Watch the Alligators: Association Marketing Legal Reminders

It is very easy for me to forget that good marketing includes a sound understanding of legal issues in addition to strategy, creative, and analysis.

Here are some of the legal items to keep in mind when developing marketing campaigns.

UBIT: In the April Associations Now piece titled “Lessons from new CAE’s”, Mary Moon Allison, CAE, from the American Nurses Credentialing Center shared that she learned when marketing her affinity programs (like list rentals, credit cards, etc.) that “If we do not actively market it, the income is considered passive and is not subject to UBIT, but if we’re involved in the marketing of it, the IRS considers it unrelated business income (p. 16).” This is why associations that hope to earn substantial revenue from these programs use outside providers to manage the program.

Nonmember Pricing: In the same Associations Now piece, Lakisha Campbell, CAE, National Association of Home Builders noted that “the difference in member to nonmember product or program pricing could not be greater than the price of membership (p.16).”

Invoices or Renewals: Some associations make a common mistake is incorrectly using the term “Invoice” on membership renewal notices. Remember, a member does not have a legal obligation to pay a renewal notice. Therefore, it is not an invoice. Using an invoice is appropriate if a member has requested to be billed through some type of bill-me solicitation.

FAX Solicitations: Fax marketing is also an area where there can be some confusion and liability. The Direct Marketing Association provides a good alert on rules governing the use of faxes in marketing. “The Junk Fax Prevention Act of 2005 allows marketers to send commercial faxes to those with whom they have an established business relationship (EBR), but imposes some new requirements. These requirements include providing an opt-out notice on the first page of faxes and establishing a system to accept opt-outs at any time of the day.” I just met with a group that was unknowingly in violation of these rules. Violations can get very expensive.

Email and SPAM: Fortunately, I do find that most associations are very aware of the laws governing email solicitations and follow the four major provisions of the act including: false or misleading information, deceptive subject lines, opt outs, and physical mailing address.

It is good to keep these in mind because violations can be expensive. The Federal Trade Commission FTC says that “Each violation of the [can spam] provisions is subject to fines of up to $11,000. Deceptive commercial email also is subject to laws banning false or misleading advertising.”

Telemarketing: Another area of legal concern in marketing is telemarketing and the Do Not Call Registry. If you are a non-profit, you are not impacted by the do not call rules. According to the Federal Communications Commission (FCC), The Do Not Call Registry “does not cover the following: calls from organizations with which you have established a business relationship; calls for which you have given prior written permission; calls which are not commercial or do not include unsolicited advertisements; calls by or on behalf of tax-exempt non-profit organizations.”

Direct Mail: Finally, there is also a non-legal, but strongly recommend ethical practice that you should consider with your direct mail marketing. It is to suppress prospective members and customers from your mailings using the DMA Mail Preference Service (Do Not Mail File). This is a file of people who have asked not to receive direct mail solicitations.

Am I missing any other legal issues here that you can think of mentioning? Feel free to let me know.


Chris Davis said...

Well Tony, I finally found some time to get back on here. Thanks for your blog. I would like to expand on the non-member pricing aspect of your post.

My association has some vendors with whom we have contractual obligations to sell to member only. However, we have some products which non-members are allowed to purchase and we do mark it up considerably while keeping competitive in the market.

There are certain non-members who purchase regularly from us and I make it a point to keep track of thier sales. Why? Because our dues are $2400 yearly (corporate memberships only) and our dues policy states that 10% of sales throughout the year, up to $24,000 will be credited to your next year's dues. If a non-member were to purchase $24,000 from us, then it would make sense for them to upfront the initial cost of membership (which is pro-rated) and join, having thier dues paid for every year from purchases they would make anyways.

We have actually recruited quite a few members by doing this. Non-members who purchase from associations at non-member pricing have the potential to be some of the most qualified prospects for membership an association can have.


Tony Rossell said...

Chris -- Thanks for sharing. I like your association's policy and am impressed with how you go about recruiting members. From my experience customers are great prospects and because you have a business relationship with them you can effectively use Fax and email to stay in touch with them. Thanks for sharing your experience. Tony