SERVICES AGREEMENT
Agreement dated as of February 8, 2000, between Hawthorne Direct Inc,
an Iowa corporation with offices at 000 Xxxxx 00xx Xxxxxx, Xxxxxxxxx,
Xxxx 00000, hereinafter referred to as "Hawthorne", and Nova
Pharmaceutical, a Nevada corporation with offices at 00000 Xxxxxx
Xxxxx, Xxxx Xxxxxxxx, Xxxxxxxxxx 0000000, hereinafter referred to as
"Client".
(1) Hawthorne agrees to produce for Client a broadcast quality
television commercial (hereinafter referred to as "Commercial")
which will be 28:30 in length, advertising Client's weight loss
product called NxTrim (hereinafter referred to as "Product").
(2) At Hawthorne's discretion, Client shall approve, in writing,
those elements of Commercial as identified on the Approval
Rider, Attachment X. Xxxxxxxxx shall request Client's approval
prior to proceeding with each Commercial element as identified
on the Approval Rider. Client shall either grant approval, or
explain why it is not doing so, on a timely basis.
(3) Hawthorne will submit one VHS copy of the completed Commercial to
Client for approval prior to its release to any media..
(4) Unless otherwise agreed to in writing by Client, the total cost
(excluding all talent, travel and legal costs) of Commercial, as
contemplated by the final version of Commercial script ("
Script"), shall not exceed $200,000 ("Cost Estimate"). To the
extent the total cost (excluding talent, travel and legal costs)
exceeds $200,000 due to changes requested by Client subsequent to
the final Script approval or for schedule delays due to Product
claims substantiation, Product manufacturing requirements, or
events within Client's reasonable control, Client shall be
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responsible for such excess costs. To the extent the total cost
exceeds $200,000 due to Hawthorne's failure to anticipate or
budget for foreseeable expenses, Hawthorne shall be responsible
for such excess costs.
.
(5) The terms of payment are as follows:
a. $50,000 at the time this Agreement is signed;
b. $70,000 upon Hawthorne's delivery of first draft of Script
to Client;
c. $70,000 plus estimated travel and talent expenses one
business day prior to commencement of principal photography for
the Commercial; and
d. Final balance upon delivery of final Commercial edit to
Client.
(6) The following costs are above and beyond Cost Estimate and will
be billed to Client at Hawthorne's cost:
a. All travel and living expenses incurred by Hawthorne
personnel (coach airfare, standard hotel rates, $50
meal per diems).
b. All legal opinions of the Script, off-line and on-line
edits (estimated cost: $1,500 to $5,000) rendered by
attorneys with expertise in direct response television
law.
c. All talent related costs related to the production and
subsequent airing of the Commercial including, but not
limited to:
Talent casting, travel, wardrobe, teachers, broker fees;
Talent fees and royalties, payroll fees,
pension and welfare fees, taxes;
AFTRA/SAG talent residuals
(7)The following talent related costs will be billed to Client at
indicated rates:
Talent search/negotiation $200/hr.
Residuals tracking/calculation $150/13 week cycle
(8) Client understands that Hawthorne is a signatory of AFTRA and SAG
and will contract only with AFTRA and/or SAG talent. Client
agrees to provide Hawthorne with talent royalty statements and
render payment to Hawthorne at least five (5) business days
prior to the date on which Hawthorne is obligated to pay
royalties and fees to talent and agency, if any.
(9) If Hawthorne causes the creation of original music for the
Commercial (hereinafter referred to as "Original Music"),
Hawthorne shall retain publishing rights and publishing
royalties in connection with Original Music. Hawthorne shall
grant to Client the non-exclusive, perpetual right to the use
of such Original Music in, and in connection with, the
Commercial. In the event that an individual or entity other
than Hawthorne purchases media time for the Commercial at any
time in the future, Client agrees to provide Hawthorne or its
designated representative a monthly media buy list which shall
be used for the exclusive purpose of obtaining royalties for
Original Music. Such media buy lists will contain the following
information, and shall be grouped by broadcast market or cable
network: name of broadcast market, station or network call
letters, date and time of airing.
