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FTC Releases Updated Endorsement & Testimonial Guidelines

Although it will be published in the Federal Register shortly, you can download and read the text of the Federal Trade Commission’s  revised "Guides Concerning the Use of Endorsements and Testimonials in Advertising" issued earlier today, right on Legal Bytes now. As reported previously in Legal Bytes, the final revisions are intended to update the FTC’s guidance, last revised in 1980, that provide advice to advertisers and agencies regarding compliance with the FTC Act.

While the prior guidelines allowed advertisers to use a “results not typical” disclaimer, that is no longer a safe haven from liability, and advertisers will be required to disclose what a consumer should generally expect when purchasing or using the product. Furthermore, any connection that a consumer might not reasonably know between an advertiser and an endorser needs to be disclosed. In recent years, comments by bloggers, through word of mouth, buzz or viral marketing were never addressed in the Guides. The updated version now deals with and provides examples of when these rise to a level of connection requiring disclosure.. For example, if a blogger receives any consideration in cash or in kind (e.g., free gaming console to try) to review products or services, that would now be considered an endorsement that requires disclosure – even if the review remains unbiased. 

The fact that a consumer should be informed about a material connection between the advertiser and the maker of the statements is now firmly embedded in the FTC Guides, even though these cases were always subject to review on a case-by-case basis. Of course, what constitutes a “material” connection will still be subject to a factual determination, but if a company, for example, sponsors research about its products or services (or potentially about the products or services of a competitor, if the results will be used in a comparative ad), then the company must disclose its sponsorship in the ad. Similarly, although consumers may expect celebrities to be paid for appearing in commercials, if an endorsement is made outside that context – for example, on a talk show, at a book signing, at a motion picture premiere, or on Facebook, Twitter or other social media – any material relationships must be disclosed.

The proposed new guidelines were the subject of a seminar, "Trust Me, I’m a Satisfied Customer: Testimonials & Endorsements in the United States", presented by Joseph I. Rosenbaum, at the University of Limerick in July. You can go to the previous Legal Bytes blog post and download a copy of the presentation at any time.  "

Want to know more about the FTC Guides, or the implications to social media advertising and marketing, or traditional advertising? Feel free to contact me or the Rimon attorney with whom you regularly work.

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British High Court is for the Birds? Actually, for Twitter!

Again in the category of "you can’t really make this up," yesterday the High Court in Britain ordered an injunction served through Twitter – the social networking site.

Donal Blaney, a lawyer, runs a blog called Blaney’s Blarney. Another account, named blaneysbarney, was impersonating Blaney, a politically conservative blogger. Inspired by a case in Australia, where Facebook was used to serve a court order, Blaney asked the court to allow him to serve the anonymous Twitter-user with a court order using the very social network the imposter was using – Twitter! As a practical matter, the court order will only actually be served (i.e., the writ received) when that account owner logs in and accesses his or her account on Twitter.

Since access to British courts appeared much more facile than heading to California in the hopes that a U.S. court will deal with the issue and with Twitter in the United States, he opted to petition the High Court in Britain to allow him to serve the order using Twitter. In the United Kingdom, the law permits an injunction to be delivered through electronic means (e.g., telecopy or even email), so in principle, no new law has actually been created, although this is certainly a novel twist to the existing law – especially since the identity of the imposter account owner was not known to Blaney.

The British High Court agreed, noting that issuing the writ using the Tweeting facility appeared to be the best way to get to the individual behind the anonymous tweeting. As has been noted in Legal Bytes previously, obtaining the identity of anonymous account holders on social media networks can be difficult, with favorable results far from a certainty in all jurisdiction and legal venues.

In the Australian case reported last year, which did not involve impersonation, a couple in Australia defaulted on their mortgage with MKM Capital, but were successfully able to avoid being served with papers in person. They ignored emails and never showed up in court. So, a Supreme Court judge in Australia’s Capital Territory agreed to let MKM Capital serve papers over the Internet. Facebook profiles (you know, those great facts and tidbits you share with everyone in your social media network and the public) had birth dates, email addresses and all the information necessary to satisfy the judge that they could indeed communicate and contact the defendants using Facebook.

Getting back to the recent UK order, online impersonation of sports figures and entertainment celebrities has become an increasing problem and nuisance on social media networks, and Twitter has even reacted to the problem by allowing celebrity "Tweeters" to have their authenticity certified with an icon (similar to a "seal") that is attached to their real profile pages.

The ability to serve legal papers and court orders using digital means through social media – imagine serving my avatar in a virtual world – may have wide-ranging implications for bringing legal actions against those who seek to use anonymity or pseudonymity to insulate themselves from detection when engaging in inappropriate or illegal activities. That said, if the actual account owner is anonymous, how will we know who they are even after they are "served," unless the host or ISP is somehow bound by the service of process.

Stay tuned. Social media is turning the legal world upside down, too . . . let us know if we can help keep you upright. Contact me if you have questions about this or any other matters.

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Are You Behaving Badly? Redux

If you missed our teleseminar “Global Regulation of Behavioral Marketing in an Age of Privacy & Data Protection,” presented by Rimon partners Douglas J. Wood and Joseph I. Rosenbaum from New York and Gregor Pryor from London, I am pleased to make a copy of the “Are You Behaving Badly” presentation available to our Legal Bytes’ readers. The industry gave us “New Hope.” Privacy and consumer advocacy groups responded, and the “Empire Strikes Back.” Just recently, Congress commended the self-regulatory efforts of the industry, but noted a perceived need for additional legislation. “The Phantom Menace” persists.

