Recently, the FTC updated its “Dot Com Disclosures” guidance document relating to online advertising, to account for social media and constrained screen space. The purpose of the update concerns the FTC’s “clear and conspicuous” online disclosures, and how they can effectively be made in the age of evolving technology. With regard to online advertisements, basic principles of advertising law apply: (1) advertising must be truthful and not misleading; (2) advertisers must have evidence to back up their claims, known as “substantiation;” and (3) advertisements cannot be unfair. However, as the FTC points out, the unique features of online advertising affect the way required disclosures are evaluated.

The “clear and conspicuous” disclosure requirement varies depending on the advertisement’s nature and the type of information that must be provided. Some of the considerations that the FTC provides in determining whether a disclosure meets the requirement are:

“the placement of the disclosure in the advertisement and its proximity to the claim it is qualifying; the prominence of the disclosure; whether the disclosure is unavoidable; the extent to which items in other parts of the advertisement might distract attention from the disclosure; whether the disclosure needs to be repeated several times in order to be effectively communicated, or because consumers may enter the site at different locations or travel through the site on paths that cause them to miss the disclosure; whether disclosures in audio messages are presented in an adequate volume and cadence and visual disclosures appear for a sufficient duration; and whether the language of the disclosure is understandable to the intended audience.”

While these considerations apply across the broad range of advertisements, the FTC recognizes the particular challenges of online advertising in evaluating whether a disclosure is “clear and conspicuous.” Below, I will present some of the FTC’s key points covered in the updated “Dot Com Disclosures” guidance document. Read more

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Advertising is all about capturing consumers’ attention in an entertaining, informative way to garner interest in a product or service – the success of which is measured in increased sales figures.  But some campaigns are too successful, attracting not only consumers but competitors and regulators.  In the worst-case scenario, that campaign could be front page news as the subject of the latest advertising consumer class action.

As the class action bar grows, so do advertisers’ questions:  What types of claims are most likely to result in class action suits?   Could a campaign be subject to a regulatory action AND a class action suit?  What are some successful techniques and strategies to protect against this situation?

These questions and more were the subject of a recent Davis & Gilbert LLP webinar, “False Advertising and Deceptive Marketing Practices:  Trends in Consumer Class Actions and Government Enforcement Actions.”  D&G is a leading marketing communications and intellectual property firm based in New York City, and developed this presentation to respond to client concerns regarding which advertising claims would attract attention from government agencies, what triggers an FTC investigation, and how to respond to and defend against false advertising and unfair competition claims.  Two D&G attorneys in the Intellectual Property group and an FTC staff attorney gave a comprehensive, complete perspective of the issues at hand.

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Thank you for attending this year’s industry event: Advertising Trends In Consumer Class Actions.

The advertising law group

The event was a huge success (again)! We’d especially like to thank our panelists, the IILP at New York Law School, and the catering staff.

We hope you enjoyed it! Please continue to follow us here on adnauseamblog.org for more insight into the world of advertising and media law.

- The Advertising Law Group

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The Center for Science and the Public Interest was founded in the 1970′s to monitor nutrition, food safety, and health. The Center’s main objective it to “promote the importance of the link between diet and health to the government, industry, and the public.”  The Center has been actively involved in the fight for food labeling, researching the quality of restaurant food, the war against trans-fats, and has actively pursued the removal of soda and junk food from schools. Even though the Center seems to be a leading voice in food reform, it has also pushed its agenda upon many companies with the threat of litigation. The Center wants every food product that may cause harm to a person’s health to be labeled as such. However, isn’t this every type of food on the market, including healthy options if consumed in large quantities?

Recently, the Center has been focusing on natural claims. Natural claims are advertisements that state that the product in question is all natural, pure, or organic. Thus, it would not contain any chemicals, or altered ingredients. However, companies may claim that their products are all natural when in fact, the product contains a trace amount of corn syrup, or red dye number 40. When this occurs, the Center takes it upon itself to threaten litigation on the company in question. Past letters have been sent to Ben and Jerry’s, Cadburry-Schweppes, and Nature Valley. With respect to Ben and Jerry’s, the Center stated that the “all-natural” products contained alkalized cocoa, corn syrup, and partially hydrogenated soybean oil. Additionally, even if the company has all natural products in its ice cream, such as cream, the Center States that “this main ingredient is still artery clogging.” Each of these companies upon receipt of the Center’s disdain for the “un-natural” use of its claims, changed their advertisements to avoid litigation. Yet, there are some companies who have decided to fight the claims of this watch dog, but they proved to be unsuccessful in the end.