(10) For a period of two (2) years following the initial air date of
the Commercial, or for as long as the Commercial is aired on
television, whichever is longest, Client agrees to remit to
Hawthorne a Participation Fee equal to two percent (2%) of all
Net Product sales generated as a result of airing the Commercial
("Commercial Sales") and one percent (1%) of wholesale revenues
( "Retail Sales") generated by Client or Client's agents,
subcontractors and representatives. For purposes of this
Agreement, Net Product Sales are equal to gross Product sales
less returns and bad debts, and do not include sales taxes or
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shipping and handling fees.
(a) Client agrees to remit such Participation Fees to
Hawthorne monthly by the fifteenth of the month
immediately following the month in which Client
receives Product sales revenues. Each payment made to
Hawthorne shall be accompanied by a detailed
accounting statement setting forth the number of units
of Product sold during the applicable month, the
actual selling price, shipping and handling charge,
and tax charge for each unit of Product, and the
calculation of the amount of Participation Fee shown
thereby to be due to Hawthorne for such month.
(b) Client grants Hawthorne the right to examine Client's
books and records related to Product sales resulting
from Commercial up to two (2) times per calendar year,
such examination to take place at Client's place of
business during normal business hours upon fifteen
(15) days written notice. Hawthorne agrees to bear the
cost of such examination except in the event that
examination discloses a discrepancy in Hawthorne's
favor of more than five percent (5%); then Client
shall bear Hawthorne's costs of such examination.
(11) For purposes of taping Commercial, Client will provide Hawthorne
with six (6) complete Product units at no charge to Hawthorne.
(12) Provided that Client is not in breach of this Agreement, Client
is entitled to full ownership rights to Commercial and will receive one
edit master.
(13) Hawthorne, on an exclusive basis, will purchase, for Client,
media time for Commercial. Hawthorne will receive a commission
equal to 12% of the total gross media cost for media time that
is purchased by Hawthorne for Commercial. Client agrees to pay
Hawthorne at least $25,000 for the Media Test and creation of
dub masters and dubs for Media Test, payment of which is to be
received by Hawthorne at least three weeks prior to the initial
telecast. Subsequent media buy costs and related commissions
will be invoiced weekly to Client by Hawthorne to meet
broadcast station and cable network (hereinafter collectively
referred to as "Stations") payment schedules, payment of which
is to be sent via bank wire or overnight courier and received
by Hawthorne within five (5) days of receipt of invoice.
Hawthorne reserves the right to cancel media booked on behalf
of Client in the event that Client payment is not received by
Hawthorne as provided for herein. Client agrees to pay interest
at 1-1/2% per month on all media payments received by Hawthorne
more than ten (10) days after receipt of invoice.
(14) Subsequent to the completion of the Commercial, all production
work related to airing Commercial, such as additional masters,
broadcast dubs, special edits, and shipping of dubs are
additional costs. Hawthorne shall invoice Client at
Hawthorne's current rates set forth in Attachment B. As a
service to Client, Hawthorne will store edited Commercial
source footage, masters, sub masters, source video and audio
tapes, film transfers, and graphics discs (hereinafter referred
to as ("Source Materials") in Hawthorne's climate controlled
library. Hawthorne shall not be liable for any damage to or
loss of Source Materials by any cause including, without
limitation, fire, theft, act of God, or the negligence or other
fault of Hawthorne or its employees or agents. While Client
Source Materials are stored at Hawthorne facilities,
Hawthorne's liability is limited to the cost of a like amount
and type of blank stock only. This is the Client's sole remedy,
and recovery for any other damages is excluded, including,
without limitation, incidental or consequential damages.
(15) Client warrants that, upon its approval, the finished Commercial
and content therein shall be truthful and not in violation of
applicable law, and that the Product will perform as indicated
within the Commercial. Client represents and warrants that all
Products advertised or otherwise promoted in the Commercial have
received any necessary government or other approvals, and are
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legal to be advertised and sold to consumers in the United
States or any other country where the Commercial is aired.
