If your offer isn’t compliant, you may lose the ability to accept payments, and ultimately your business.
Supplement merchants face a big challenge in the e-commerce world. And it’s not going to go away anytime soon. COVID-19 has swept through the world. Among those disrupted are a large number of e-commerce sites and supply chains. Thus, one change in the business world is affecting high-risk industries that deal with supplements.
Unfortunately, when it comes to web compliance, businesses have been breaking the law on a global level in the e-commerce world for many years. Now, more companies face penalties in the wake of COVID-19. Global governments are performing substantial crackdowns on online sellers who violate the rules.
It’s so important to exercise good marketing practices when advertising your immunity offer or other health supplement. This must be done to keep your business running. It’s also necessary to keep your payment processing maintained and stay off of the MATCH list or the Terminated Merchant File (TMF).
The EU just shut down thousands of nutraceutical businesses online
The European Commissions has recently conducted a wide sweep of businesses. Affected websites were associated with false claims, scam products, and other dishonest notions that are in the context of coronavirus. Products that are using COVID-19 as a marketing scheme are being targeted. A few of these businesses are from supplement merchants. Ones intentionally misleading their consumers to believe that their supplements and related products have the ability to cure COVID-19 or similar false claims.
In order to adhere to these rules properly, it’s important to understand exactly what changes are occurring. Particularly for setting up additional merchant accounts in Europe. So, we will touch on what compliance practices to remember. It doesn’t matter if you’re selling items like benign herbs or liver enhancement supplements. These guidelines apply to operations in France, Bulgaria, Romania, elsewhere in the European Economic Area (EEA), or in the US.
The supplements market has grown during the pandemic
The supplements market is a substantial one, estimated at around 123.28 billion USD in 2019 alone. Over the past few months, the health and supplements market has grown in popularity in the wake of the recent pandemic. This is particularly so in the American market.
With no cure in close range and fears growing, it makes sense why consumers would rush to the supplements industry. Unfortunately, no supplement can cure or prevent any type of disease. No supplement, diet, or other types of lifestyle changes can protect one from or cure COVID-19. The only effective measures are social distancing and correct hygiene practices.
Consumers know that supplements cannot cure COVID-19. But, they are still flocking to e-commerce websites and online shops. In turn, they are trying to buy supplements that can improve their immunity and overall health.
Yet, supplement merchants take advantage of situations by using COVID-19 as a buzzword to pull in more buyers. Now merchants are in a position where they must manage supply and demand. Just as well, e-shop owners need to manage marketing and payment options for their customers.
Supplement merchants must be aware of false claims and misleading advertising practices
The European Commission has a number of harmonized rules that stem from Directive 2002/46/EC. They are designed to “protect consumers against potential health risks from those products and to ensure that they are not provided with misleading information.”
The Directive classifies food supplements as items available in dosage form. These include tablets, pills, liquids, capsules, etc. It also classifies how much or how little of those supplements can be used for nutritional purposes. The Directive also dives into the claims that can be made about certain supplements and how truthful they need to be. This Directive is quite old and has been around for a while. However, after the e-commerce boom and especially after the pandemic began, the European Commission has cracked down on compliance for businesses that sell supplements and market them dishonestly.
In addition, there’s the issue of the FTC. In the United States, the Federal Trade Commission, as well as the food and Drug Administration (FDA), have intensive enforcement programs that are used to protect consumers from false or misleading claims about the safety or practical benefits of a dietary supplement.
Penalties resulting from not complying with these government organizations are not light, either. An online vendor could be put on the MATCH list and find their payment processing is indefinitely terminated, for instance. Just as well, supplement merchants can also face lawsuits, additional high fines, a very high rate of chargebacks, affiliate fraud, and even total shutdown of the merchant account or possibility of accepting payments. Reputation compliance (in addition to risk management) is wholly necessary to avoid these downfalls.
Social media platforms are not afraid to ban merchants
Marketing compliance is also an important aspect of Facebook Ads. In many scenarios, Facebook Ads has not been particularly kind to the supplement market. You have to prove through different modes that you do not sell an “unsafe” supplement and do not use “sensational” or “misleading or controversial”. Also, it’s very hard for a supplement to not fall under one of Facebook’s restricted categories. For example, “Illegal Products or Services” or “Unsafe Supplements”. You won’t lose your business or get put on MATCH (more on that in the next section) if you don’t comply. But, losing out on Facebook Ads is a major marketing opportunity lost.
Direct PayNet is dedicated to helping business owners understand the payment processing industry. That’s why we focus on helping high-risk merchant account owners configure their tools and develop best practices to maximize conversions while minimizing risk. Learn more about how we can help you adhere to compliance in the nutraceutical industry stress-free!
Getting on MATCH could spell the end
Getting on the MATCH list is one possible sanction for violating government regulations. Using services from Stripe or PayPal for your health offer may lead to problems. This could be a terminated merchant account or the MATCH or TMF list. Third-party processors are risk averse. A few chargebacks as a supplements merchant may get you in deep trouble. Non-compliance and payment processing have quite an intensive link. That link could spell disaster for a supplement manufacture, merchant, or associated seller.
Mastercard created and managed the MATCH list system . It houses details about businesses, websites and their owners. It also lists reasons why credit card processing abilities were locked. Acquiring banks use this list to screen potential partners and merchants to reduce risk on their end. It’s a blacklist for those that do not follow government protocols for selling online. This means having excessive chargebacks, engagement in fraud, or even involvement in laundering.
Control affiliates and marketing campaign message
Outside of MATCH, being dishonest about the potency, safety, or benefits of a supplement product could lead to a negative reputation. Consumers are much less trustful of businesses, especially e-commerce ventures, than ever before. Consumers do research on brands. They require more convincing marketing techniques to pique their interest. Scandal or clearly misleading language should not be anywhere in a marketing campaign. It could spell reputational disaster for a supplements merchant. Be factual and straight up with your customers and it will ensure you fare better in the long run.
Because of this, it’s so important for high-risk supplement merchants to understand how to monitor affiliates, any and all claims in paid advertisements, and government regulations applicable to the nutraceutical industry. Acquiring banks aren’t the only entities that pay intense attention to such things when they are vetting a supplements merchant for onboarding. Payment processing providers also do regular seasonal checks on merchants. This will happen more often if there is a suspiciously high volume of chargebacks that begin to start popping up.
Do not use Covid-19 as a marketing ploy
To be honest, supplement merchants don’t need much to follow government protocols, and ensure the safety and honesty of products. Ensure any claims made by affiliates or through your own marketing endeavors is 100% true. Do not use misleading language and does not use COVID-19 as an advertising ploy. The future of your payment processing will definitely be more secure. The ability to accept credit cards is vital to your business. It does not matter if you’re selling immunity products, nootropics or vitamins.
We can help you be compliant and get additional payment processing
In short, web and marketing compliance for supplement merchants is crucial. But, merchants certainly don’t have to deal with adhering to these rules alone. DirectPayNet is proud to provide risk management and consulting services from the foremost experts in a variety of industries, from nutraceutical to coaching to e-cigarettes to business opportunities (biz-op).
Are you in a high-risk industry? Need help understanding all of the relevant compliance requirements and best practices going forward? DirectPayNet can help. Start by taking a lot at some of the services we offer!