What Is Marketing Compliance and Why Should You Care About It? Here's What You Need to Know. In this article, we will explore the basics of marketing compliance and discuss some key considerations businesses should assess when creating their marketing plans.
By Alex Quin Edited by Chelsea Brown
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Marketing compliance is a term used to describe the actions and practices of a company in order to ensure that it is compliant with marketing regulations. These regulations can vary depending on the industry, geography and other factors. Generally speaking, marketing compliance requires a company to exercise due diligence when creating and executing its marketing campaigns. This includes ensuring that all marketing materials are accurate and conform to local laws and regulations.
Marketing compliance is an important issue for companies of all sizes, as violating these regulations can lead to significant fines and other penalties. In this article, we will explore the basics of marketing compliance and discuss some key considerations businesses should assess when creating their marketing plans.
Related: An Entrepreneur's Guide to Compliance
What is marketing compliance?
Marketing compliance is the process of making sure that your marketing, advertising and sales content abides by all rules and regulations designed to safeguard consumers and their information. One modern example of such regulation is the European Union's General Data Protection Regulation, or GDPR. This regulation requires companies to obtain explicit consent from customers before using their data for marketing purposes and provides consumers with numerous rights related to their personal data.
The goal of regulatory compliance is to protect consumers from deceptive and unfair practices while promoting fair competition within markets. Companies should always stay up-to-date with the latest regulations, such as GDPR and the California Consumer Privacy Act (CCPA), in order to ensure their marketing activities are compliant.
Why should I be compliant?
Marketing compliance is important for any business, regardless of size. It helps ensure that your company is following the rules and regulations set forth by regulators to protect consumers from deceptive or manipulative practices.
Additionally, marketing compliance helps promote fair competition within markets, allowing companies of all sizes to compete. Furthermore, it can help keep your company out of legal trouble and protect your reputation.
Finally, staying compliant can be beneficial for your customers because it ensures that they are getting accurate information about the products or services you offer.
Different types of compliance
There are several different types of marketing compliance laws, each with its own set of regulations. Below, I've highlighted a few of the most common forms of compliance:
FTC:
The Federal Trade Commission is a regulatory agency responsible for preventing unfair, deceptive or anticompetitive business practices within the United States. The FTC takes legal action against businesses engaged in such activity; collaborates with other government agencies both domestically and overseas; conducts policy research through hearings, workshops and conferences; and produces educational materials to share best practices with consumers and businesses alike.
FDA:
The FDA is an agency that regulates food and drugs in the U.S. It is responsible for ensuring that all food products, dietary supplements and medications are safe, effective and accurately labeled before being sold to consumers. The FDA also regulates the advertising of food and drug products to ensure that it follows its guidelines and does not mislead consumers. Following FDA guidelines is essential for all companies. If a company promotes off-label use, it could face legal penalties from different government entities. Additionally, many businesses still battle to create internal policies and procedures surrounding allowable off-label communications.
FCC:
The Federal Communications Commission, or FCC, is responsible for regulating all forms of communication in the U.S., including television, radio and telephone services, as well as internet access. The FCC works to protect consumers from fraud and other deceptive marketing practices by enforcing its rules regarding truth-in-advertising and consumer protection.
ADA compliance:
The Americans with Disabilities Act, or ADA, is a federal civil rights law that prohibits discrimination against individuals with disabilities. Companies must comply with the ADA when creating their marketing content by making sure it's accessible to all users. This includes ensuring that images are descriptive and text can be read using assistive technologies such as screen readers.
HIPAA:
HIPAA marketing compliance means doing two key things at once. The first is protecting your patients' protected health information, or PHI, whether it's stored on paper or electronically. The second is understanding and carrying out your responsibilities under HIPAA. By doing so, you can be sure that your patients' PHI is kept private and secure.
In addition to HIPAA compliance, some states have additional laws that require companies to take extra measures when processing patient information. For example, California has a law known as the California Confidentiality of Medical Information Act (CMIA), which requires businesses to take additional steps to protect patient data.
