Tag: advertising

FTC Attorney on Endorsement Guide Compliance

Influencer marketing and review websites have attracted a great deal of attention recently by states and federal regulatory agencies, including the FTC.  The FTC’s Endorsement Guides addresses the application of Section 5 of the FTC Act to the use of endorsements and testimonials in advertising.

At their core, the FTC Endorsement Guides (the “Guides”) reflect the basic truth-in-advertising principle that endorsements must be honest and not misleading.  The Guides suggest several best practices, including, but not limited to the following:

  1. Influencers must be legitimate and bona fide users, and endorsements must reflect honest opinions.
  2. Endorsers cannot make claims about a product that would require proof the advertiser does not have.  Blogger and brands are potentially subject to liability for claims with no reasonable basis therefor.
  3. Clearly and conspicuously disclose material connections between advertisers and endorsers (e.g., a financial or family relationship with a brand)
  4. To make a disclosure “clear and conspicuous,” advertisers should use plain and unambiguous language and make the disclosure stand out.  Consumers should be able to notice the disclosure easily.  They should not have to look for it.  Generally speaking, disclosures should be close to the claims to which they relate; in a font that is easy to read; in a shade that stands out against the background; for video ads, on the screen long enough to be noticed, read, and understood; and for audio disclosures, read at a cadence that is easy for consumers to follow and in words consumers will understand.
  5. Never assume that a social media platform’s disclosure tool is sufficient.  Some platforms’ disclosure tools are insufficient.  Placement is key.
  6. Avoid ambiguous disclosures like #thanks, #collab, #sp, #spon or #ambassador.  Clarity is crucial.  Material connection disclosures must be clear and unmistakable.
  7. Do not rely on a disclosure placed after a CLICK MORE link or in another easy-to-miss location.
  8. Advertisers that use bloggers and other social media influencers to promote products are responsible for implementing reasonable training, monitoring and compliance programs (e.g., educating members about claim substantiation requirements and disclosing material connections, searching for what people are saying and taking remedial action).
  9. Statements like “Results not typical” or “Individual results may vary” are likely to be interpreted to mean that the endorser’s experience reflects what others can also expect.  Therefore, advertisers must have adequate proof to back up the claim that the results shown in the ad are typical, or clearly and conspicuously disclose the generally expected performance in the circumstances shown in the ad.
  10. Brands can ask customers about their experiences and feature their comments in ads.  If they have no reason to expect compensation or any other benefit before they give their comments, consult with an FTC CID and defense attorney to assess whether a disclosure is necessary.  If customers have been provided with a reason to expect a benefit from providing their thoughts about a product, a disclosure is probably necessary.

What about affiliate marketers with links to online retailers on their websites that get compensated for clicks or purchases?  According the FTC, the material relationship to the brand  must be clearly and conspicuously so that readers will be able to decide how much weight to give the endorsement.  In some instances – like when the affiliate link is embedded in a product review – a single disclosure may be adequate.

When the review has a clear and conspicuous disclosure of a material relationship and the reader can see both the review containing that disclosure and the link at the same time, readers may have the information they need.  However, if the product review containing the disclosure and the link are separated, readers may not make the connection.

Never put disclosures in obscure places, behind a poorly labeled hyperlink or in a “terms of service” agreement.  That is not enough.  Neither is placing a disclosure below the review or below the link to the online retailer so readers would have to keep scrolling after they finish reading.

Consumers should be able to notice disclosures easily.

U.S. regulators are not the only ones policing influencer disclosures.  In fact, the Competition and Markets Authority, the British government agency that regulates advertising, recently sent numerous warning letters to British celebrities and other social media influencers.  The CMA has also recently released its guidelines for influencers.

The FTC has already demonstrated that it monitors accounts of popular influencers.  It has also demonstrated that it can and will initiate investigations and enforcement actions.  Brands are well-advised to review promotional practices, implement written policies and monitoring protocols.

© 2019 Hinch Newman LLP

For more on influencers, endorsement & advertising, see the National Law Review Communications, Media & Internet law page.

How Harmful do Gender Stereotypes Need to be?

Ads Banned in UK Following New Rule

As we reported earlier this year, a new rule dealing with the depiction of harmful gender stereotypes, was introduced into the BCAP and CAP Codes as of June 2019.

The first decisions under the new rules have been released and we have seen two separate ads by Volkswagen and Philadelphia banned by the Advertising Standards Authority (ASA) under the new rule.

Volkswagen’s advert for its eGolf electric car, with the slogan “when we learn to adapt, we can achieve anything” features a man and a woman camping on a sheer cliff face, two male astronauts floating in space, a male athlete with a prosthetic limb, and a woman sitting next to a pram.

Separately, the Philadephia ad by Mondalez depicts fathers being distracted by the cheese spread long enough for their babies to end up on a conveyor belt of Philadelphia, resulting in an embarrassed dad saying “let’s not tell mum”.

Both ads received a number of complaints from the public on the basis that they were contrary to the new rule, which aims to ban harmful gender stereotypes in ads which can

“contribute to inequality in society” and “can, over time, play a part in limiting people’s potential.”

Whilst Volkswagen argued that caring for a new born child was a life-changing experience about adaption, regardless of the gender of the parent depicted, and that a female was also engaged in the adventurous activity of camping on the mountain, the ASA ruled that “unlike her male counterpart, the female rock climber was passive, because she was asleep” and that the woman with the pram was depicted in a stereotypical care-giving role.

Mondalez told ASA that it was in a “no-win situation” having deliberately chosen two dads to avoid depicting the stereotypical image of women handling the childcare responsibilities. However the ASA banned the ad on the basis that it reinforced the stereotype that males are ineffective in care-giving roles.

Critics have said that the watchdog has gone too far and in a statement posted on the website for ISBA, the body representing the UK’s leading advertisers, Phil Smith (director-general and a member of a working group that helped develop the new rules) said the bans are “concerning, both in terms of the precedent they set and the likely impact they will have on advertisers.”

