Tag: advertising

Google Modifies Ad Policy to Benefit Daily Fantasy Sports and Lottery Couriers

Google has set the stage for a transformative change slated for July 15, 2024, providing a roadmap to extend Google Ads to daily fantasy sports (“DFS”) operators and lottery courier services across numerous U.S. states. A significant shift in the search engine’s Google Ads gambling and games policy, this move is indicative of the company’s responsiveness to the evolving legal landscape surrounding online gaming and lottery courier services. Industry stakeholders must navigate this new advertising landscape mindfully, seizing its potential within regulatory bounds. Legal advice and assistance may be needed to address the new policies and understand the new Google environment.

Google announced that it would permit these businesses to advertise on a state-by-state basis.

  • Approved for DFS Advertising: Alaska, California, Florida, Georgia, Kentucky, Minnesota, Nebraska, New Mexico, North Carolina, North Dakota, Oklahoma, Rhode Island, South Dakota, Utah, West Virginia, Wisconsin, and Wyoming.
  • Approved for Lottery Courier Advertising: Alaska, Arkansas, Colorado, District of Columbia, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont, West Virginia, and Wyoming.

If advertisers are targeting their ads in a state that does not require a license to conduct DFS or lottery courier service, they must be licensed in at least one other U.S. state that mandates such a license.

The Legal Context of the Updated Google Ads Policy

Usually circumspect when it comes to gambling-related content, Google’s policy update marks a notable departure. Traditionally, its stringent restrictions limited advertising to state-run lotteries and horse racing only. The historical context here is important as this shift from Google’s previously conservative policy marks a wider change in the digital advertising of gaming activities. Now, licensed lottery courier services will be able to market themselves through Google Ads in 40 states, excluding California due to specific state restrictions. The revised guidelines correspond with the expanding endorsement and enactment of governance over online gaming and lottery operations. Nonetheless, this update enforces rigorous procedural rules and criteria for advertising compliance, encompassing adherence to both individual state regulations and the certification processes established by Google.

This paradigm shift in Google’s policy echoes their latest requirements for advertisers, who are compelled to demonstrate compliance not just through licensing but also through the integrity of their ad content and search positioning efforts, reflecting a commitment to consumer trust and regulatory adherence.

Daily Fantasy Sports Advertising: A New Playing Field

On the DFS front, Google’s policy expansion allows operators to advertise in 17 states, including jurisdictions where online sports betting remains unlegislated. DFS operators in states which currently do not permit online sports betting will remain at liberty to run Google ads. This reflects Google’s nuanced approach to advertising within the gaming industry, ensuring that ads from entities that have met state-imposed standards are available to users. DFS providers can enter new markets at the rollout, subject to regulatory compliance, including state licensing. In states without such licensing requirements, operators must nonetheless hold a valid license from another state that does enforce scrutiny of operators, underscoring Google’s effort in promoting only legitimate, reputable services.

Lottery Courier Advertising: Riding the Wave of Legalization

Entities such as Jackpocket and Lotto.com, acting as intermediaries, can now increase their visibility and customer base through Google Ads. Among other recent developments, DraftKings’ recent acquisition of Jackpocket for $750 million showcases the growing economic significance of lottery courier services. This growing market, while gaining popularity for convenience, is also varied in acceptance across states; advertisers must navigate diverse regulations and be keenly aware of states like California, where the State lottery commission has expressed restrictions and presently takes a dim view of courier operations.

Understanding Compliance: Standing At the Gate of Certification

Google’s guidelines mandate advertisers provide evidence of all aspects of their operation, from licensing to customer data protection and legal compliance. Certification thus becomes synonymous with service integrity, with Google’s policy now establishing this as a prerequisite. To synchronize with this directive, advertisers must:

  • Hold an official license in one state, considering the dynamics of interstate variances in regulation.
  • Target ads with precision, respecting the complexities of state-specific legal frameworks.
  • Engage diligently with Google’s certification process, indicative of an advertiser’s adherence to compliance and transparency.

Advertisers seeking certification need to demonstrate compliance with rigorous legal standards, including the authentication of tickets and adherence to regulations. The process calls for delivering not just proof of licensing where required, but also extensive details pertaining to their business operations. The intent behind this comprehensive evaluation is to safeguard consumers by preventing untrustworthy services from gaining approval to advertise.

It will be particularly interesting to understand how Google enforces its ”licensing” requirement for vendors, such as marketing affiliates, which promote lottery/fantasy sports services indirectly. Unlike B2C fantasy sports operators or couriers, these B2B entities traditionally not providing consumer-facing services may not be subject to the same state licensing demands, yet they must still navigate the intricacies of Google’s policy in their marketing efforts.

