Urgency Is Not Illegal (But…)

Written by Brook Schaaf

Fake discounts? Annoying. Quality email subject lines? Enticing. Fake discounts as email subjects? Irresistible, at least to plaintiffs’ lawyers, at least in Washington state, at least until this past June. 

CEMA, the Commercial Electronic Mail Act, a long-overlooked 1998 law that prohibits “false or misleading information in the subject line,” became its own headline last year when the Washington State Supreme Court upheld an interpretation in Brown v. Old Navy that makes senders liable for a fine of $500 per email for phrasings like “expiring” when the offer didn’t expire but created “a false sense of urgency.” “That means a single email, sent to 5,000 Washington recipients, could result in $2,500,000 in damages.” 

But, but, you say, what about the federal government’s 2003 CAN-SPAM, which disallows private right-of-action for consumers and preempts state laws? It has a carve-out for falsity and deception. 

Should this qualify as falsity and deception? “Puffery” is an accepted legal concept; consider how my alma mater Zappos got away with calling itself the “world’s most popular shoe store” when Nordstrom threatened legal action against “world’s largest.” Tony Hsieh also relied on expiring discount offers that routinely reappeared the next day, presumably because they worked; he was famously data-driven. By this “misleading” standard, these fake discounts would surely be liable, even though they’re common practice. Hey, maybe they are—Nike and Lululemon are dealing with “phantom discounts” lawsuits.

So to advertisers, this must feel a bit like having your house burned down because you parked slightly too far from the curb, especially when promotional calendars do often change on the fly. To plaintiffs’ lawyers, this must feel great, and it became a feeding frenzy. As a defendant’s lawyer opined, “The blood was in the water when the decision went live.” In CEMA’s first 20 years: 8 lawsuits. In the last year: 100. The consequences were so dire they rushed through a milder law with penalties of $100 per email or actual damages, whichever is greater (and damages “don’t exist,” according to another lawyer in the same video). 

Still a daunting challenge for businesses sued before the law changed. But why bring up what now appears to be a resolved issue? Because I suspect it isn’t resolved at all. Rather, it reflects a broader trend, and cases might pop up in any state. Trade-group resistance notwithstanding, lawyers and governments often set up legal tripwires for businesses when they can. For example, Washington’s Attorney General recently sued Albertsons, Safeway, and Haggen over their “buy one, get one free” promotions, alleging the stores raised prices just before advertising the discounts. Does this have legal merit? I don’t know. But it may well be a political winner, leading to more lawsuits, legislation, and regulation.

This trend has obvious implications for affiliate marketing. If advertisers and publishers alike can be held to a greater degree of responsibility for offer representation, compliance becomes more than a best practice—it becomes a legal risk. A law firm in California with over 50 cases was mentioned, many of which “target affiliate marketing.” Copy monitoring is already practiced in heavily regulated verticals like finance and health and wellness, where advertisers and government agencies routinely monitor affiliate messaging. Email simply makes enforcement easier because every claim is searchable and preserved.

Let’s return strictly to discount offers. If you sell some kind of product, you can try not posting them, but good luck with that in a very competitive market. Whether or not these common practices ultimately create legal liability, they may already create a trust liability. 

More than anything else, this does come down to trust. Coupons work best when anchored to a real price reference, reaching a buyer segment that might not otherwise have purchased. If the reference is fake or the deadline theater, there is a credibility tax to pay.

While CEMA’s original penalties may have been wildly disproportionate, the underlying complaint was not. Affiliate is the key channel for coupon delivery, and we should seek to ensure its trustworthiness.