Smith further commented

“In our view, the two decisions go beyond the intent of the new rule and guidance and will likely create confusion for advertisers and the broader co-regulatory system as they seek to address the harmful gender stereotypes and outdated portrayals this rule was designed to tackle.”

The effectiveness of the new rule will be reviewed by CAP in June 2020, to determine whether it is suitable in helping the ASA meet the rule’s objective. It will be interesting to see how the ASA applies the rule in future decisions.

© Copyright 2019 Squire Patton Boggs (US) LLP

ARTICLE BY Carlton Daniel and Katie Rodgers of Squire Patton Boggs (US) LLP.
For more on advertising regulation, see the National Law Review Communications, Media & Internet law page.

How Social Media Impacted the Teenage Juul Epidemic: Study Recommends Strict FDA Control

BMJ’s journal, Tobacco Control, just released a study recommending that the FDA do more to control Juul’s e-cigarette advertising in social media. The study included a review of over 15000 posts in a three-month period during 2018. Approximately 30% of reviewed posts were promotional, e.g., leading to Juul purchase locations, and over half the posts included “youth” and “youth lifestyle” themes. Because many of these posts were re-posts or user-generated, rather than ads specifically placed by Juul, the company protested that 99% were third-party content over which Juul had no control. However, the intended goal for social media advertising is to “share” and to inspire creation of third-party user-generated content that is also shared. Juul’s public comments weirdly suggest they don’t understand social media advertising. That is quite unlikely.

Juul first came under fire for its youth-focused advertising back in 2016, but has only recently made changes to restrict it. Not until late 2018, long after being called-out by educational and government agencies for targeting youth, did it begin to materially limit its social media accounts and social media messaging.

Juul’s chief administrative officer, Ashley Gould, was quoted last year telling CNN that Juul was “completely surprised by the youth usage of the product.” (Source: CNN.) In response, Dr. Robert Jackler, founder of the Stanford Research into the Impact of Tobacco Advertising, said, “I don’t believe that, not for a minute, because they’re also a very digital, very analytical company,” he added. “They know their market. They know what they’re doing.”

Gould’s obfuscation about underage users doesn’t fool people in the know—and it certainly doesn’t generate trust that Juul will voluntarily follow ethical practices. Juul only instituted its recent changes to restrict youth advertising after FDA scrutiny and bad press.

Juul also advertises its products are for smoking cessation. Last week, in response to San Francisco’s imminent ban on e-cigarette sales, Juul raised concerns that people would resort back to traditional cigarettes—implying this would further negatively impact the health of San Franciscans.

Unfortunately for Juul, the internet remembers everything. In a 2015 Verge interview at the beginning of Juul’s meteoric rise, one of Juul’s R&D engineers made it clear that Juul didn’t care about smoking cessation nor had any concerns about creating an addictive product. The engineer (Atkins) was quoted saying, “We don’t think a lot about addiction here because we’re not trying to design a cessation product at all,” he said, “anything about health is not on our mind.”

Juul’s public “feint and parry” strategy tends to mirror the traditional tobacco industry—a group with a sordid history of youth-focused advertising, concealment, lying to officials, and purposely creating highly addictive products in order to boost sales. It took multiple lawsuits and the Master Settlement Agreement of the nineties for big tobacco to materially comply with government regulations.

Courtesy of Trinkets & Trash Rutgers School of Public Health

Unfortunately, despite all of that history, the tobacco industry’s disregard for consumer protection has spread into the e-cigarette industry. As late as 2017, big tobacco-owned e-cigarette, Blu, launched its “Something Better” advertising campaign. The campaign mocked government-mandated package warnings on traditional cigarettes. The ads included variations of the following text and were designed to look like cigarette warning labels:

“Important: Contains flavor;”
“Important: Vaping blu smells good”
“Important: No ashtrays needed”

The parody on government-mandated safety warnings mocks consumer protection efforts by government agencies—a tactic not surprising coming from a tobacco company. Right now, there is very little regulation over e-cigarettes despite the fact that the FDA was granted oversight in 2016. Like Blu, Juul also has heavy ties to big tobacco. Altria, parent company to Phillip Morris, the maker of Marlboro, is heavily invested in Juul.

If Juul truly intends to address social media advertising, consumer protection, and youth e-cigarette use, it must do more than spew rhetoric through the media. It must take incisive, prophylactic action to reduce exposure of its products to underage users. If history is any indication, that won’t happen without strict FDA regulation.

If you or someone you know has become seriously addicted to nicotine in e-cigarettes, has health problems associated with e-cigarettes, or has been injured by a malfunctioning e-cigarette, you should contact an experienced e-cigarette injury attorney to advise you on the ability to seek compensation for your injuries.

COPYRIGHT © 2019, STARK & STARK
For more on nicotine product regulation see the National Law Review Consumer Protection page.

Why Correctly Understanding Antitrust Risk is Crucial to Properly Addressing Brand Dilution in the E-Commerce Age

“Run a Google search for the phrase ‘minimum advertised price policy’ and you will find hundreds of policies, posted on a variety of manufacturers’ websites.  Interest in minimum advertised price (‘MAP’) policies has skyrocketed in recent years.”  That is what one of my colleagues wrote in a prescient article in 2013.[i]  Since 2013, the interest in MAP policies has exploded.  But much of the online guidance regarding MAP policies is misguided and clearly has not been crafted or vetted by antitrust counsel.  Manufacturers should proceed with caution and consult with antitrust counsel before adopting a MAP policy.

  1. What is a MAP Policy?

MAP policies impose restrictions on the price at which a product or service may be advertised without restricting the actual sales price.  In the context of print advertising, MAP policies usually concern only off-site advertising, such as in flyers or brochures.  They do not restrict the in-store advertising or sales price offered at the retailer’s “brick and mortar” locations.  In the context of internet advertising, MAP policies often concern pricing advertised by an internet retailer on its website.  But with internet advertising, the distinction between an advertised price and a sales price is often blurry and requires special attention.