Client agrees to abide by all marketing guidelines as issued by
the Electronic Retailing Association ("ERA"), a current copy of
which is included as Attachment C to this Agreement. Client
understands that Hawthorne is a member of ERA and accordingly is
required to certify to every broadcaster and cablecaster which
airs Commercial that Commercial complies with the ERA Marketing
Guidelines. Client acknowledges that Client is solely
responsible for adequately substantiating all Product claims,
upon which Hawthorne will rely in producing Commercial, and
agrees, prior to actual taping of any portion of Commercial, to
provide Hawthorne with written substantiation of all Product
claims made in Commercial.
(16) Client acknowledges that Hawthorne's media rates constitute the
secret and confidential information of Hawthorne giving it a
competitive advantage over others in the industry. Client
agrees to hold such information in confidence and not to,
directly or indirectly, disclose such information to
competitors of Hawthorne or others, for any purpose. Client
understands that any breach by Client of this Paragraph 16 may
cause Hawthorne irreparable damage, and that Hawthorne would
not be entering into this Agreement but for Client's agreement
set forth in this Paragraph 16.
(17) Client acknowledges that it is well informed of the financial
risks associated with airing Commercial and agrees to in no way
hold Hawthorne financially responsible for degree of success
resulting from airing Commercial. Hawthorne provides no
warranty, express or otherwise, as to the potential degree of
success to result from airing Commercial.
(18) Client agrees to contract with Hawthorne exclusively for
Hawthorne to provide various marketing services to Client,
including but not limited to: international distribution,
television home shopping, direct response print advertising,
catalog advertising, radio, direct mail advertising, and credit
card syndication, hereinafter collectively referred to as
"Integrated Marketing Services." Specific Integrated Marketing
Services and fee structure for will be specified in a contract
that both parties agree to negotiate in good faith within sixty
(60) days of execution of this Agreement.
(19) At Client's option and as preapproved by Client, Hawthorne will
provide account management services at Client's place of
business and/or consulting services for telemarketing,
fulfillment, computer programming and various aftermarket
opportunities. Consulting services will be billed at $125 per
hour. Any reasonable travel and living expenses incurred by
Hawthorne and preapproved by Client in connection with such
consulting will be paid by Client (actual cost of coach
airfare, standard hotel rates, local travel, $50 meal per
diem).
(20) Client shall indemnify and hold Hawthorne and any of its
affiliates, executives and employees free and harmless from all
suits, claims, demands and other liabilities and expenses
(including, but not limited to, actual damages, punitive
damages, fines and legal fees) arising out of the airing or
other use of Commercial, and/or the Products sold as a
consequence of Commercial, whether instituted by any
governmental body, federal, state, or local, any prosecutorial
or law enforcement agency, or any other person or organization,
including, but not limited to, any FTC, FDA, or Dept. of
Agriculture proceeding or investigation, and any suit for
product liability. Client shall obtain product liability
insurance in the amount of at least $2 million naming Hawthorne
as an insured, and shall provide a Certificate of Insurance from
the carrier to Hawthorne prior to delivery of the final tape of
Commercial. Hawthorne shall give Client prompt written notice
of all suits and claims for infringements and an opportunity to
defend the same, at its own expense, through counsel of Client,
and to control such defense.
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(20) Hawthorne shall indemnify and hold Client and any of its
affiliates, executives and employees free and harmless from all
suits, claims, demands and other liabilities and expenses
(including, but not limited to, actual damages, punitive
damages, fines and legal fees)arising out of the production of
Commercial. Client shall give Hawthorne prompt written notice
of all suits and claims for infringements and an opportunity to
defend the same, at its own expense, through counsel of
Hawthorne, and to control such defense.
(21) Subsequent to completion of the Commercial, this Agreement may
be canceled by either party ninety (90) days after receipt of written
notice of such cancellation. In the event of such cancellation,
Participation Fees, as described in Paragraph 10 herein, shall be
continued to be paid to Hawthorne as provided for in Paragraph 10.