Related: Protect Your Business From Regulatory Pitfalls, With 'Practical Compliance'
Risks of being non-compliant
The risks of being non-compliant with marketing regulations are high, and businesses stand to lose a lot if they fail to comply. Below, I have outlined a few marketing compliance risks businesses could face:
Fines and penalties
Strict adherence to laws and regulations is essential, as the repercussions of non-compliance can be detrimental. These range from financial penalties imposed by government entities. The following are some of the legal fines that have been enforced in recent years:
Fair Labor Standards Act: This act makes it mandatory for an employer to pay the federal minimum wage and overtime compensation when certain criteria are met. Moreover, any violations of this law may result in back pay and penalties (which can reach up to $10,000).
GDPR: The GDPR imposes administrative fines of up to €20 million or 4% of the company's global annual revenue, whichever is higher.
Loss of trust and brand reputation
When customers discover that companies are not compliant with marketing regulations, they can lose trust in the brand and move their business elsewhere. This is especially true if businesses fail to comply with GDPR, as customers may hesitate to share their data with companies they don't fully trust.
Downtime
Non-compliance can result in long periods of downtime. If companies fail to maintain compliance, they may be forced to take down their sites or services while they work to fix the issue. This could lead to significant losses in terms of revenue and customer loyalty.
How to avoid marketing compliance violations
Here is a brief marketing compliance checklist you can use to ensure you stay compliant:
Terms of service
It is critical for companies to be transparent about their terms and conditions in order to maintain customer satisfaction. In particular, SaaS businesses need to be clear about how their services work and what will happen with important factors.
In the European Union, businesses cannot legally enforce unfair contract terms against consumers. When companies don't fulfill their consumer rights obligations, they could lose customers and profit. For these reasons, it's vital that marketing departments work with other areas of their business to make sure that their terms of service are always clear, up-to-date and fair.
Product specifications and prices
Businesses face a number of guidelines, both domestically and internationally, that they must follow when sharing product specifications in marketing materials. In the United States, for example, the Federal Trade Commission enforces laws related to truth-in-advertising, which demand businesses share accurate information that is backed up by evidence.
There are also strict rules and regulations that businesses must follow when it comes to advertising on digital platforms, such as Amazon, Facebook and Google.
Companies can face hefty fines or other penalties if these rules are not followed. This is where a strong marketing compliance strategy comes in handy.
Data management
Marketing compliance is also concerned with how businesses use and manage customer data. In the European Union, GDPR places a responsibility on companies to protect their customers' personal data. This requires companies to store and securely process customer data and not share it with unauthorized third parties. Companies must also ensure that they are taking steps to comply with the "right to be forgotten" and other GDPR rights granted to customers.
Marketing channels to monitor for violation
Monitoring for marketing compliance violations is a crucial part of any successful risk management program.
Businesses should keep an eye on platforms such as Amazon, Google Ads and Facebook Ads since these popular channels can be used to quickly reach large audiences. Aside from these, email marketing compliance should also be monitored closely, as companies must adhere to the CAN-SPAM Act when sending out promotional emails. Companies should also monitor their own website or app for compliance issues.
This includes checking how customer data is collected and stored, as well as verifying that all terms and conditions are up to date. Companies should also review marketing material for any potential legal issues. Finally, businesses must ensure that they are regularly monitoring industry-specific regulations and laws to ensure they stay compliant. This involves staying on top of changes in legislation, such as GDPR and the California Consumer Privacy Act.
Related: 3 Key Legal Issues Online Marketers Need to Know About
Marketing and advertising compliance is a complex issue, with many laws and regulations that companies must adhere to in order to protect their customers' data and ensure fair competition within markets. Companies should consider creating a comprehensive marketing compliance strategy that takes into account all applicable laws and regulations and ensure that their marketing practices are compliant with them.
If doing things yourself would be too much of a burden, consider hiring compliance professionals or lawyers who are knowledgeable in this area. You could also take advantage of various marketing compliance software in the market. This can ensure that your business not only stays compliant but is also able to grow and expand without fear of legal repercussions.