  1. What has been driving all the recent interest in MAP?

The e-commerce boom has been one key driver.  Although e-commerce has been a financial boon for some by allowing products to reach broader audiences and conveniently connecting consumers to highly discounted and diversified products, other manufacturers are concerned that they are losing control over their brands and the advertising of their products.  Once premium branded products might be discounted to the point of being considered cheap.  As margins are squeezed, service may suffer and consumers ultimately lose out.

This phenomenon, and how to address it, has attracted massive recent attention, including from the popular press.  In 2017, the Wall Street Journal published an article headlined, Brands Strike Back:  Seven Strategies to Loosen Amazon’s Grip, reporting that a growing number of brands are pushing back on large online retailers by adopting MAP policies.[ii]  The article reported that instituting MAP policies can be effective in decreasing online discounting.  A recent Forbes article similarly recommended that manufacturers adopt MAP policies in response to the emergence of e-commerce sites.[iii]

  1. Popular Misconceptions About MAP.

Public interest in MAP has been great for drawing attention to the usefulness of MAP policies in addressing brand dilution.  But much of the popular discourse about MAP fails to account for the critical legal considerations attendant to adopting and enforcing a MAP policy, and would steer the unwary into legally risky territory.  For example, a sampling of articles online—which will go unattributed—offer the following characterizations in promoting MAP policies:

  • A “MAP policy is an agreement between manufacturers and distributors or retailers”;
  • In a MAP policy, “authorized sellers agree to the policy and in return, the brand agrees to enforce their pricing”;
  • To prevent “margin erosion,” “manufacturers and retailers work together to set a minimum advertised price”;
  • MAP should be “enforced by both” the manufacturer and reseller; and
  • Brands should “control sellers” through “enforceable agreements.”

These suggestions to implement MAP through an “agreement” or in “cooperation” with resellers, and to use MAP to enforce product pricing, may have intuitive appeal.  And in fact, several MAP templates available online are styled as “agreements” between the manufacturer and reseller.  But be warned—these suggestions, if carried out, could pose significant antitrust risk that could subject companies to serious and expensive liability.  The next section explains why.

  1. Quick Antitrust Legal Guide to MAP.

When most people think of illegal antitrust conspiracies, they think of agreements among competitors to fix prices or restrict competition, which are per se illegal.  But in general, manufacturers also may not require their resellers—either distributors or retailers—to resell at (or above) a set price.  This is known as minimum resale price maintenance (“RPM”) and it is also per seillegal under antitrust laws in several states.

Although RPM may be per se illegal under certain state laws, MAP policies are generally analyzed under a more lenient legal framework called the “rule of reason.”  But a MAP policy must be crafted with care to avoid being treated as RPM.  For example, agreements with resellers concerning the minimum advertised price may be viewed, depending on the circumstances, as actually having the effect of setting the minimum sales price, converting the MAP policy into RPM.  A MAP policy also must be adopted free from any agreement with a manufacturer’s horizontal competitors, which could be found to be an unlawful horizontal conspiracy.  In one prominent example, the Federal Trade Commission (“FTC”) brought an enforcement action against five major competing compact disk (“CD”) distributors challenging their MAP policies as violating federal antitrust laws.[iv]  All five major CD distributors had adopted MAP policies around the same time, allegedly at the urging of retailers, and the policies each prohibited all advertising below a certain price, including in-store advertising.  The FTC viewed the policies under those circumstances as horizontal agreements among the distributors, and thus per se illegal.

  1. Practical Antitrust Pointers for MAP.

Several guiding principles can help minimize antitrust risk in adopting a MAP policy:

  • Advertising Only.  A retailer should remain free to sell a product at any price, so that the restriction on advertising is deemed to be a non-price restraint.  In the context of online sales, adhering to this principle can require special care, as some might try to argue that there is little distinction between an advertised price and a sales price.  MAP policies that concern internet advertising thus often include provisions that allow internet retailers to communicate an actual sales price in a different manner—such as “Call for Pricing” or “Add to Cart to See Price.”
  • No Agreement.  A MAP policy should be drafted as a unilateral policy—i.e., a policy that the manufacturer creates on its own (in consultation with antitrust counsel), without input from or agreement with its own competitors or with its downstream resellers.  The policy should expressly state that it is a unilateral policy that does not constitute an agreement.
  • Broad Application.  Policies that apply to all off-site advertising, no matter the form, are more likely to be upheld than policies that are specifically directed at internet retailers.
  • Clarity.  A MAP policy should be user-friendly and easy to understand.  One best practice is to include a Frequently Asked Questions guide to clarify how the policy works.

Antitrust risk must be kept in mind not just when a MAP policy is created, but throughout its implementation and enforcement.  The manner in which a MAP policy is enforced could risk converting the unilateral policy into conduct that could be viewed as a tacit agreement, even if no written agreement is ever signed.  For example, enlisting or “working with” resellers to enforce the policy, as suggested by articles online, could be viewed as evidence that a manufacturer is coordinating with resellers as part of an overall agreement.  Working with competitors to coordinate strategies for MAP enforcement would also pose significant legal risk.  For that reason, manufacturers that are adopting MAP policies should resist communications with resellers or competitors about MAP and continue to work with antitrust counsel through implementation and enforcement.