(22) In the event of any dispute under or related to this Agreement,
both parties agree that such dispute shall be determined by arbitration
proceedings conducted in Chicago, IL, under the then current commercial
rules of the American Arbitration Association, and any award rendered
therein in favor of a party in such proceeding may be enforced in any
court of competent jurisdiction. In the event of arbitration, the
prevailing party shall be entitled to reasonable attorney's fees and
costs.
(23) This Agreement contains the entire agreement and understanding
between the parties regarding the subject of this Agreement,
and no modification or amendment of this Agreement shall be
effective unless contained in a written instrument signed by
both parties.
(24) This Agreement shall be governed by the laws of the Iowa without
regard to the conflict of law provisions thereof.
(25) Any notice under this Agreement shall be in writing sent by
telefax or overnight mail to each party at the address set
forth above.
HAWTHORNE DIRECT INC
BY:
Date
TITLE:
THE CLIENT
BY:
Date
TITLE:
CREATIVE AND PRODUCTION APPROVAL RIDER
If requested by Hawthorne, Client agrees to indicate final written
approval of various elements of Commercial by signing in the
appropriate space below and returning a copy of this Addendum to
Hawthorne. Hawthorne, at its discretion, may require signature prior to
proceeding to the next production phase of Commercial. Client herein
designates as The Representative who has the authority
to, and will in a prompt manner, provide written approvals.
Commercial Element
Approval Signature
Date Approved
Script
Off-line edit
Final program
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Attachment A
Videotape Dubbing and Editing Rates
Duplication (with no editing)
30 Minutes 1 to 2 Minute
Programs Spots
1/2" VHS Demo $7 $5
3/4" Broadcast Dub $30 $25
Beta Broadcast Tape $40 $25
Beta SP Broadcast Tape $50 $30
1" Broadcast Dub $50 $15
Digital Beta $75 $55
D-2 $130 $70
Closed Captioning $1,100 N/A
Note: $10 additional charge per tape for 24 hour turnaround. Above
rates do not include shipping charges for tapes sent to or
returned from stations.
Commercial and Program Editing
30 Minute 1 to 2 Minute
Programs Spots
Dub Master-Custom Voice Over* $175 $36
Special Edit ** $150 $36
* Dub masters are created each time a new 800# is used.
** Special edits are required for changes in show length (as
specified by certain cable networks), product price changes,
inserting special keys and crawls into the body of the show,
voice or music change, graphic tag change, etc.
DUB RATE C
Rev. 991221
Attachment B
TERMS OF BUSINESS - VIDEOTAPE DUBBING AND EDITING
ALL ORDERS FOR VIDEOTAPE DUBBING AND EDITING ARE ACCEPTED SUBJECT TO
THE FOLLOWING TERMS OF BUSINESS:
1. PRICES: Prices to be charged for all materials, services and
facilities shall be the prices of hawthorne direct inc
("Hawthorne") in force at the date of delivery of such items by
Hawthorne. Prices are subject to change without notice. All
prices are F.O.B. Hawthorne, Fairfield, Iowa. Tapes and film
elements (hereinafter referred to as "tapes") submitted to
Hawthorne shall be suitable for use by the method employed by
Hawthorne in its commercial operations when the use occurs. Tapes
transported to and from Hawthorne shall be at Client's risk and
expense. Local, state, federal or other governmental charges for
sales, use, manufacturing, excise and like taxes shall be added to
all Hawthorne prices.
2. TERMS OF PAYMENT: Client agrees to pay Hawthorne for all services
performed and invoiced to Client immediately upon completion of
services, unless specified differently in a contractual agreement
between Hawthorne and Client. Client agrees to pay interest at 1-
1/2% per month on all accounts which are not paid when due. Client
agrees to pay all costs and expenses, including reasonable attorney
fees incurred by Hawthorne in connection with the collection of
amounts owing to Hawthorne . Any claims for adjustment in
connection with an invoice must be presented to Hawthorne in
writing within thirty (30) days from the date of the invoice in
question. Client hereby waives any claim for adjustment in billing
which is not timely presented according to the provisions of this
paragraph.