Implications for Advertisers: A Forward-Looking Approach

In navigating Google’s updated advertising framework, adherence to its detailed certification process is paramount to successful marketing. A failure to meet Google’s more robust standards could lead to advertising restrictions on its platform and related services—underscoring the need for meticulous strategy alignment and transparent operations.

The alterations to Google’s policy demand substantial attention to detail and legal compliance. These policy changes necessitate careful scrutiny and a proactive stance from advertisers to ensure alignment with new advertising avenues. On July 15, 2024, Google’s updated advertising policies will come into effect, after which the related policy page will be updated to reflect these changes.

Google’s revisions to its policies underscore the company’s pragmatic response to the dynamic realm of Internet-based lottery-related and gaming services. Notably, Google’s decision enables lottery courier advertising in a majority of states, acknowledging the sector’s growth. It is highly likely that other social media platforms will soon follow suit, thereby setting new standards for these business to adhere to if they want to take advantage of these powerful tools.

© 2024 Blank Rome LLP

Privacy Tip #359 – GoodRx Settles with FTC for Sharing Health Information for Advertising

The Federal Trade Commission (FTC) announced on February 1, 2023 that it has settled, for $1.5M, its first enforcement action under its Health Breach Notification Rule against GoodRx Holdings, Inc., a telehealth and prescription drug provider.

According to the press release, the FTC alleged that GoodRx failed “to notify consumers and others of its unauthorized disclosures of consumers’ personal health information to Facebook, Google, and other companies.”

In the proposed federal court order (the Order), GoodRx will be “prohibited from sharing user health data with applicable third parties for advertising purposes.” The complaint alleged that GoodRx told consumers that it would not share personal health information, and it monetized users’ personal health information by sharing consumers’ information with third parties such as Facebook and Instagram to help target users with ads for personalized health and medication-specific ads.

The complaint also alleged that GoodRx “compiled lists of its users who had purchased particular medications such as those used to treat heart disease and blood pressure, and uploaded their email addresses, phone numbers, and mobile advertising IDs to Facebook so it could identify their profiles. GoodRx then used that information to target these users with health-related advertisements.” It also alleges that those third parties then used the information received from GoodRx for their own internal purposes to improve the effectiveness of the advertising.

The proposed Order must be approved by a federal court before it can take effect. To address the FTC’s allegations, the Order prohibits the sharing of health data for ads; requires user consent for any other sharing; stipulates that the company must direct third parties to delete consumer health data; limits the retention of data; and implement a mandated privacy program. Click here to read the press release.

Article By Linn F. Freedman of Robinson & Cole LLP

For more privacy and cybersecurity legal news, click here to visit the National Law Review.

Copyright © 2023 Robinson & Cole LLP. All rights reserved.

NFT Endorsed by Celebrities Prompts Class Action

Since the early days of the launch of the Bored Ape Yacht Club (BAYC) non-fungible tokens (NFTs), several celebrities have promoted the NFTs. On Dec. 8, 2022, plaintiffs Adonis Real and Adam Titcher brought a lawsuit against Yuga Labs, creators of the BAYC, alleging that Yuga Labs was involved in a scheme with the “highly connected” talent agent Greg Oseary, a number of well-known celebrities, and Moonpay USA LLC, a crypto tech company. According to the complaint:

  1. Yuga Labs partnered with Oseary to recruit celebrities to promote and solicit sales of BYAC;
  2. Celebrities promoted the BAYC on their various platforms;
  3. Oseary used MoonPay to secretly pay the celebrities; and
  4. The celebrities failed to disclose the payments in their endorsements.

According to the complaint, as a result of the various and misleading celebrity promotions, trading volume for the BYAC NFTs exploded, prompting the defendants to launch the ApeCoin and form the ApeCoin decentralized autonomous organization (DAO). Investors who had purchased the ApeCoin allegedly lost a significant amount of money when the value of the coins decreased.

This case highlights the potential risks that may arise in connection with certain endorsements. In addition to the FTC, the SEC also has issued guidance on requirements in connection with promotional activities relating to securities, which may include digital assets, such as tokens or NFTs. Under SEC guidance, any paid promoter, celebrity or otherwise, of a security, including digital assets, must disclose the nature, scope and amount of compensation received in exchange for the promotion. This would include tv/radio advertisements and print, in addition to promotions on social media sites.

Article By Barbara A. Jones, William B. Mack, and India L. Sneed of Greenberg Traurig, LLP

For more finance legal news, click here to visit the National Law Review.