The Center joined a class-action suit against General Mills, claiming that its fruit roll-up fruit snacks are deceptive to consumers. The box states that the fruit candies are “made with real fruit,” with a picture of a strawberry or orange adjacent to the claim. The Center argued that this is an un-natural claim since the list of ingredients include: “pears from concentrate, corn syrup, dried corn syrup, sugar, partially hydrogenated cottonseed oil, citric acid, acetylated monoglycerides, fruit pectin, dextrose, malic acid, Vitamin C (ascorbic acid), unspecified “natural flavor,” and Red 40, Yellow 5, Yellow 6, and Blue 1.” The Center then goes on to argue the non-health benefits of these ingredients. General Mills acquiesced to the Center, and has agreed to add real strawberries to the fruit snacks in order to include the “made with real fruit” tagline on its boxes by 2014. Should there have been an agreement though?

One could argue that the company was not being deceptive because there are pears from concentrate in the product. Additionally, the snack is flavored to taste like strawberries, so isn’t it logical for there to be a strawberry on the box. Consumers are visual, and without the strawberry how would they differentiate the product from other flavors on the shelf. They would have to take more time to figure out which flavor is which, and becomes the antithesis to the main principles of trademarks. Further, how does the non-health benefits affect the “made with real fruit” claim? A person eating a fruit roll up could easily eat a granola bar instead to get more fiber his or her diet. It has nothing to do with the fruit content of the snack.

Thus, what is the Center’s real policy? To improve the health of society by promoting the benefits to consumers’ health, or to police companies?

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REGISTER NOW @ www.nyls.edu/adlaw  Limited space remaining.  See you there!

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This month the FTC released an update to its 2000 guidelines on dot-com disclosures in mobile and social media advertising.  These updates provide guidance on how to effectively make disclosures clear and conspicuous so as to avoid any deception for the consumer.   Some of the guidance is the same but other areas have changed.  For instance, the 2000 guide advised that advertisers should place disclosures, “near, and when possible, on the same screen” as the relevant claim, while the 2013 updates state that a disclosure should be placed “as close as possible to the relevant claim.”  The updates also explain that if a disclosure cannot be made clear and conspicuous and without a disclosure the ad would be deceptive or unfair then that ad should not be disseminated.  This also applies to platforms as a whole that might inhibit disclosures.  Twitter is one such platform that could be difficult to provide clear and conspicuous disclosures on due to the word limit.  Some things were continued from the original guidelines.  One such example was that advertisers should avoid using hyperlinks for disclosures that involve pricing information or certain health and safety issues.  These determinative factors should be present in the ads main text and should not be hidden in a disclosure.   The new guidelines also provide useful mock ads to illustrate the updated principals.  To see the full updated guidelines please follow this link: http://www.ftc.gov/os/2013/03/130312dotcomdisclosures.pdf

For more on privacy issues come register for AdNauseaum.org Presents: Advertising Trends in Class Actions on April 2^nd.  There will be panels on Privacy: the Large Scale Issues and Deciphering Natural Claims as well as The Class Action Demystified.  You can register here: www.nyls.edu/adlaw

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Facebook Custom Audience[1]

Facebook’s “custom audience” feature lets marketers find and target advertising toward specific individuals among Facebook’s users. Marketers use e-mail addresses, phone numbers or Facebook User ID’s to match up with Facebook users in order to generate a “custom audience” created from data they already have. To generate the “custom audience,” the marketer uses a tool called the “power editor” to input an email or phone list representing their “segments” (groups of customers they’d like to target—may be current customers, prospects, loyalty club members…etc.). To protect the data, Facebook never receives the customer list. The list of emails or phone numbers is “hashed” on their own computer when using the power editor. Hashing is a method of securing information. Unlike encryption (another method of securing information), hashing summarizes text into a short fingerprint that can’t be decrypted.

Does this feature comport with the TCPA and the Consumer Privacy Bill of Rights?

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Last month, Ad Nauseam discussed the FTC’s changes to the Children’s Online Privacy Protection Act (COPPA). The purpose of COPPA, which was implemented in 2000, is to protect the online use of personal information of children under the age of 13. In particular, the rule assigns strict responsibilities to “operators” including that they obtain verifiable parental consent before collecting, using or disclosing personal information from children, and that any information they do collect be kept secure.  Today we will take a closer look at the FTC’s revised definition of an “operator” under the COPPA rule, and focus on the effect to third party services.

Importantly, under the revised definitions, advertising networks and plug-ins now fall under the umbrella of COPPA. The COPPA revisions have expanded the definitions of an “operator” and a “website or online service directed to children” to take today’s Internet-landscape into consideration. The definitions now include a child-directed site or service that integrates outside services that collects or maintains personal information from its visitors.  This rule governs entities that have an agent or service provider collect or maintain personal information from its visitors, or an entity that benefits from allowing third parties to collect personal information from the viewers. Put simply: if you own the child-oriented website, then the use of that website by third parties is your responsibility.