3. LIEN: Hawthorne shall have a lien on all tapes and other
property delivered by Client to Hawthorne until the balance of the
account due to Hawthorne has been paid.
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4. DELIVERY: Orders will be filled as rapidly as is practical, taking
into consideration the order of service requests by Client, and
Hawthorne plant capacity; delivery dates are approximate. If
conditions arise which prevent compliance with delivery schedule,
Hawthorne will not be liable to Client or any other person for any
losses, damages, liability or delay in delivery, nor for failure to
give notice of delay. Without limiting the generality of the
foregoing, Hawthorne shall not be liable for any delay by reason of
events of force majeure or other causes beyond its control.
5. LIMITATION OF LIABILITY AND LIMITATION OF WARRANTY: Client's
tapes and other materials are handled by Hawthorne only and solely
at Client's risk, and Hawthorne shall not be liable for any loss of
or damage to such materials, or for any injury to earnings, profits
or goodwill suffered by reason of such loss or damage, from any
cause whatsoever, including but not limited to negligence,
affirmative or otherwise, of its agents, employees or persons
acting under its direction or control. Client further understands
that Hawthorne does not carry insurance covering Client's tapes or
other property and it shall therefore be Client's responsibility,
at its own expense to insure all tapes. In addition, Hawthorne
will not be liable for any damage or loss which occurs in transit
from Hawthorne to Client or from Hawthorne to Client's designee.
For instance, Hawthorne will not be liable for damage or loss of
tapes incurred in transit from Hawthorne to broadcast stations. In
no event shall Hawthorne be liable for loss or damage to any tapes
delivered to it or to any tape Hawthorne delivers to Client or
Client's designee for any amount in excess of the replacement value
of the raw stock involved.
6. EQUIPMENT FAILURE: Hawthorne will use its best efforts to ensure
that all equipment will be in working condition. In the event of
equipment failure, Hawthorne will use its best efforts to
expediently fix faulty equipment. However, Hawthorne will assume
no liability for delays which occur because of equipment failure.
7. MODIFICATION: These terms of business can only be modified by an
instrument in writing signed by an authorized representative of
Hawthorne.
"MARKETING GUIDELINES FOR ELECTRONIC RETAILERS"
The Electronic Retailing Association ("ERA") believes that consumer
confidence is the key to the continued growth and success of the
electronic retailing industry. In order to encourage fair, ethical, and
responsible marketing practices that will promote consumer confidence in
electronic retailing, ERA has adopted the following "Marketing Guidelines
for Electronic Retailers," which apply to all television or radio
advertisements produced or disseminated by ERA members.
General Principles
ERA members should be aware of the laws and regulations that govern
advertising and marketing practices, and conduct their business in
compliance with those laws and regulations.
ERA members should encourage the companies or individuals with whom they
do business to follow the principles set forth in these Marketing
Guidelines, and should not do business with firms that engage in dishonest
or unethical business practices.
Most importantly, ERA members should tell the truth, the whole truth, and
nothing but the truth to consumers.
General Guidelines for Advertising
No ERA member shall produce or disseminate any television or radio
advertisement that has a deceptive format (i.e., that appears to be a bona
fide information or entertainment program created by a disinterested party
solely for the purpose of providing information or entertainment) or that
otherwise purports to be something other than an advertisement.
Each television or radio advertisement that is more than 15 minutes long
must be preceded and concluded with clear and prominent audio or video
disclosures that the program is a paid advertisement for [name of product
or service]. Similar disclosures also should be made prior to each
ordering opportunity. In addition, each such advertisement should include
77
a clear and prominent audio or video disclosure identifying the name of
the party who sponsored, paid for or furnished the program.
All statements made in an advertisement shall be truthful and not
misleading, whether or not they are specifically made with respect to the
product or service being marketed.
Advertisements must not contain deceptive implied claims, nor omit
material information, the disclosure of which is necessary to prevent the
advertisement from being deceptive. Any necessary qualifying disclosures
should be legible (or audible) and understandable.