©2022 Greenberg Traurig, LLP. All rights reserved.

USDA Focused on Accurate “Made in the USA” Beef Labeling

  • In response to industry concerns for mislabeled beef products, U.S. Agriculture Secretary Tom Vilack recently said that the “Product of the USA” label on meat products should undergo a full-scale review. Vilack maintains that he is “committed to ensuring that the ‘Product of USA’ label reflects what a plain understanding of those terms means to U.S. consumers.” In March, we reported that the Tenth Circuit dismissed lawsuits based on meat producer’s use of allegedly deceptive and misleading “Product of the USA”  labels on their beef products that did not originate from cattle born and raised in the United States.
  • The issue of country-of-origin beef labeling (“COOL”) continues to be a source of debate. Earlier this week, the FTC finalized a rule that is intended to tighten the use of the Made in the USA standard. The FTC said that this update would benefit small businesses who lack the resources to defend their products from foreign imitators. However, the FTC rule does not require USDA action. In response, the beef industry is demanding Congress to act swiftly.
  • R-CALF, a group of USA-based cattle ranchers, has been pushing hard for reforms on COOL. On September 22, R-CALF released a poll that shows staggering support for mandatory COOL legislation by the American public. R-CALF reports that 86 percent of American voters support the American Beef Labeling Act that reinstates mandatory country of origin labeling for beef, and 90 percent of voters are concerned that foreign importers of beef can legally put a “Product of USA” sticker on a package containing beef that was born, raised, and harvested outside the United States.
  • Currently, Congress is working through prospective beef labeling legislation that would require USDA oversight of COOL. The American Beef Labeling Act (S.2716) is a bipartisan bill that was introduced in the Senate in 2021; however, the bill has languished without action in the U.S. Senate Agriculture Committee. In March 2022, a bipartisan companion bill was introduced in the U.S. House (H.R.7291), which has also seen little to no progress in the House Agriculture Committee. Keller and Heckman will continue to monitor these legislative developments and USDA action.

For more Food and Drug Law news, click here to visit the National Law Review.

© 2022 Keller and Heckman LLP

Children’s Advertising Rules Apply in the Metaverse Too, CARU Says

CARU, the Children’s Advertising Review Unit of BBB National programs, issued a compliance warning last week reminding industry that the self-regulating body on children’s advertising and privacy intends to enforce its advertising guidelines in the metaverse, just like in the real world.

CARU’s August 23 compliance warning puts companies on notice of what perhaps should have been obvious: its guidelines for advertising to children apply in the metaverse, too. The warning heavily analogizes the metaverse, augmented reality (AR) and virtual reality (VR) worlds to other digital spaces like smartphone apps and online videos. CARU emphasizes the need to:

  • avoid blurring the lines between advertising and non-advertising content;
  • clearly disclose the use of brand-sponsored avatar influencers;
  • avoid manipulative tactics that induce children to view or interact with ads or to make in-game purchases; and
  • use clear, understandable, easily noticeable and prominent disclosures, repeated if necessary to ensure children notice and understand them.

The metaverse is a new area of focus for CARU and BBB National Programs: two recent posts, Know the Rules: How to Be Age Appropriate in the Metaverse and Advertising And Privacy: The Rules Of The Road For The Metaverse, emphasize the need to make sure advertising is truthful, non-deceptive and clearly identifiable as advertising, especially in brand-sponsored worlds. CARU recommends that advertisers and operators anticipate and stay aware of how their child audiences interact with the metaverse experience, including how, when and where ads will be shown to them and how influencers will engage in the space.

Article By Phyllis H. Marcus and Samuel J. Thomas of Hunton Andrews Kurth

For more communications, media, and internet legal news, click here to visit the National Law Review.

Copyright © 2022, Hunton Andrews Kurth LLP. All Rights Reserved.

Life in The Fast Lane: How Urban Car Ads Depicting ‘Street Art’ Can Backfire

Vehicle manufacturers and their ad agencies really love to show off their driving machines in action. Television commercials depict sturdy, reliable trucks hauling tons of cargo; four-wheel-drive SUVs navigating perilous terrain in extreme weather conditions; and sleek sedans cruising through cityscapes of gleaming skyscrapers and funky urban streets.

It is on the funky urban streets where car manufacturers can sometimes steer in the wrong direction. Their commercials often feature street scenes that may include recognizable landmarks, historic buildings, public art installations like sculptures and wall murals, and even distinctive graffiti. Carmakers aren’t the only retailers entranced by “street art.” Makers of athletic shoes and apparel like to incorporate graffiti-like designs into their fashions and ads, as well. Filming other people’s art, even when in public view, can result in copyright claims, litigation and attorneys’ fees, not to mention potential damages. This article offers a brief roadmap for avoiding such claims.