To be sure, some may believe that coordination, for example, between manufacturers and retailers, is helpful in stamping out e-commerce discounting.  But even if such coordination between manufacturers and retailers could be effective in addressing such discounting, it carries significant legal risks.  And potentially risky agreements with resellers are not a manufacturer’s only option in addressing how its products are advertised in e-commerce.  Other tools are also available and can be adopted in conjunction with MAP and other policies.  As just one example, a unilateral distribution policy, in which a manufacturer unilaterally suspends resellers that sell through unauthorized e-commerce sites, can be a powerful complement to a MAP policy.  It also may present a more direct way to address the e-commerce channels through which goods are (or are not) sold.  Because such policies do not involve prices, if appropriately created and implemented, U.S. courts are likely to also assess them under the lenient “rule of reason.”  It is therefore unsurprising that such policies are gaining in popularity.  One recent study surveying over 1,000 European retailers found that policies precluding or limiting e-commerce sales are widely in place with approximately 18% of respondents reporting that manufacturers limit their ability to sell through online marketplaces or platforms and 11% reporting that manufacturers restrict their online sales to their own website.[v]

Ultimately, addressing brand dilution is critical in the e-commerce age.  It is also highly fact specific and typically requires custom solutions tailored to a company’s commercial and legal objectives.  Adopting an “off the rack” MAP policy and simply hoping for the best is unwise and could lead to expensive litigation or, worse yet, liability and costly penalties.  But antitrust lawyers are here to help companies navigate the legal landscape to come up with commonsense solutions that work while minimizing legal risk.

[i] Erika L. Amarante, A Roadmap to Minimum Advertised Price Policies, 16 The Franchise Lawyer 4 (2013), https://www.wiggin.com/erika-l-amarante/publications/a-roadmap-to-minimum-advertised-price-policies/.

[ii] Ruth Simon, Brands Strike Back:  Seven Strategies to Loosen Amazon’s Grip, Wall St. J., (Aug. 7, 2017),  https://www.wsj.com/articles/brands-strike-back-seven-strategies-to-loosen-amazons-grip-1502103602.

[iii] Danae Vara Borrell, Why Manufacturers Can’t Afford to Ignore Minimum Advertised Price Policies, Forbes Tech. Council (Oct. 17, 2018), https://www.forbes.com/sites/forbestechcouncil/2018/10/17/why-manufacturers-cant-afford-to-ignore-minimum-advertised-price-policies/#167f8d5417ec.

[iv] See In re Sony Entertainment, Inc., No. C-3971, 2000 WL 1257796 (F.T.C. Aug. 30, 2000).

[v] See European Commission, Final Report on the Ecommerce Sector Inquiry, staff working document paragraph 461, http://ec.europa.eu/competition/antitrust/sector_inquiry_swd_en.pdf.

© 1998-2019 Wiggin and Dana LLP

Hungry for Change: ASA and Government Target Junk Food Ads

With childhood obesity rates in the UK among some of the worst in Europe, the Government has set a national target to halve childhood obesity by 2030. Whilst the Government acknowledges that this is a multi-faceted problem, it has reported that evidence suggests that children’s exposure to advertising of products that are high in fat, salt and/or sugar (“HFSS”) contributes to their consumption patterns.

HFSS product advertising is currently subject to content and placement restrictions under the Committees of Advertising Practice (“CAP”) broadcast and non-broadcast codes of advertising (“Codes”); however, campaigners and industry bodies have raised concerns that adverts are not being targeted correctly and that the existing rules do not go far enough. The Advertising Standards Authority (“ASA”) and the Government have taken steps in recent months to address these issues, with the ASA launching a monitoring exercise on targeted ads and the Government consulting on options to reduce children’s exposure to HFSS ads.

The rules

Each of the Codes contains rules dealing with adverts that are directed at or feature children, as well as specific rules in relation to advertising HFSS products, whether directly or indirectly. The restrictions include:

  • a prohibition on the use of licensed characters and celebrities popular with children in ads for HFSS products where the ad is targeted at under 12s;
  • in relation to broadcast TV, a prohibition on HFSS products being advertised “in or adjacent to programmes commissioned for, principally directed at or likely to appeal particularly to audiences below the age of 16”; and
  • in relation to ads placed in children’s media, “HFSS product advertisements must not be directed at people under 16 through the selection of media or the context in which they appear. No medium should be used to advertise HFSS products, if more than 25% of its audience is under 16 years of age”.

ASA monitoring

Although compliance with the Codes by advertisers is generally high, the ASA recently published the results of a ‘compliance sweep’ that used online avatars to monitor ads for HFSS products that were served to children. Similar technology was used earlier this year to track brands that breached CAP’s gambling rules on advertising to under 18s, which we reported on in April.

The avatars replicated the browsing habits of children of various ages and collected information about HFSS adverts appearing on children’s websites and on YouTube. The monitoring exercise found that the vast majority of HFSS ads on children’s websites were being targeted correctly; however, potential issues were identified in relation to HFSS ads being served on YouTube.

Moving away from its typically ‘reactive role’, the ASA took proactive action to notify a number of non-compliant brands which were each required to take steps to prevent further breaches, including making improvements to their targeting approach.

Government consultation

Despite strong compliance by the industry, the Government is still considering further advertising prohibitions and earlier this year launched a consultation in which it sought views on options to further reduce children’s exposure to HFSS in broadcast and online media, including the introduction of a 9pm watershed. Other options included a ‘ladder’ system for advertising restrictions on broadcast TV, the strengthening of current targeting restrictions for online advertising and a mixed option for online advertising consisting of a watershed for video and additional targeting restrictions for other types of marketing.

Whilst the watershed proposals have received extensive support from campaign groups such as The Children’s Food Campaign (Sustain) and the Obesity Health Alliance, the ASA and the Institute of Practitioners in Advertising have both stated that the proposed changes would be ineffective and disproportionate, particularly given the high level of compliance with the HFSS rules in the Codes.

Steps to take

The ASA has stated that it will carry out further compliance sweeps in future, and so advertisers should take care to continue to comply with the Codes.

Anyone advertising in the area should also make use of any available tools which allow the targeting of ads so as to restrict children and young people from seeing adverts for HFSS products. Advertisers must also ensure that terms with their media buyers are sufficient to guarantee that targeting has been put in place correctly. As with labelling or other regulated industries such as financial services, agencies may wish to make clear that responsibility for compliance with these specialist rules lies with their clients (in particular if an assessment as to whether a product is indeed HFSS is required).