Comparative advertising should inform buyers of the benefits of the
advertiser's product, and not run down a competitor's product.
Comparisons should be presented fairly and accurately rather than in a
contemptuous manner intended to degrade the competitive product.
All statements regarding prices and costs must be truthful and
substantiated. For example, if an advertiser claims that the current
price for an advertised product is less than a former price, the former
price must be a bona fide price at which the product actually was offered
for sale. Comparative price advertising should compare only actual prices
for comparable products and must not be otherwise misleading. When "free"
or similar representations are made, any conditions or obligations upon
which receipt of the "free" item are contingent should be disclosed, and
the cost of the "free" merchandise should not be recovered by marking up
the regular price of the product that must be purchased in order to
receive the "free" product, or by lowering the quality or quantity of the
product that must be purchased.
Advertising should not disparage any person or group on the grounds of
race, religion, national origin, gender, age, or sexual orientation, or
include indecent or offensive content.
Particular care shall be taken in advertisements for products designed for
use by children. Any such advertising should comply with ERA's
"Guidelines for Marketing Children's Products" and with the "Self-
Regulatory Guidelines for Children's Advertising" issued by the Council of
Better Business Bureaus' Children's Advertising Review Unit. No program-
length commercial shall be produced primarily for an audience of children
twelve years old and under.
Claims Substantiation
There must be a reasonable basis, consisting of competent and reliable
evidence, for all express or implied objective claims made for a product
or service.
If the programming contains an express or implied representation that a
claim's truth has been scientifically established or proven, the
advertiser must possess a sufficient level of evidence to convince the
relevant scientific community of the claim's truthfulness. At a minimum,
an advertiser should always have the amount and kind of substantiation
that it claims it has.
Particular care should be taken to substantiate health or safety claims
for products such as dietary supplements, drugs, diet and exercise
products, and medical devices. All representations regarding the safety
or efficacy of such products or services must be substantiated by
competent and reliable scientific evidence.
Demonstrations of the product being marketed or a competing product must
not misrepresent any material feature of that product or the product's
actual performance in real-life conditions. All demonstrations must
actually take place as represented or the details of the demonstration
(such as the actual elapsed time) must be disclosed.
Comparative advertising claims, whether about a competing product or the
advertiser's own product, must be truthful and substantiated in the same
manner as any other objective claim. Comparative tests and demonstrations
of competing products must take into account the purpose for which the
products are intended, the manner in which they are normally used by the
consumer, and the instructions for use that accompany the products.
Testimonials and Endorsements
Testimonials and endorsements may not make representations that would
be deceptive or could not be substantiated if the advertiser made them
directly.
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All testimonials from consumers shall reflect the honest opinions,
findings, beliefs or experiences of the consumer and be generally
representative of the results to be expected by the average consumer.
Alternatively, the advertiser may clearly and prominently disclaim that
the experiences of the consumer offering the testimonial are not
representative of the results to be expected by the average consumer, or
disclose what results the average consumer can expect.
If an advertisement represents that an endorser uses the endorsed product,
then the endorser must have been a bona fide user of the product at the
time the endorsement was made. The advertiser should not continue to use
an endorsement without reason to believe that the endorser remains a bona
fide user of the product.
When an advertisement represents that an endorser is an expert, the
endorser's qualifications must in fact give him or her the expertise that
he or she is represented as possessing. An expert's endorsement must be
supported by an actual evaluation, examination or testing of the product
or service he or she is endorsing that is at least as extensive as an
expert in that field would normally conduct in order to support the
conclusions presented in the endorsement. An advertiser should not
continue to use an expert endorsement without reason to believe that the
views expressed in the expert's endorsement continue to represent his or
her views.
Any "material connection" between an advertiser and an endorser that is
not reasonably expected by the audience and that would have a significant
effect on the weight or credibility given to the endorsement by that
audience - e.g., a family or business relationship - must be disclosed.
(Audiences expect expert or celebrity endorsers to be compensated, so
payments to expert or celebrity endorsers need not be disclosed.)