Over the last decade, at least four automobile manufacturers have found themselves embroiled in copyright litigation as a result of having incorporated public art into their advertisements. (A word of caution to other retailers: American Eagle Outfitters, Coach, H&M, Marriott International, McDonald’s, Moschino, North Face and Roberto Cavali, among others, also have found themselves navigating lawsuits over the alleged appropriation of street art.)

In 2011, Fiat released a television commercial featuring Jennifer Lopez, seemingly driving through her old Bronx neighborhood, where she grew up. “Here, this is my world,” she says in voice over, as stereotypical Bronx scenes pass by. One of those scenes included an intersection splashed with murals created by the group that calls itself “TATS Cru,” which then asserted a claim of copyright infringement. Soon after the car company became aware of the issue, the claim was quickly settled out of court. (Incidentally, the commercial was also controversial for reasons unrelated to the infringed-upon mural: JLo wasn’t actually driving the car around her old neighborhood; rather, it was driven by a double, and JLo did the voice over from Los Angeles.)

In 2018, General Motors launched an advertising campaign for its Cadillac line. Labeled “The Art of the Drive,” the campaign featured images of Cadillac vehicles with scenes from Detroit in the background. One of those images included a large mural by a Swiss graffiti artist professionally known as “Smash 137,” who had been commissioned by a Detroit art gallery to create an outdoor mural on the outdoor elevator shed of a 10-story parking garage. He sued G.M. for copyright infringement.

The company argued that the lawsuit should be dismissed on the grounds that the parking garage was an “architectural work,” the mural was incorporated into that structure and, therefore, it was permissible to use a photograph of the structure in its ads. After the court rejected this argument and it was clear the lawsuit was headed for a jury trial, the lawsuit settled.

And in 2019, Mercedes-Benz USA, LLC was threatened with lawsuits by several artists who claimed that Instagram photos posted by Mercedes-Benz of its G 500 luxury truck in the foreground of colorful Detroit murals infringed upon their copyright rights. Rather than wait to be sued, the automobile company took the initiative and filed federal lawsuits in which it asked the court for a determination of non-infringement. As G.M. had done, Mercedes-Benz argued that the 1990 federal law that extended copyright protection to architectural designs (the Architectural Works Copyright Protection Act, or AWCPA) allowed the company to post photographs of the exteriors of buildings visible from public spaces, notwithstanding the artwork painted on them.

The muralists filed a motion seeking the summary dismissal of the car company’s lawsuits on several grounds, including that the AWCPA did not permit the company’s copying of their artwork. Soon after the court denied that motion, the parties reached a settlement and the lawsuits were dropped.

Most recently, Volkswagen Group of America, Inc. finds itself in the litigation fast lane. On November 11, another artist who is supposedly known for her work in a variety of media, including murals and street art, sued the car manufacturer, as well as Marvel Entertainment, over a 2018 cross-promotional commercial for Audi vehicles and the motion picture Avengers: Endgame. (Korsen v. Volkswagen Group of America, Inc., Case No. 21-cv-08893 (C.D.Cal. 2021).) The plaintiff alleges that her works have been displayed in Los Angeles-area galleries and public spaces and that she has worked with major clients like Red Bull, Whole Foods and the City of Los Angeles. According to her complaint, Korsen created an original mural on 7th and Mateo Streets in downtown Los Angeles (i.e. one of those gritty urban landscapes mentioned at the start of this article). The mural can be seen prominently in the Audi/Marvel commercial, which apparently was featured widely on Audi’s official YouTube channel, Facebook Live and at the Los Angeles Auto Show, among other places.

To be sure, this plaintiff’s claim may be subject to numerous challenges and defenses. For one thing, the advertisement ran in 2018, and the plaintiff’s claim is subject to a three-year statute of limitations. So even if the commercial continued to air within three years of the filing date of the complaint, a substantial portion of any profits that might be attributed to the marketing campaign could well be out of the plaintiff’s reach. In addition, it appears that the plaintiff did not actually register her work with the US Copyright Office until November 2019, long after the alleged infringement commenced in 2018. This would mean that the plaintiff may be ineligible for an award of statutory damages (which plaintiffs often elect when their actual damages or the defendant’s profits are difficult to establish) and, importantly, the recovery of attorneys’ fees. And, even if the plaintiff still might be eligible for statutory damages, she would not be entitled to an award of up to $150,000 for each allegedly infringing photograph of her mural, as she demands. The Copyright Act makes clear that a copyright plaintiff may seek only one award of statutory damages for each infringed work, regardless of the number of infringing works.

