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New York Has New Law on “Senior” Designations

On November 21, 2014, New York’s Governor Cuomo signed into law Assembly Bill 1787, which amends the general business law to provide for mandatory disclosure in advertising using senior specific designations. This is not limited to insurance transactions, but will have an impact on insurance producers who market themselves or their businesses as having credentials related to seniors.

When Alan Prochoroff, Editor and Publisher of Insurance Compliance Insight notified me of this legislation, I was intrigued because it takes a different approach than many of the senior-specific insurance designation regulations, including NY’s. Unlike many insurance-specific rules on senior designations, this law does not prohibit certain combinations of words or mandate certain educational standards for designations. It should be noted that disclosure under the new law appears to be in addition to Regulation 199 that prohibits certain designations.

This new law requires clear and prominent disclosure in advertising of the designation source, whatever it may be – or not be. The law specifically contemplates (and allows) designations that are self-created, but requires advertising disclose that the designation is created by the business or individual doing the soliciting. It appears that this means even if an insurance producer is using an insurance-permitted designation, s/he still must disclose the source of the designation. It appears a producer in NY needs to check that Regulation 199 permits the designation and then make sure that all advertising complies with this new law.

One thing that I like about this approach is the broad definition of “designation.” It specifically includes “professional description that indicates the person has expertise or training specifically related to seniors in their field.” Since the proliferation of rules regarding insurance-specific senior designations, including Reg. 199, we have seen a move to using the word combinations in URLs, business names, and tag lines. The argument of those using the same combinations of words in different places is that they are not designations. While we have strongly argued against use of the words in business names, tag lines, and URLs, this law helps support that recommendation because it includes professional descriptions in the definition of a designation.

As for penalties, the new law provides for generally available civil penalties, but it also provides that the attorney general can issue injunctions without the need to prove that any individuals have, in fact, been injured.

Businesses in NY who have names, taglines, or other descriptions that suggest an expertise in seniors or insurance products specifically relevant to seniors should pay just as much attention to this new law as those who are using senior-specific designations. Producers who are honest about their expertise don’t appear to have anything to worry about.

Learning from others

Currin Compliance is located in upstate NY. This week there has been a lot of publicity about NY Attorney General Eric Schneiderman’s investigation into false online reviews of businesses. When I started reading the articles, I kept hoping I would not see any insurance related examples cited and I did not. I am hopeful that the insurance industry will avoid this growing problem, but I am concerned because of the increasing importance of online reviews to consumers.

The Saratogian’s article of September 24, 2013 references a Nielsen consumer survey that found “online reviews were the second most trusted form of advertising after word-of-mouth by family and friends.” Further, the survey revealed that “70 percent of customers worldwide trust online reviews, rising 15 percent in four years.” The problem, according to Schneiderman’s investigation is that many of the online reviews are false. His office has settled cases with 19 companies for $350,000 in penalties.

Insurance is a business based on trust. It could be appealing for an insurance producer to use services that promote online visibility and include trumped up online reviews of their knowledge, experience and performance for clients. It could be promoted as effective use of social media and promoting one’s image in that realm. I am very hopeful that the insurance industry can learn from others and avoid this trap. It might sound perfectly reasonable when pitched as a way to increase one’s visibility and reputation. But false reviews are not harmless and Mr. Schneiderman has sent a warning this week. I hope the industry is listening.