
It may be a good way to get your name out there and build a good brand image by sponsoring an event or something similar.
It is important to formalise any agreement such as this to prevent any legal issues occurring.
For example there could be issues in relation to the other party using you IP, warranties, or either of your obligations under the agreement. Having the agreement formalised will confirm the commitments made to each other and reduce the chance of a dispute occurring.
Your marketing team may consider using a celebrity endorsement in their promotions, where the celebrity is paid in return for their image being used to promote the company. There are potential legal issues with this such as: licensing, warranties and obligations, and exclusivity, among others.
Ambush marketing is becoming increasingly popular, where an advertiser attempts to associate themselves with an event without becoming an official sponsor. They may try to associate themselves with a public event that is sponsor by a competitor to benefit from the goodwill created by the event without having to become an official sponsor.
There are a number of legal issues in relation to this that you must consider if you decide to implement this kind of campaign:
- Legislation such as the Major Events Act and Olympic Act regulates the use of ambush marketing
- You may be in breach of s 18 and 29 of the ACL for misleading conduct
- Passing off may be claimed
- Potential IP infringements
- There may be measures in contractual agreements between the event and official sponsors to manage ambush marketing
An example of this is where Telstra associated themselves with the 2016 Rio Olympic Games, where they were not an official sponsor rather their competitor Optus was.
While ambush marketing may seem like a good marketing strategy, as you can see there are several potential legal implications that you should ensure your marketing and advertising team are educated on.
Trade promotions are competitions run but a business as a promotion. They are a great way to increase brand awareness, however there are a number of regulations that must be followed.
The games can either be games of chance where the winner is selected purely on chance, or games of skill where the winner is based on their performance of skills.
Trade promotions must be run in accordance with state laws, and therefore the requirements differ from state to state. Some states also require a permit to run the promotions.
Some common restrictions and requirements are:
- Conditions of entry
- Chances of winning
- Restrictions of participating
- Distribution of prizes
All restrictions are determined on a state by state basis.
It is very important that the team providing the marketing and advertising for your tech startup receive training, and that their strategies and promotions are in line with the law. Marketing and advertising is essential to the growth of your technology business, however legal implications could occur if these are not followed.
Interested in chatting with us?
Have you taken a look around Biztech Documents?
High quality, ready to customise legal documents and agreements at your fingertips. Be guided through an expert interview wizard, then your customised legal document is sent to your inbox, all done in under 5-20 minutes.
Head to Biztech Documents to create yours today.