SEM is illegal - Unless you are licensed

[Discovery]

Catchy headline or reality?

We work with a number companies in the financial services sector and more and more we are getting legal opinions that we, as an advertising agency for companies, need to be licensed in many states to provide marketing services to these companies.

With the economy tanking and local governments looking to fill their coffers more legislation is coming about.

Dental, Medical or Vision related services - you now have to be licensed in each state and follow their unique laws.

Insurance of any kind - need a license to advertise REGARDLESS if you are the end provider or not.

Even more disturbing is the price tag. In most cases it will run between $3,000-$5,000 to get licensed in each state PLUS any other legal costs to submit the forms and comply with the laws.

Oh and that is for each SERVICE... so if you advertise Financial, Insurance and Dental services that would be 3 x $3k-$5k for each state. So if you advertised in 48 staes and had 3 verticals you are talking a minimum $432,000 to be properly licensed. PLUS legal fees, Plus the cost of compliance!

And one wonders how we are going to emerge from this economy?

Who is concerned that one day the State or Fed is going to start enforcing these laws and require SEM's and marketing agencies like us to pay through the nose?

Discovery

[mcanerin]

That's an excellent idea! (places tongue in cheek)

This way, my non-American clients will be able to totally mop up their US rivals by using SEM services American's can't afford.

Since the internet knows no borders, it'll be like shooting fish in a barrel.

Of course, I happen to know a lot of Americans and am pretty sure they they will not stand still long for me to sit there shooting at them (metaphorically speaking).

I suspect that even if this began to be the trend, it would stop as soon as it was clear just how much at a disadvantage this would place the very people and governments trying to bring it in.

Intelligent regulation is a good thing. But over-regulation is just as likely to destroy an economy as under-regulation just did.

I suspect, if only for simple self-preservation, this will not happen.

But I'm OK with the US getting rid of most of my business rivals for me, if they really want to...

[AussieWebmaster]

This one seems to be a little off.... do they ad companies for national eye care, dnetal and pharmacy companies get individual license? If I work for a national company and the ppc ads appear in a state requiring licenses mean I have to have one?

If you are based in a state then I can understand but if a company reaches out to you across borders does that still apply?

[Discovery]

So I thought as well. But read this from PA legislation.

"Section 3(a) of the DMSA states that no person may advertise, solicit, state or represent that it can offer,
obtain or procure debt management services to or for a consumer or provide debt management services
to a consumer unless such person is licensed by the Department under the DMSA. Exceptions to the
licensing requirements are found in Section 4 of the DMSA."

Okay so I'm no lawyer, but this says to me, if you're advertising in this state without a license for this specific type of service then we're going to hit you with a C&D then haul your ass into court and sue you. PS: Penalty is $10,000 for EVERY person who responded to your ad and signed up with a service.

For those not familiar with "DMS" basically the courts view ANY debt relief service as a DMS. So credit counseling, debt mangement, debt consolidation, debt settlement and negotiation all fall under the umbrella of DMS in many of the states around the U.S.

Our lawyers are looking at this closely. However even if they find that we have some legal leg to stand on... who wants to go to court and face steep fines to defend their position? State AG's are looking for a whipping boy and money to fill their coffers. With the general population hating financial groups like Wall Street and individuals like Made-off (madoff) many financial services companies are an easy target.

Discovery

[AussieWebmaster]

so all such advertising goes off shore? or the states go after Google... will we see these ads dropped like gambling? hell Kentucky grabbed domains... what next

[Discovery]

Kentucky grabbed names? I had not heard...please do tell.

You may see a massive consolidation within the lead generation as well as debt relief industry. Or, you will simply no longer be able to get debt relief...accept directly through the programs offered by the creditors themselves; credit counseling for example. These CCS companies with the credit card company lobbyists have deep pockets that can sway politicians.

Discovery

[B-Double-U]

I'm not sure that with debt consolidation, that we would have to worry about it going offshore, since any offshore entity would not be allowed to deal on behalf or "consolidate" for a citizen and work with the lending institutions.

I am fairly certain that this would be short lived, since they would get some traffic and then realize that there is nothing they can do and therefore cannot make any profit to sustain the advertising...

Very similar to the sites that used to bid on terms to show adsense pages and use that revenue to cover the ads promoting them... one would eventually take over the other...

[mcanerin]

Good find, Discovery.

I'll be watching this with interest, and hope cooler heads prevail. For all the tongue in cheek comments I made above, I have no desire to see my American friends harmed by this type of thing.

It's a tough issue, because I've no doubt that the intentions behind this are good, but they simply forgot that there are other countries outside of the US that would be happy to take advantage of this.

I don't want to place this on poor President Obama's desk (he's got enough work to do as it is, and I wish him well) but hopefully the attitude of "doing what works" will trickle down to maybe make this less onerous to US marketers. It simply doesn't strike me as either fair or productive.

I'm all for fairness in advertising rules. But this strikes me as more of a cash grab.

[Discovery]

Ian we've known you too long miss the point of your witty cynicism. The fact is a lot of what you say certainly has truth to it.

Discovery