But what about the third party service that is placed onto a child-oriented website? The expanded definition states that a third-party service that collects personal information directly from users of a child-directed site or service will be liable for complying with COPPA only when the third party has actual knowledge that the site is child-directed. The FTC explains that a third party service may obtain actual knowledge when: (1) a child-directed content provider expressly communicates the child-directed nature of its content, or (2) a representative of the online service recognizes the child-directed nature of its content.

URL’s present an interesting issue to “actual knowledge.” An easy assumption is that a URL will indicate whether the website you are placing the ad on is child-oriented. However, the Internet is a multi-layered and complicated network, and each layer collects different information. As a result, a third-party may not be able to discern whether or not a website is a “child-directed site” simply by viewing the URL. As a result, a URL may not be a proper indicator that a website has child-directed content, and could leave a third-party at risk for liability under COPPA.

The FTC’s Chief Technologist, Steve Bellovin, recently published a blog post which provides some suggestions as to how to resolve this issue of actual knowledge.  The first suggestion was explicit signaling from the child-oriented website to the third-party advertisement. This type of signaling has already been used by advertising networks when they include how to request advertisements. In this type of signaling, a news article might contain a long link, and when you click on a word, it indicates how to place the advertisement in your article. Furthermore, the advertising network is being passed along information about the website it is placed on.

Bellovin explains that this technique can be tailored to include a “COPPA-covered site” flag, to give third parties actual notice that the website is child-oriented. This flag could be placed into the URL, so that the browser will understand and pass the information on to the third party. Also, it would be possible to configure the system so that embedded content that embeds content from another source, will have to pass along information about the COPPA flag.

At this time a standard “signaling” system has not been put into place to resolve the issue of actual notice, but Bellovin suggests that it could be with accomplished with the joint effort of the industry. Until this is implemented, it is important for advertising networks and plug-ins to be cognizant of the fact that if their services are placed on a child-directed site and they have notice of this fact, they could be held liable for COPPA violations under the revised rule.

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Like baseball and apple pie, television is among the classic all-American pastimes.  Who can’t relate to the anticipation of waiting for a favorite show to premiere, and then dissecting every detail with fellow fans?  While the favorite shows always change over time, now the ways to watch them have too.  Traditionally, you would wait for the specific date and time to see your show, but with recording devices like TiVo and cable On-Demand and sites like Netflix and HBOGo, viewership is anything but traditional.  Instead of being limited to only the show’s current season or time constraints, you can catch up with entire seasons at the push of a button, and see current episodes in their from your computer or tablet just minutes after the live broadcast.  With these monumental shifts in viewing habits, it comes as a surprise that media ratings agencies have been slow to consider these new practices when compiling their ratings statistics.

But finally, Nielsen Company, the media company that monitors and compiles TV viewership to create TV ratings, has revised its sampling methodology.  On February 21, 2013, Nielsen announced that it would begin counting TVs connected to the Internet as “television households,” therefore including those Americans that have dropped their cable or satellite providers and watch TV exclusively via the Internet.  This change marks the conclusion of two years’ consideration of the plan, which Nielsen announced it was considering after TV ownership figures dropped in 2011.  In conjunction, Nielsen will start monitoring the use of iPads, Playstations and other mobile devices in an attempt to create a more accurate picture of total viewership, and the use of streaming services like Amazon and Netflix (because these services are either ad-free or contain different ads than the original broadcast, they were not included in Nielsen data).  Similarly, the move comes just a day after the Billboard 100 announced that it will include Youtube streams in compiling its song rating data.

TV executives, among others, are praising the long-awaited shift in ratings compilation, because they have long (and likely correctly) complained the new viewership avenues are not adequately reflected in ratings data.  Nielsen’s position acknowledges the shift from traditional viewing mediums, and is an important first step in reflecting America’s media consumption in the digital age.

For press releases and articles detailing Nielsen’s announcement, see here and here.

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On February 1, the Federal Trade Commission (FTC) issued a staff report entitled Mobile Privacy Disclosures: Building Trust Through Transparency. By releasing this report, the FTC’s goal was to put in place “best practices” for mobile privacy disclosures. The FTC recognized several key themes arising from issues surrounding mobile privacy:

The lack of consumer awareness and understanding relating to “current information collection and use practices occurring on mobile devices.”

The importance of design of privacy disclosures to address the limitations of small screens.

The key role of platforms in deciding how information is conveyed to consumers and control they have over application developers.

The FTC organized their best practice recommendations by industry participant—platforms, app developers, third parties, and app trade associations—which is the order in which I will summarize the findings here.

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