Whether Volkswagen wins, loses or settles this dispute, one thing is certain: It will have to spend time, effort and attorneys’ fees to achieve a resolution of this plaintiff’s claims. It may also find itself the subject of negative publicity. Automobile manufacturers and other retailers would be prudent to follow some basic steps before releasing this type of advertisement to the public, thereby potentially sparing themselves such costs.

First, a proposed advertisement should be reviewed at the concept and/or script stage for potential third party intellectual property issues. Second, all of the proposed locations for photography or filming should be vetted properly for the presence of copyright-protected artwork, third-party trademarks and the like. Third, the creators of the marketing campaign should discuss with qualified counsel the risks associated with filming or photographing publicly-viewable art and business signage, including: (1) how visible the artwork/signage will be and for what duration; (2) whether the artwork/signage can or should be covered over and/or replaced with approved content prior to filming, or blurred in post-production; (3) whether there is any conceivable fair use or other defense to a potential claim of infringement; and (4) whether it would be prudent to contact the content/signage owner and obtain permission for the proposed use.

©2022 Katten Muchin Rosenman LLP
Article by David Halberstadter with Katten.
For more articles about copyright litigation, visit the NLR Intellectual Property Law section.

Maryland Comptroller Adopts Digital Advertising Gross Revenues Tax Regulations

On December 3, 2021, the Maryland Comptroller published notice of its adoption of the digital advertising gross revenues tax regulations (which was originally proposed on October 8, 2021). Per the Maryland Administrative Procedure Act, the final adopted regulations will go into effect in 10 calendar days, or December 13, 2021. (See Md. Code Ann., State Gov’t § 10-117(a)(1).)

The final regulations were adopted almost entirely as proposed, with just two minor changes that the Attorney General (AG) of Maryland certified as non-substantive. Specifically, the changes to the October 8 proposed regulations concern the information that may be used to determine the location of a device and are described by the AG as follows:

  • Regulation .02(C): The Comptroller is clarifying language regarding the allowable sources of information a taxpayer may use to determine the location of a device. Specifically, this final action amendment changes “both technical information and the terms of the underlying contract” to “both technical information and nontechnical information included in the contract.”
    • Regulation .02(C)(2): The Comptroller is amending the non-exhaustive list of technical information to include “industry standard metrics.”

    Practice Note: While “industry-standard metrics” is a nice addition to the list of sources that may be used to determine the location of devices for sourcing purposes, significant and fundamental questions and concerns submitted as part of the comments were not addressed by the Comptroller in adopting the final digital ad tax regulations. The tax is subject to multiple lawsuits (both state and federal court) and pending a court order to the contrary is scheduled to take effect beginning January 1, 2022, with the first filing obligation for large taxpayers in April 2022. Taxpayers grappling with how to comply with this new tax are encouraged to contact the authors.

    © 2021 McDermott Will & Emery

    Article by Stephen P. Kranz, Eric Carstens, and Jonathan C. Hague with McDermott Will & Emery.

For more updates on tax regulations, visit the NLR Tax section.

Top Storytelling Techniques Lawyers Need to Use in Their Marketing

In the past, marketing and advertising strategies were all about showing your ideal clients why your law firm was the one to choose. Every ad and marketing plan was focused on framing the law firm or the attorney as the hero of the story: “Let us step in and save the day!”

The problem is, your clients do not need a hero. They are the hero of their story. And law firms and attorneys across the country are only beginning to see how storytelling is going to be an integral part of their content marketing and digital marketing strategies going forward.

It’s all about relating to your ideal client and giving them the information that they really need to make decisions that work best for their family. It sounds a lot more complicated than it is. But there are several techniques that you can use to make sure that your marketing is telling compelling stories that are going to guide your ideal client to the decision that your law firm is the one that is going to help them achieve their goal.

Tip 1: Focus on Making Your Client the Hero

One of the biggest mistakes law firms are making in their marketing strategies is making themselves the hero at the expense of what the client really needs. Traditional marketing has told law firms to sell their accomplishments and achievements. Listing reason after we reason for why this law firm was the right one for that particular client. Are you bored? So is your client. And chances are, if your readers are bored, they are not going to convert into clients.

With that in mind, you need to tell stories in a way that grabs their attention and helps them see that they are the hero in their story. Instead of talking about all of your law firm’s achievements, you should be relating to your clients. What services are you providing to them that allow them to fix their legal issues and come out on top?

