Affiliate Marketing:

1. Affiliate Marketing: How To Ensure Your Third Parties Are Meeting Privacy Obligations Mary Ellen Callahan, Hogan & Hartson Quinn Jalli, Datran Media Cambridge, Massachusetts August 22, 2007

2. What Is Affiliate Marketing? • Working with other companies • Ad Networks • Affiliate programs & networks • Third-party e-mail marketers • Offline direct marketers • Various payment approaches • Pay Per Click /Action • Pay Per Lead • Shared Revenues • Pay for delivery • Way to leverage own database more effectively • PII often necessary to share for affiliate monitoring, but also as part of the leverage

3. How Does Affiliate Marketing Differ From Conventional Marketing? • Potentially joint ownership / use of consumer data • Multiple privacy and contractual representations • Transparency of transactions

4. Getting To Accountability • Regulatory framework to be accountable for acts of affiliates • CAN-SPAM: obligations imposed on advertiser, additional obligations on initiators • Implicit need to monitor actions of affiliates • Gramm-Leach-Bliley: financial institutions must also require compliance by its vendors and service providers • Section 5: prohibits unfair and deceptive trade practices. Application to affiliates?

5. Getting To Accountability FTC Actions • Cases brought by the FTC in several areas have suggested that marketers, leveraging affiliates, should monitor affiliate behavior • TJ Web – Jan 2007 settlement includes obligations on affiliate review, based on CAN-SPAM • Optin Global • Cleverlink Trading Ltd. • Zango • Cart Manager – March 2005 • Director of Bureau of Consumer Protection’s press release statement of monitoring activities: "Companies and [vendors] must make sure that their privacy policies are in sync. A [vendor] cannot secretly collect and rent consumers' personal information, contrary to a merchant's privacy policy. At the same time, merchants have an obligation to know what their [vendors] are doing with consumers‘ personal information.”

6. Getting To Accountability New York Attorney General Actions • New NY AG Cuomo settles with major advertisers in Jan 2007 --online promotion of products and services through another’s alleged deceptively installed adware programs • Priceline • Travelocity • Cingular

7. In what circumstances do companies have a legal obligation to monitor affiliates? What affirmative actions should your company take to avoid any law enforcement action?

8. Policies & Procedures • Establish necessary and reasonable policies and procedures, depending on the level of relationship. • It’s your playground, make the rules. • Know thy affiliate. • Don’t turn a blind eye.

9. Playground Rules • Establish standard operating procedures for the relationship. • Keep standards consistent. • If company doesn’t meet standards, don’t bend rules late then in – could be weak link. • Develop deployment strategies. • Rules for marketing: channels, media, frequency.

10. Know Thy Affiliate Develop monitoring techniques to detect abuse • Utilize seeds • Leverage brand-monitoring solutions that identify brand abuse • Ensure marketers are honoring channel representations • Verify /contractually require affiliates to use reputable partners • Understand data collection and use policies (and get contractual representations re: same) • Review applicable privacy policies as appropriate (PII in particular) • Monitor suppression list and complaint activities

11. Blindness The recent enforcement activities indicates that if you have a close relationship with purportedly bad actors, you could be held liable for their actions, even if you did not dictate them.

12. Contact Information Mary Ellen Callahan, Esq. Partner Hogan & Hartson 555 Thirteen Street NW Washington, DC 20004 Tel: (202) 637-6406 Fax: (202) 637-5910 Email: mecallahan@hhlaw.com Quinn Jalli, Esq. Privacy Officer and Vice President of ISP Relations Datran Media 345 Hudson Street, 5th floor New York, NY 10014 Tel: (212) 706-4897 Fax: (212) 706-9758 Email: QJalli@datranmedia.com