MoreNiche Limited (M), a company which runs an online network for 30 merchant businesses and nearly 150,000 affiliate marketing businesses, has given legal undertakings to the Office of Fair Trading (OFT) under the Enterprise Act 2002 for M to make improvements to the way the network operates.
The OFT conducted an investigation into the network, in which affiliates market merchants’ products to consumers on the affiliates’ own websites. The investigation related to alleged breaches of the Consumer Protection from Unfair Trading Regulations 2008 and the misleading of consumers by the network in the following ways:
- reviews and endorsements appearing on the affiliates’ websites which were presented as “independent” but which were in fact commercial promotions; and
- the affiliates’ websites not making clear that the affiliate received financial rewards from a merchant for each product sold by a merchant to a consumer who had been introduced to that merchant by an affiliate.
Following the investigation, M agreed to several legal undertakings to address the above concerns. The undertakings deal with several issues including:
- M reviewing its affiliates’ websites to ensure that the “affiliate” status is clear to consumers visiting those websites;
- M providing further guidance to affiliates on legal responsibilities; and
- M acting on complaints about affiliate websites and suspending affiliate accounts if those affiliates do not take corrective action.
M has agreed to implement the undertakings by 23 September 2012. If M breaches the undertakings, the OFT can apply to the courts for an enforcement order; if that enforcement order is then not complied with, the OFT can issue proceedings for contempt of court.