 

© Copyright 2019 Squire Patton Boggs (US) LLP

Donald Trump, Want To Binge-Watch Anti-Trump Ads? You’ll Need Three Full Days And Nights

If you were to binge-watch every negative Donald Trump advertisement aired in 23 selected markets during the primary season, you would first want to make yourself comfortable.

How comfortable?  Extremely so. You’ll be sitting down for more than 3 days and nights.

Our analysis of Political TV Ad Archive data has found that the Republican presidential nominee was the subject of at least 4,963 minutes of negative advertisements between Nov. 20 and July 14, in television markets ranging from San Francisco to Washington, D.C. Cumulatively, the ads attacking Trump amounted to about 83 hours of air time.

Donald Trump, Election anti-trump ads
Screenshot of Our Principles PAC advertisement from the Political Ad Archive

By comparison, it would take about 11 hours to watch the airings of negative ads aimed exclusively at Hillary Clinton. The presumptive Democratic nominee only had one major primary candidate, Bernie Sanders, who, for the most part, stuck to his pledge of running a positive campaign. Republican groups sponsored all of the anti-Clinton spots.

The campaign against Trump is unusual. Most of the attack ads came from a super PAC backed by his own Republican party’s establishment.

Outsourcing negative ads

Although waning in influence, television advertisements still make up the single largest expense of any presidential campaign – nearly three of every four dollars spent. Most political ads are bought by campaign committees that are tied directly to an individual candidate.

Traditionally, those committees have been reluctant to sling mud for fear of angering voters. Instead they have outsourced the work of attacking opposing candidates to outside spending groups. Most negative ads are now sponsored by those groups, which include super PACs and “dark money” organizations that aren’t required to reveal their donors.

Archive records show that anti-Trump ads aired at least 7,811 times during the primary season. Our Principles, a super PAC backed by the Republican party’s establishment wing, paid for at least 1,795 airings of spots dedicated to attacking Trump individually — the most from a single group. Nearly 30% of that air time was devoted to one ad that attacked the Republican nominee’s history of using undocumented workers on construction projects.

Two super PACs affiliated with the campaign of U.S. Sen. Ted Cruz paid for at least 670 airings of anti-Trump ads. But the Texas Republican, who ran against Trump in the GOP presidential primary before dropping out of the race in May, used his own campaign funds to pay for 5 separate ads attacking Trump. One of those spots claimed Trump favored gender-neutral public bathrooms.

Conservative Solutions PAC, a super PAC affiliated with the unsuccessful campaign of U.S. Sen. Marco Rubio (R-Florida), who dropped out of the race in March, paid for nearly 600 airings of anti-Trump spots. All of those ads featured Trump boasting, “I love the poorly educated.”

Business As Usual

Of the 95 separate advertisements focused on Trump, the Political Ad Archive determined that 71 were unambiguously negative, while 22 ads were considered strictly positive. That means that roughly 3 out of every 4 ads featuring only Trump were negative.

Those figures are similar to the previous presidential primary season, when roughly 70 percent of the political ads aired through April of 2012 took a negative tone, according to researchers at the Wesleyan Media Project. In 2008, only 9 percent of presidential primary ads were negative.

A 2012 post-election report found that near the end of the campaign, the prevalence of negative ads threatened to swamp any positive marketing by candidates. Almost 90 percent of 2012 GOP nominee Mitt Romney’s general election advertisements were negative, according to Kantar Media CMAG; roughly 80 percent of Obama’s 2012 spots were attack ads.

Clinton’s allies have been attacking Trump since late November, according to archive records. Priorities USA Action, a Democratic-leaning super PAC that supported Obama and is now backing the former Secretary of State, has paid for 527 airings of attack ads focused only on Trump, including one spot that has run 415 times. Clinton’s own committee has already aired more than 130 anti-Trump ads, including one that consists entirely of Republicans criticizing Trump.

Methodology: analysis of Political TV Ad Archive data through July 14, 2016. The markets included in the Political TV Ad Archive include stations in Iowa (Des Moines-Ames; Cedar Rapids-Waterloo-Iowa City-Dubuque; and Sioux City), New Hampshire (Boston-Manchester), Nevada (Las Vegas and Reno), South Carolina (Columbia and  Greenville-Spartanburg), Colorado (Colorado-Springs-Pueblo and Denver), North Carolina (Charlotte and Raleigh-Durham-Fayetteville); Virginia (Roanoke-Lynchburg; Norfolk-Portsmouth-Newport News; and Washington, DC-Hagerstown), Ohio (Cleveland-Akron-Canton and Cincinnati), Florida (Tampa-St. Petersburg-Sarasota; Orlando_Daytona Beach-Melbourne; and Miami-Ft. Lauderdale), California (San Francisco), Pennsylvania (Philadelphia), and New York (New York City). More information about the data from the Political TV Ad Archive is available here.

ARTICLE BY MapLight of MapLight
© Copyright MapLight

Serious Games Require Serious Attention to Marketing Statements

BrainLumos Labs recently paid $2 million to the Federal Trade Commission to settle claims that it deceived consumers about its brain training application’s ability to increase cognitive function. According to the FTC,  the company alleged that its app, called Lumosity, provided many beneficial effects including the ability to improve users’ school and work performance, delay the onset of age-related cognitive disorders and help restore brain function lost as a result of brain trauma and other health conditions.

According to the FTC, the company did not have sufficient scientific data to back up the claims made in its ads. The FTC also claimed that the company did not disclose that it solicited consumer testimonials about the effectiveness of the product via a contest that offered users the chance to win iPads and other prizes.

In a prepared statement, the company stood by the scientific basis for its brain-training methods and asserted that the settlement was a result of its marketing language that has since been discontinued.

The use of games for “good” causes, such as education, health and training is known as “serious games.” The potential for these types of games to help people in a variety of ways is immense. The number of these games is growing rapidly.

Makers of these games must be mindful not to overreach in the claims of what these games can do. The FTC has been active in policing unsupported claims by app makers.