Leading with a firm first approach isn’t likely to be successful in today’s age. These days, your clients know that they are the hero, and they are not going to choose a law firm that they feel like they have to compete with.

Tip 2: Frame Yourself as the Guide

You still need to be able to explain to your clients in all of your different marketing strategies why your law firm is better than the competition. But you can do this in a way that does not come across as you are showing off or attempting to put the spotlight on your law firm’s biggest case results, settlements, victories, and achievements.

Instead, you should frame yourself as the guide. This is the concept of the Storybrand by Donald Miller, where the service provider is the guide who helps the client (the hero) find a solution to fix their problem. Make sure that your marketing materials are framed in a way that sets your law firm up to be the guide that will help the hero solve their problem.

Tip 3: Solve Your Ideal Client’s Pain Points

It sounds easy. Writing content and developing marketing materials that make you the guide and the reader the hero. Check. If only it were that easy. Unfortunately, developing these types of storybranded materials can be challenging. There is a fine line between showcasing the benefits of working with your firm and showing the reader how you can solve their problems. Many law firms miss the mark, and it costs them clients.

If you want to get it right, make sure you start off by thinking about the biggest pain points your client is experiencing with their legal issue. How high are their costs? Are they experiencing substantial economic and non-economic losses? Are they at risk for going to prison? Do they have complex legal issues they do not understand? These questions become more and more specific depending on the type of practice area you are in and the type of content materials that you are developing. By addressing your ideal client pain points, you can show them how your law firm will provide them with the tools they need to fix their legal issues.

Make sure to keep your content short and to the point across the board. Most readers do not have the time, patience, or inclination to read more than one or two lines. The first line should describe their pain point. The second line should describe how your solution fixes their problem. If you do it right, that is all you will need to get your prospective client to pick up the phone or fill out your website’s contact form.

Start Storytelling With Your Law Firm’s Marketing Strategies

Storytelling and storybranding are the future for law for content marketing. Gone are the days where clients chose law firms based on their achievements and successes. All lawyers are successful in the eyes of a potential client, figuratively speaking. What your clients care about is how you are going to help them solve their issue. They couldn’t care less what college you graduated from, what your Avvo rating is, or all of that volunteer work you put in while you were working for the County Clerk’s office.

You can still use these credentials and accomplishments as benefits that you provide to clients in need. But you need to be sure to do so in a way that still frames the client as the hero. How specifically does your accomplishment help them help themselves?

You need to be very careful to produce content that answers this question carefully. If you miss the mark and make yourself a hero, you have probably lost a potential client. But, if you can clearly answer this question and provide your prospective clients with the information they are looking for, at a glance, you are more likely to generate the leads you hoped to see online.

© 2021 Denver Legal Marketing LLC

Article By Meranda M. Vieyra of Denver Legal Marketing

For more articles on legal marketing, visit the NLR Law Office Management section

FTC Reports to Congress on Social Media Bots and Deceptive Advertising

The Federal Trade Commission recently sent a report to Congress on the use of social media bots in online advertising (the “Report”).  The Report summarizes the market for bots, discusses how the use of bots in online advertising might constitute a deceptive practice, and outlines the Commission’s past enforcement work and authority in this area, including cases involving automated programs on social media that mimic the activity of real people.

According to one oft-cited estimate, over 37% of all Internet traffic is not human and is instead the work of bots designed for either good or bad purposes.  Legitimate uses for bots vary: crawler bots collect data for search engine optimization or market analysis; monitoring bots analyze website and system health; aggregator bots gather information and news from different sources; and chatbots simulate human conversation to provide automated customer support.

Social media bots are simply bots that run on social media platforms, where they are common and have a wide variety of uses, just as with bots operating elsewhere.  Often shortened to “social bots,” they are generally described in terms of their ability to emulate and influence humans.

The Department of Homeland Security describes them as programs that “can be used on social media platforms to do various useful and malicious tasks while simulating human behavior.”  These programs use artificial intelligence and big data analytics to imitate legitimate activities.

According to the Report, “good” social media bots – which generally do not pretend to be real people – may provide notice of breaking news, alert people to local emergencies, or encourage civic engagement (such as volunteer opportunities).  Malicious ones, the Report states, may be used for harassment or hate speech, or to distribute malware.  In addition, bot creators may be hijacking legitimate accounts or using real people’s personal information.

The Report states that a recent experiment by the NATO Strategic Communications Centre of Excellence concluded that more than 90% of social media bots are used for commercial purposes, some of which may be benign – like chatbots that facilitate company-to-customer relations – while others are illicit, such as when influencers use them to boost their supposed popularity (which correlates with how much money they can command from advertisers) or when online publishers use them to increase the number of clicks an ad receives (which allows them to earn more commissions from advertisers).

