Minnesota Crackdown on Phony Listings a Potential Boon for Local Advertisers

Score one for local businesses … at least in Minnesota.

As of Aug. 1, the state began enforcement of a law that prohibits advertising “deceptive local telephone numbers and geographically deceptive business names” across the Internet, as well as in print advertisements and directories.

Legislation targets national businesses that camouflage themselves behind local names and listings, cluttering the advertising space. The landmark represents a clear win for neighborhood “mom-and-pops,” but also a victory for national chains (insurance, restaurants, other retailers) fighting for local brand relevance in an increasingly populous online space.

The Minnesota law cracks down on local-listing squatters, not companies that serve as middlemen between local merchants and customers. Often, national poachers will field a consumer’s order, skim a finder’s fee, then place the order with the actual retailer.

Writing in Ad Age, Casey Squier, managing director at hyperlocal marketing network Wahlstrom, trumpets that “all businesses with a local geographic footprint will find an easier time winning in the online and print battlefield.”

Especially so if similar legislation is adopted in other states. Georgia, for example, passed a similar statute in June that will take effect on Jan. 1, 2011, making it the 27th state to put fraudulent-listing laws on the books.

Unaddressed in the new law is the related security issue of unclaimed online listings. With search engines, social networks, Yellow Pages directories, and other formats all offering listing services, local businesses must claim their listings to prevent phony sellers from grabbing them, then optimize them with photos, video, rich media, coupons and other features. Failure to do so, and waiting for listing-service security to catch up to deceptive business practices, is an invitation to “high-jack.”