Additionally, the FTC has been enforcing its endorsement guidelines which require disclosure when a company provides some compensation or financial incentive for endorsements or testimonials. Here, the fact that users had a chance to win valuable prizes in exchange for providing testimonials apparently was not disclosed.

Serious games and other apps have tremendous opportunity to provide beneficial results. However, it is important for makers of these games and apps to understand and comply with the various legal issues that are relevant to these offerings. It is advisable to seek legal review of all serious games and apps and their marketing plan before they are released to identify potential legal issues.

Article By James G. Gatto of Sheppard, Mullin, Richter & Hampton LLP
Copyright © 2015, Sheppard Mullin Richter & Hampton LLP.

Online Behavioral Advertising: Industry Guides Require Real Time Notice When Data Are Collected or Used for Personalized Ads

Greenberg Traurig Law firm

WHAT’S COVERED?

Online behavioral advertising (OBA) has become a very common tool for commercial websites. OBA can be defined as follows:

the collection of data online from a particular computer or device regarding web viewing behaviors over time and across Web sites for the purpose of using such data to predict preferences or interests and to deliver advertising to that computer or device presumed to be of interest to the user of the computer/device based on observed Web viewing behaviors.

OBA might be implemented by use of cookies directly on a company’s website by the company itself. Or it might occur through technology embedded in ads from other parties displayed on the company’s site. Either way, the operators of commercial websites need to be aware when OBA is occurring on their sites and should be taking steps to provide greater transparency about OBA occurring on their sites.

WHAT’S THE CONCERN?

While the use of OBA is largely unregulated by law in the U.S. at this time, its spread has generated concern among privacy advocates. Of particular concern is the gathering of data about consumers without their knowledge where such information is supposed to be anonymous but advances in technology make it more and more possible to link that information to individuals (not just devices) through combination with other information. Examples can include information about health conditions and other sensitive information gleaned by watching the sites a user visits, the searches he/she conducts, etc. Key characteristics of OBA include that it is: (a) invisible to the user; (b) hard to detect; and (c) resilient to being blocked or removed.

In an effort to stave off government regulation of OBA in the United States, the Digital Advertising Alliance (DAA), a consortium of the leading advertising trade associations, has instituted a leading set of guidelines. Based on standards proposed by the Federal Trade Commission, the DAA Self-Regulatory Program is designed to give consumers enhanced control over the collection and use of data regarding their Internet viewing for OBA purposes.

WHAT’S REQUIRED?

The key principles of the DAA’s guides are to provide greater transparency to consumers to allow them to know when OBA is occurring and to provide the ability to opt out. For commercial website operators that allow OBA on their sites, the compliance implications are as follows:

  1. First Party OBA. First Parties are website operators/publishers. If a company simply gathers information for its own purposes on its own site, it is generally not covered by the guidelines. However, as soon as the First Party allows others to engage in OBA via the site, it has a duty to monitor and make sure that proper disclosures are being made and even to make the disclosures itself if the others do not do so, including assuring that “enhanced notice” (usually the icon discussed below or a similar statement) appears on every page of the First Party’s site where OBA is occurring.

  2. Third-Party OBA. Third parties are ad networks, data companies/brokers, and sometimes advertisers themselves, who engage in OBA through ads placed on other parties’ sites. These Third Parties should provide consumers with the ability to exercise choice with respect to the collection and use of data for OBA purposes. (See below on how to provide recommended disclosures.)

  3. Service Providers. These are providers of Internet access, search capability, browsers, apps or other tools that collect data about sites a user visits Service Providers generally are expected to provide clear disclosure of OBA practices which may occur via their services, obtain consumer consent for such practices, and provide an easy-to-use opt-out mechanism.

HOW TO COMPLY

Generally, Third Parties and Service Providers should give clear, meaningful, and prominent notice on their own websites that describes their OBA data collection and use practices. Such notice should include clear descriptions that include:

  • The types of data collected online, including any PII for OBA purposes;

  • The uses of such data, including whether the data will be transferred to a nonaffiliate for OBA purposes;

  • An easy to use mechanism for exercising choice with respect to the collection and use of the data for OBA purposes or to the transfer of such data to a nonaffiliate for such purpose; and

  • The fact that the entity adheres to OBA principles.

In addition, “enhanced notice” should appear on each and every ad (or page) where OBA is occurring. The “enhanced notice” means more than just traditional disclosure in a privacy policy. It means placement of a notice on the page/ad where OBA is occurring. The notice typically is given in the form of the following icon (in blue color) which should link to a DAA page describing OBA practices and providing an easy-to-use opt-out mechanism:

online behavioral advertising

The icon/link should appear in or around each ad where data are collected. Alternatively, it can appear on each page of a website on which any OBA ads are being served. It is normally the duty of the advertisers (Third Parties) to deploy the icon. However, if they fail to do so, then the operator of the site where the OBA ads appear has the duty to make appropriate real-time disclosures about OBA on each page where OBA activity is occurring, including links to the DAA page describing OBA practices and providing an easy-to-use opt-out mechanism.

ENFORCEMENT

The DAA is taking its OBA guidelines seriously. It has issued sets of “compliance warnings” to many major U.S. companies. While DAA has no direct authority to impose fines or penalties, its issuance of a ruling finding a violation of its guidelines could create a tempting target for the FTC or plaintiffs’ class action lawyers to bring separate actions against a company not following the DAA guidelines. For all these reasons, operators of websites employing OBA (either first party or third party) should pay heed to the DAA Guidelines.

ARTICLE BY

Ed Chansky
David A. Wheeler
OF
Greenberg Traurig, LLP

Too Good To Be True: FTC’s Crackdown On L’Occitane’s Body Slimming Almond Extracts

Sheppard Mullin Law Firm

L’Occitane Inc’s advertisements for its topically-applied body sculpting almond extracts seemed straightforward: “Almond Shaping Delight 3 out of 4 women saw firmer, lifted skin. This luxuriously lightweight massage gel instantly melts into the skin to help visibly refine and sculpt the silhouette” and “Almond Beautiful Shape Trim 1.3 inches in just 4 weeks. This ultra-fresh gel cream helps to visibly reduce the appearance of cellulite, while smoothing and firming the skin.”