Such misuses generate significant ad revenue.

“Bad” social media bots can also be used to distribute commercial spam containing promotional links and facilitate the spread of fake or deceptive online product reviews.

At present, it is cheap and easy to manipulate social media.  Bots have remained attractive for these reasons and because they are still hard for platforms to detect, are available at different levels of functionality and sophistication, and are financially rewarding to buyers and sellers.

Using social bots to generate likes, comments, or subscribers would generally contradict the terms of service of many social media platforms.  Major social media companies have made commitments to better protect their platforms and networks from manipulation, including the misuse of automated bots.  Those companies have since reported on their actions to remove or disable billions of inauthentic accounts.

The online advertising industry has also taken steps to curb bot and influencer fraud, given the substantial harm it causes to legitimate advertisers.

According to the Report, the computing community is designing sophisticated social bot detection methods.  Nonetheless, malicious use of social media bots remains a serious issue.

In terms of FTC action and authority involving social media bots, the FTC recently announced an enforcement action against a company that sold fake followers, subscribers, views and likes to people trying to artificially inflate their social media presence.

According to the FTC’s complaint, the corporate defendant operated websites on which people bought these fake indicators of influence for their social media accounts.  The corporate defendant allegedly filled over 58,000 orders for fake Twitter followers from buyers who included actors, athletes, motivational speakers, law firm partners and investment professionals.  The company allegedly sold over 4,000 bogus subscribers to operators of YouTube channels and over 32,000 fake views for people who posted individual videos – such as musicians trying to inflate their songs’ popularity.

The corporate defendant also allegedly also sold over 800 orders of fake LinkedIn followers to marketing and public relations firms, financial services and investment companies, and others in the business world.  The FTC’s complaint states that followers, subscribers and other indicators of social media influence “are important metrics that businesses and individuals use in making hiring, investing, purchasing, listening, and viewing decisions.” Put more simply, when considering whether to buy something or use a service, a consumer might look at a person’s or company’s social media.

According to the FTC, a bigger following might impact how the consumer views their legitimacy or the quality of that product or service.  As the complaint also explains, faking these metrics “could induce consumers to make less preferred choices” and “undermine the influencer economy and consumer trust in the information that influencers provide.”

The FTC further states that when a business uses social media bots to mislead the public in this way, it could also harm honest competitors.

The Commission alleged that the corporate defendant violated the FTC Act by providing its customers with the “means and instrumentalities” to commit deceptive acts or practices.  That is, the company’s sale and distribution of fake indicators allowed those customers “to exaggerate and misrepresent their social media influence,” thereby enabling them to deceive potential clients, investors, partners, employees, viewers, and music buyers, among others.  The corporate defendant was therefor charged with violating the FTC Act even though it did not itself make misrepresentations directly to consumers.

The settlement banned the corporate defendant and its owner from selling or assisting others in selling social media influence.  It also prohibits them from misrepresenting or assisting others to misrepresent, the social media influence of any person or entity or in any review or endorsement.  The order imposes a $2.5 million judgment against its owner – the amount he was allegedly paid by the corporate defendant or its parent company.

The aforementioned case is not the first time the FTC has taken action against the commercial misuse of bots or inauthentic online accounts.  Indeed, such actions, while previously involving matters outside the social media context, have been taking place for more than a decade.

For example, the Commission has brought three cases – against Match.com, Ashley Madison, and JDI Dating – involving the use of bots or fake profiles on dating websites.  In all three cases, the FTC alleged in part that the companies or third parties were misrepresenting that communications were from real people when in fact they came from fake profiles.

Further, in 2009, the FTC took action against am alleged rogue Internet service provider that hosted malicious botnets.

All of this enforcement activity demonstrates the ability of the FTC Act to adapt to changing business and consumer behavior as well as to new forms of advertising.

Although technology and business models continue to change, the principles underlying FTC enforcement priorities and cases remain constant.  One such principle lies in the agency’s deception authority.

Under the FTC Act, a claim is deceptive if it is likely to mislead consumers acting reasonably in the circumstances, to their detriment.  A practice is unfair if it causes or is likely to cause substantial consumer injury that consumers cannot reasonably avoid and which is not outweighed by benefits to consumers or competition.

The Commission’s legal authority to counteract the spread of “bad” social media bots is thus powered but also constrained by the FTC Act, pursuant to which the FTC would need to show in any given case that the use of such bots constitute a deceptive or unfair practice in or affecting commerce.

