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Test Marketing - "Naked Tests" - "Dry Testing"
Many times, when a company has a new product idea, it wants to "test the
waters" - gauge market demand by advertising even before manufacturing. Here's what the DMA and FTC have to say about such
"naked" tests.
http://www.the-dma.org/
The DMA says, in its Direct Marketing Ethical
Guidelines, "DRY TESTING - Article #30 - Direct marketers should engage in dry
testing only when the special nature of the offer is made clear in the
promotion."
The DMA further comments, "Comment:
"• Dry testing occurs when you want to “test the waters” for interest in a new
product, i.e., one that does not yet exist. On its face, testing the market for
a product that doesn’t yet exist appears to violate the 30-Day
Rule, as the Rule requires a seller who makes an offer to have a reasonable
basis that the goods ordered will be shipped. However, you may dry test as long
as consumers are not misled and are informed, for example, by stating something
like: “This new magazine is being planned; we will let you know if it will not
be published, and of course, if it is not, we will promptly credit your account
by (date).”
"• You may want to delay accepting payment for a product that is not yet
available, or refrain from charging an account.
"• Also, you should know that the FTC has stated in an advisory opinion that
substitutions may not be made in this kind of situation.
"• “Price testing” is sometimes confused with “dry testing.” As noted under
Price Comparisons, price testing is an acceptable and common way of testing the
market -– for example, setting a different price for the same
merchandise in a different geographic location. It is recommended that consumers
who complain to you about this practice be offered the merchandise at the lower
advertised price, and that the test be of finite duration.
"Questions to Ask:
"• Does your advertising clearly reflect that the offer is for a product or
service that is not yet available?
"• If it is determined for whatever reason that the product will not be made
available, do you notify consumers of this fact promptly and issue credits or
refunds, if payment had been accepted?"
The FTC mail order publication includes more at
http://www3.ftc.gov/bcp/conline/pubs/buspubs/mailorder.htm
"The Rule requires that when you advertise merchandise, you must have a
reasonable basis for stating or implying that you can ship within a certain
time. If you make no shipment statement, you must have a reasonable basis for
believing that you can ship within 30 days. That is why direct marketers
sometimes call this the '30-day Rule.'"
"Dry-testing - Q: We want to sell by mail or telephone a product that is not yet
available. Does the Rule apply?
"It depends. In an advisory opinion, the FTC told a publishing company that it
could "dry-test" its merchandise as long as the following conditions were met:
In promoting the merchandise, the merchant can make no suggestion that the
merchandise will be shipped or that customers expressing an interest in it will
receive it. In all promotional materials, the merchant must disclose all
material aspects of the promotion, including the fact that the merchandise is
only planned and may not be shipped. If any part of the promotion is later
dropped, the merchant must notify subscribers of the fact within a reasonable
time after soliciting their subscriptions. If, within a reasonable time after
soliciting their subscriptions, the merchant has made no decision to ship the
merchandise, it must notify subscribers of this fact and give them the
opportunity to cancel and, where payment has been made, make a prompt refund.
The merchant can make no substitutions of any merchandise for that ordered. If
these conditions are not met, the Rule applies."
BOTTOM LINE: the question, therefore, is -- What
disclaimer / disclosure language to add to protect yourself from a violation of
the FTC 30 Day Rule.
You cannot state or imply that people are already using
and benefiting from a product that is yet to be produced.
The Vitamin Lawyer is available to help you craft
an appropriate disclosure. Just contact me at
ralph.fucetola@usa.net and put "Dry
Test Disclaimer" in the subject line.
"Supporting industry compliance with FDA and FTC
regulations."
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