Unfortunately for L’Occitane, an international skin care company with over 150 shops across the U.S., the Federal Trade Commission (FTC) found those claims dubious at best, and earlier this year charged the company with violating the Federal Trade Commission Act (“FTC Act”).

According to the FTC’s complaint, which was filed on January 7, 2014, L’Occitane had been manufacturing, advertising, and selling the two products at issue, “Almond Beautiful Shape” and “Almond Shaping Delight,” in interstate commerce and violated the FTC Act by promoting them as being able to slim and reshape the body. The FTC alleged that L’Occitane did not have sufficient scientific data to support L’Occitane’s advertising claims that the creams could trim the user’s thighs, reduce cellulite, and slim the body in just weeks. The FTC asserted that  L’Occitane based its advertising claims in large part on two unblinded and non-controlled clinical trials and greatly exaggerated the results from one of the studies. The FTC charged L’Occitane with violating Sections 5(a) and 12 of the FTC Act, which declare unfair or deceptive acts or practices unlawful and bar false advertisements likely to induce the purchase of food, drugs, devices, or cosmetics. As part of the final consent order, the FTC fined L’Occitane $450,000 and prohibited it from making future false and deceptive weight-loss claims.

L’Occitane, however, is not the only entity which the FTC has recently fined because of questionable advertising claims. The FTC has also charged Sensa Products, LeanSpa, and HCG Diet Direct with violations of the FTC Act for allegedly misleading the public with unfounded weight loss claims and misleading endorsements relating to their products. These complaints, along with L’Occitane’s, were part of the FTC’s recent “Operation Failed Resolution” initiative, aimed at combating deceptive weight-loss claims.

One of the companies charged, Sensa Products, which claimed weight loss results from one of its dietary supplements, had to pay a $26 million fine for FTC Act violations. As a part of “Operation Failed Resolution,” the FTC also released an updated media guide for spotting deceptive weight-loss claims in advertising, entitled “Gut Check: A Reference Guide for Media on Spotting False Weight-Loss Claims.”

Manufactures and marketers of health products, cosmetics, drugs, and dietary supplements should be mindful of the FTC’s continuing and increasing vigilance in taking action with respect to enforcement of the FTC Act to stop unfounded weight loss claims. Companies making weight-loss claims in advertising and marketing materials must make sure that their claims are defensible and supported by sufficient credible scientific data.

Jordan Grushkin contributed to this article.

Article By:

Theodore C. Max
Of:
Sheppard, Mullin, Richter & Hampton LLP

Price Comparison Advertising – Massachusetts Law

GT Law

Retailers doing business in Massachusetts should ensure that their price comparison advertising complies with Massachusetts law, particularly 940 C.M.R. § 6.05 (Section 6.05). Otherwise, they may face a civil enforcement action by the Massachusetts Office of the Attorney General (MA AGO), a putative class action brought by a consumer under the Massachusetts Consumer Protection Act – Chapter 93A, or even a civil action brought by a competitor alleging unfair and deceptive trade practices.

What is price comparison advertising?

As defined in Section 6.05, price comparison advertising “is a form of advertising used in the sale of products whereby current prices are compared with the seller’s former or future prices, the prices of other sellers, or other stated values to demonstrate price reductions or cost savings.” According to the regulation, which was promulgated by the MA AGO, (1) “price comparisons based on false, arbitrary or inflated prices or values deceive or mislead the public” and (2) “[a]buse also occurs when sellers fail to disclose material information which is important to enable consumers to understand the price comparison.” To protect against this alleged deception and abuse, Section 6.05 regulates price comparison advertising.

Which practices does Section 6.05 deem unfair or deceptive?

Section 6.05 is divided into various sections (as more fully described below) that provide retailers with guidance concerning what the MA AGO deems to be unlawful. Violations of Section 6.05 may be enforced by the MA AGO in a civil enforcement action as well as by consumers, who may seek to assert claims individually and on behalf of all those “similarly situated” under Chapter 93A.  Massachusetts law even supports civil actions brought by competitors harmed by unlawful advertising practices.

Specifically, Section 6.05 provides that the following are unfair or deceptive acts:

  • Unidentified Price Comparisons. Sellers cannot state or imply that they are offering any product savings by making a direct or indirect price comparison, unless they “clearly and conspicuously”1   describe the basis for the comparison; provided, however, that sellers may claim a savings or make such a comparison (without disclosing the basis) if they are making a comparison to their own “former price” (as determined by Section 6.05(3)).
  • Comparison to Seller’s Own Former Prices. Sellers cannot compare their current price with their own former price for any product, unless such former price is a “bona fide, actual price” that they had offered “openly and in good faith for a reasonably substantial period of time in the recent past” to the public.2
  • Introductory Offers and Future Price Comparisons. Sellers cannot make an introductory offer or compare their current product price with a future product price unless (i) the future price takes effect immediately after the sale and not later than 60 calendar days after “the dissemination date of the introductory offer or price comparison” and (ii) following the effective date of the future price, the product is offered “openly and in good faith” at that price for at least equal to  the period of time offered at the introductory price, but not less than 14 days (except for certain circumstances).3
  • Use of “Sale” Terminology. Sellers cannot use the words “priced for sale,” “on sale,” “sale,” “selling out,” “clearance,” “reduced,” “liquidation,” “must sell,” “must be sacrificed,” “now only $X,” or other terms which state or imply a price savings unless certain specific factors listed in Section 6.05 are met.4
  • Use of “List Price” or Similar Comparisons. Sellers cannot compare their current product price with a “list price,” “manufacturer’s suggested retail price” or similar term, unless the list or manufacturer’s suggested retail price is the price charged for the advertised product by a reasonable number of sellers in the seller’s trade area as of a particular “measurement date” determined by Section 6.05.5
  • Comparison to Other Seller’s Price for Identical Product. Sellers cannot compare their price with another seller’s price for an identical product, unless the stated higher comparative price is at or below the price at which the identical product is being offered in the seller’s trade area as of the “measurement date” or other specifically identified period under certain circumstances.6
  • Comparison to Seller’s Own or Other Seller’s Price for Comparable Product. Sellers cannot compare their price with their own price or another seller’s price for a comparable product unless the comparable product is being offered for sale as of the “measurement date,” or other specifically identified period, at the stated higher comparative price, unless certain factors are met.7
  • Price Comparisons on Price Tickets or Labels. Sellers cannot imprint or attach any ticket or label to a product that contains a fictitious or inflated price which is capable of being used by sellers as a basis for offering fictitious price reductions.8
  • Range of Savings or Price Reduction Claims. Sellers cannot state or imply that any products are being offered for sale at a range of prices or at a range of percentage or fractional discounts unless various factors are met.9
  • Use of Terms “Wholesale” or “At Cost.” Sellers cannot state or imply that any product is being offered at or near a “wholesale” price or “at cost” (or words of similar meaning) unless the price is, in fact, either at or below the price paid by the seller at wholesale, or, in the case of a service, the seller’s cost for the service excluding overhead and profit.
  • Use of Terms “Two for the Price of One” or “Buy One – Get One Free.” Sellers cannot state or imply that products are being offered at the usual price of a smaller number of the same or a different product unless (i) they clearly and conspicuously disclose all material sale conditions being imposed; (ii) the price advertised as the usual price for the smaller number of products is their own “former price”; and (iii) the products are of substantially the same quality, grade, material and craftsmanship as the seller offered prior to the advertisement.
  • Use of Term “If Purchased Separately.”  Sellers cannot make any price comparison based on the difference between the price of a system, set or group of products and the price of the products “if purchased separately” (or words of similar meaning) unless: (i) a reasonable number of sellers in the trade area are currently offering the products as separate items at or above the stated separate purchase price as of the “measurement date”; or (ii) they have actually sold or offered the products for sale as separate items at the stated separate purchase price.
  • Prices for Parts or Units of Sets or Systems. Sellers cannot advertise a price for any product that normally sells as part of a pair, system, or set without clearly and conspicuously disclosing that the price stated is the price per item or unit only, and not the price for the pair, system or set.
  • Gifts. Sellers cannot state or imply that any product is being offered for free or at a reduced price (“a gift”) in conjunction with the purchase of another product unless various factors are met.10
  • Use of Disclaimers. Sellers cannot use a price comparison that is prohibited even if the advertisement contains disclaimers or explanatory language.
  • Are there any other requirements11  that sellers should consider when assessing their price comparison advertising?
  • Record Keeping Requirements. Sellers must maintain records for a period of six months after the last dissemination of subject advertisements and provide those records to the MA AGO, upon request, to substantiate the propriety of such advertisements.12
  • Deceptive Pricing Generally, Examples, and Loss Leaders. Although not contained within Section 6.05 itself, the MA AGO has adopted a more general regulation dealing with “Deceptive Pricing” set forth in 940 C.M.R. § 3.13(2).13  This subsection describes generally what the MA AGO deems deceptive and provides some examples. In addition, related § 3.13(3) prohibits sellers from selling or offering for sale so-called “loss leaders” to induce a buyer to make a purchase of a product sold only in combination with other merchandise on which the seller recovers such loss.
Article By:

Michael E. Pastore
James P. Ponsetto
David G. Thomas
Of:
Greenberg Traurig, LLP

1 “Clearly and conspicuously” means that “the material representation being disclosed is of such size, color, contrast or audibility and is so presented as to be readily noticed and understood by a reasonable person to whom it is being disclosed.” Section 6.01 provides guidelines for determining if disclosures are proper. 

2 Section 6.05(3) lists various factors that are considered when determining whether a “former price” is a “bona fide, actual price.” Section 6.05(4) provides certain safe harbors for comparison prices.  A complete list of factors and a description of the safe harbors are contained in 940 C.M.R. §§ 6.05(3)(a) and 6.05(4), which are available at  http://www.mass.gov/ago/government-resources/ags-regulations/940-cmr-600.html  (MA AGO’s Website). 

3 These circumstances and exceptions for certain offers limited to certain consumers who are deemed “first time purchasers” as defined in the regulation are contained in 940 C.M.R. § 6.05(5), which is available at  the MA AGO’s Website. Also, Section 6.05(5) contains separate requirements for health clubs. 

4 These factors are contained in 940 C.M.R. § 6.05(6), which is available at the MA AGO’s Website. 

5 Section 6.05(7) contains separate requirements for manufacturers or franchisors. Also, the “measurement date” is defined in Section 6.01. 

6 These requirements are contained in 940 C.M.R. § 6.05(8), which is available at the MA AGO’s Website. 

7 These factors are contained in 940 C.M.R. § 6.05(9), which is available at the MA AGO’s Website. 

8 There are certain exceptions for prices that are pre-ticketed by manufacturers or other sellers, as contained in 940 C.M.R. § 6.05(10), which is available at the MA AGO’s Website. 

9 These factors are contained in 940 C.M.R. § 6.05(11), which is available at the MA AGO’s Website. 

10 These factors are contained in 940 C.M.R. § 6.05(16), which is available at the MA AGO’s Website. 

11 This advisory does not contain an all-inclusive list of the MA AGO’s advertising regulations and requirements. Sellers, among other things, should be aware of additional requirements set forth in 940 C.M.R. § 3.00 (General Regulations) and 940 C.M.R. § 6.00 (Retail Advertising). 

12 940 C.M.R. § 6.14 contains specific and detailed record retention requirements for price comparison advertising, which is available at the MA AGO’s Website. 

13 This more general regulation is available at http://www.mass.gov/ago/government-resources/ags-regulations/940-cmr-3-00/940-cmr-300.html.