Disclosure of Costs and Other Material Terms of an Offer
The terms of an advertised offer should be sufficiently clear and complete
so that the average consumer will understand what is being offered, what
it costs, and what his or her ongoing commitments or obligations are, if
any, prior to purchase of the advertised product or service. The
advertiser should make it clear if accessories or other items depicted or
mentioned in an advertisement are optional and not included in the
advertised price. All costs related to an offer (including postage and
handling, taxes, etc.) must be disclosed.
Offers involving continuity programs should comply with ERA's "Guidelines
for Continuity Programs." The material terms and conditions of a
continuity program must be conveyed to consumers before their orders are
accepted.
The cost of calling an advertised 900 number or an audiotext service
must be clearly and prominently disclosed in advertising. Callers to a
pay-per-call service should hear an introductory disclosure message, or
"preamble," at the beginning of their calls that discloses the cost of
the call and contains the other disclosures prescribed by law, and
should be given the opportunity to terminate the call during the
preamble without incurring any charge. Members should not place any
charges on telephone bills when they know or should have known that the
charge was not authorized by the consumer responsible for paying the
telephone xxxx.
Warranties
Advertising claims relating to a product warranty must be truthful and
consistent with the terms of that warranty, and the advertiser should
disclose any material conditions, limitations, or charges relating to the
warranty. Any warranty offered with a consumer product should be properly
designated as "full" or "limited," and should contain the basic
information required by law (e.g., what the warranty covers and does not
cover, what the period of coverage is, what the warrantor will do to
correct problems, how the customer can obtain warranty service, and how
state law affects the customer's rights under the warranty). Any requests
for repairs, replacement products, or refunds under the terms of a
warranty should be honored promptly.
A copy of the warranty must be made available free of charge to any
consumer who requests one in writing, and advertisements that mention a
warranty should tell consumers how to obtain a copy of that warranty.
Order Fulfillment, Money-Back Refunds, and Collection and Use of
Personal Information
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An ERA member should not advertise and offer merchandise for sale
unless it has a reasonable basis to believe that it will be able to
ship that merchandise within the time specified in the offer (or, if no
time is specified in the offer, within 30 days after receipt of an
order). A member should not charge a customer's credit card account,
debit a customer's checking account, or cash a customer's check or
money order until the order is shipped. If after receiving an order
the marketer learns that the product cannot be shipped on a timely
basis, it should notify its customers of that fact, allow them to
cancel their orders if they wish, and make any necessary refunds
promptly. A marketer should not substitute merchandise that materially
differs from that ordered by a customer unless the customer agrees to the
substitution.
A marketer who offers a satisfaction or "money-back" guarantee to its
customers should honor valid refund requests promptly. Any advertisement
that mentions a money-back guarantee should disclose any material
limitations or exceptions that may apply to that guarantee (e.g., "less
shipping and handling"). Any marketer who offers a money-back guarantee
should maintain an adequate reserve or otherwise ensure the availability
of funds to satisfy refund requests.
An ERA member who offers consumers a "free trial" of an advertised product
should not charge the customer's credit card, debit his or her checking
account, or cash his or her check or money order until the free trial
period has expired.
A marketer should provide its customers with an address and/or telephone
number to use to communicate any complaints, inquiries, or refund
requests, and should take all reasonable steps to respond to such
complaints, inquiries, or refund requests promptly and courteously.
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ERA members who collect personal information from consumers should not
misrepresent the purposes to which that information may be put. If a
consumer requests that his or her personal information not be rented,
sold, or exchanged by a member, that request should be honored. A member
should not rent, sell, or otherwise provide a consumer's credit card
number, checking account number, or similar information to a third party
(other than a third party who assists the member to process or complete
authorized purchases or other transactions) without the consumer's express
authorization.
Self-Certification/Enforcement
Subscription to these Marketing Guidelines is a condition of ERA
membership. Members shall have the right to certify their compliance
with these guidelines to members of the general public and the media.
Willful violation of the Marketing Guidelines is a basis for expulsion
from the Association.