The FTC will continue its monitoring of enforcement opportunities in matters involving advertising on social media as well as the commercial activity of bots on those platforms.

Commissioner Rohit Chopra issued a statement regarding the “viral dissemination of disinformation on social media platforms.” And the “serious harms posed to society.”  “Social media platforms have become a vehicle to sow social divisions within our country through sophisticated disinformation campaigns.  Much of this spread of intentionally false information relies on bots and fake accounts,” Chopra states.

Commissioner Chopra states that “bots and fake accounts contribute to increased engagement by users, and they can also inflate metrics that influence how advertisers spend across various channels.”  “[T]he ad-driven business model on which most platforms rely is based on building detailed dossiers of users.  Platforms may claim that it is difficult to detect bots, but they simultaneously sell advertisers on their ability to precisely target advertising based on extensive data on the lives, behaviors, and tastes of their users … Bots can also benefit platforms by inflating the price of digital advertising.   The price that platforms command for ads is tied closely to user engagement, often measured by the number of impressions.”

Click here to read the Report.

© 2020 Hinch Newman LLP

JUUL Faces New Lawsuit Over Marketing Tactics

Marketing to youth has long been part of the tobacco industry’s strategy to keep a steady influx of customers. However, since the Joe Camel lawsuit in 1997, tobacco companies have increasingly been under fire for targeting underage consumers. Most disavow these intentions, but from time to time, a company will draw attention to these kinds of tactics. Most recently, the vaping pioneer, JUUL, has been pinpointed.

Despite assertions that they had never marketed their products to children or teenagers, a recent New York Times article reports that JUUL purchased ad space on youth-centered websites like Nickelodeon, the Cartoon Network, Seventeen magazine, and educational sites for students as young as middle school.

This report highlights a new lawsuit filed by the Massachusetts attorney general, Maura Haley, on February 12, 2020. The suit indicates that JUUL was targeting underage demographics during its early launch period between June 2015 and early 2016.

Efforts to target this demographic were deliberate according to the lawsuit. JUUL rejected an initial marketing proposal that aimed to attract adult smokers by using vintage 1980s technology. Instead, they produced a campaign featuring youthful models and sought to enlist millennials, Gen Z celebrities, and Instagram influencers to increase appeal to younger consumers.

“This is the first real window into JUUL’s original marketing plan, and what it did to target our kids — target our kids. That’s what we’re talking about,” Healey said at a press conference. “JUUL’s own documents show that the company intentionally chose fashionable models and images that appeal to young people for its ads. They tried to recruit celebrities and social media influencers like Miley Cyrus and Kristen Stewart to promote its products. It purchased ad space and websites for kids, such as Nickelodeon, Seventeen, and Cartoon Network. It’s sold and shipped e-cigarettes to underage kids in Massachusetts through its website. And it worked.”

Equally – if not more – troubling are charges that these ads were placed in paid advertising positions across a wide range of websites intended for underage audiences. Sites include:

Educational sites: basic-mathematics.com, mathplayground.com, mathway.com, onlinemathlearning.com, and purplemath.com, socialstudiesforkids.com, and schcollegeconfidential.com

Gaming sites for young girls: dailydressupgames.com, didigames.com, forhergames.com, games2girls.com, girlgames.com, and girlsgogames.com

General game and craft sites for young children: allfreekidscrafts.com, hellokids.com, and kidsgameheroes.com

The report also alleges that JUUL had given e-cigarettes to consumers who provided high school students’ email addresses.

Campaign for Tobacco-Free Kids, among other national anti-smoking organizations applauded the lawsuit. Matthew Myers, president of the organization, commented that “What is remarkable is the extent to which a single company, drove this train and the extent to which the decisions of that company were knowing, conscious and intentional with disregard for the health and safety of our kids.”

JUUL executives have yet to address the specific charges in the complaint. Company spokesperson Austin Finan has only commented that, “While we have not yet reviewed the complaint, we remain focused on resetting the vapor category in the U.S. and earning the trust of society by working cooperatively with attorneys general, regulators, public health officials, and other stakeholders to combat underage use and transition adult smokers from combustible cigarettes.”

Public sentiment has turned against JUUL as more information comes to light about the dangers of vaping and concern over what has been called “an epidemic” of underage vaping by the federal government. According to a 2019 CDC study, e-cigarette use was reported at 27.5% among high school students and 10.5% among middle school students. The company has strongly rejected claims that it has focused its marketing on youth and maintains its position that its sole goal is to help adult smokers transition to a safer option.

 

COPYRIGHT © 2020, STARK & STARK

For more on tobacco/vape product regulation, see the National Law Review Biotech, Food & Drug Law section.