The intergalactic battles continue, battle lines remain drawn, tensions remain high and the balance unclear – perhaps because changing technology, social media norms and advertising models keep rewriting the rules of engagement. If you listened in, thank you. If you missed it, here is the presentation. In either case, don’t hesitate to contact any of us with questions.

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Online Behavioral Advertising – Congress Poised to Act

Late last week, Rep. Rick Boucher (D-Va.), who chairs the Subcommittee on Communications, Technology and the Internet, released a statement indicating that despite industry collaboration and efforts at self-regulation, his belief is that government regulation remains necessary. Rep. Boucher intends to introduce legislation, regulating online behavioral advertising. His statement notes that the intention would be “to assure Internet users a high degree of privacy protection, including transparency about the collection, use and sharing of information about them and to give them control over that collection, use and sharing,” and that the advertising industry’s self-regulatory principles, “while proactive . . . . do not go far enough.”

In deference to the industry, however, Rep. Boucher’s statement also acknowledges that “online advertising supports much of the commercial content, applications and services that are available to Internet users today without charge,” and mentions that the intention of any legislation is not to disrupt well-established business models. The announcement asserts the legislation will have bipartisan support, and although it notes that actual draft legislation is not yet ready for prime time, it will be targeted primarily at privacy concerns, seeking to establish baseline standards relating to the disclosure, collection and use of consumer information, and safe harbors for advertisers that adhere to certain online practices in connection with these issues. In addition, the Federal Trade Commission will be given the authority to enforce the principles in the legislation and define the specific policies and practices that would allow advertisers to take advantage of the proposed safe harbor protections.

You can read all of Rep. Boucher’s statement right here. Fittingly, there is still time to register for tomorrow’s teleseminar “Are You Behaving Badly”, sponsored by the Advertising Technology & Media law practice at Rimon.

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Self-Regulatory Online Behavioral Advertising Principles: What’s Déjà New?

In a speech in November 1942, Sir Winston Churchill remarked, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

So, if you have been following along with the original announcement and each of the following “principle summaries” posted on Legal Bytes:

. . . and, if you have read the actual report, then you will appreciate that “Self-Regulatory Principles for Online Behavioral Advertising”, consistent with the Federal Trade Commission’s support of industry self-regulation, are patterned after the highly successful record of the Council of Better Business Bureaus in regulating the traditional advertising industry for more than 30 years. A record that includes industry collaboration, self-regulatory principles and monitoring, and close collaboration with the Federal Trade Commission over the years, as the industry and advertising models evolved.

While one is always careful to ensure that at some point governmental intervention may be necessary to protect consumers from those who abuse the system or violate the law, the question to ask is whether and to what extent new or different regulation is required. That is certainly a question being asked (and being answered) by a coalition of 10 consumer advocacy and privacy groups in its recently released report, “Online Behavioral Tracking and Targeting Concerns and Solutions”, in response to the industry principles. More importantly, one may ask whether a concretized and codified piece of legislation is likely to remain relevant or even defensible in the face of innovation and technology that could not have been predicted five years ago and, I believe, will remain relatively unpredictable in the future.

That said, some aspects of advertising are predictable. Development, display and distribution mechanism will evolve dynamically as technology and innovation continue. Notions of consumer privacy and data protection will continue to evolve and be difficult to harmonize across nations, across cultural and local boundaries, and—because privacy is and has always been context specific—in time and space. What might have been considered private in 16th century France is very different from the concept of privacy that permeates the hearts and minds of citizens of Japan or Brazil today. Indeed, even the role of government in protecting one’s right to privacy and the use of information about oneself, is an ever-changing one. Advertising models and economics will continue to change, with metrics and quantification methodologies being sparred and argued over, recognizing that even the roles of advertisers, agencies, media buyers, and broadcast and publishing networks, as well as ISPs, search engine, browser and web hosting companies—the technology players—are and will continue to change. Wireless and mobile devices will continue to expand the domain of advertising and challenge our ability to capture consumers’ interest on tiny mobile screens, while the opposite is taking place in our living rooms—with the separation of desktop or laptop computing and home television and entertainment centers being increasingly irrelevant (and screens becoming larger). Oh, and did we forget to mention how online gaming and the interplay between gaming console, entertainment and product placement, virtual worlds and display advertising, are all blurring (pardon the pun) right before our eyes?

So if you have ever attempted to change a tire on a moving automobile, you have a vision of what the “industry” is and will look like in the future. Under these circumstances, traditional regulation as we knew it, may not make sense. What might make sense is a more dynamic system of regulation. One that is more flexible, more adaptable and more capable of interacting and reacting to changing circumstances, mechanisms, technology and the environment. Perhaps allowing the industry and the Federal Trade Commission, in conjunction with other agencies already tasked with the mission of protecting consumers within their particular areas of authority (e.g., FDA, FCC, FAA, and the list goes on) to develop self-regulatory enforcement mechanisms, referral mechanisms, and a track record, may be the best way to determine what, where and when regulation may be needed.

In the meantime, you may want to ask yourself if you are misbehaving as an advertiser or marketing professional, and register and listen in to our “Are You Behaving Badly” Teleseminar Sept. 30, which will tackle current issues in global regulation of behavioral advertising.

As always, I and my colleagues in the Advertising Technology & Media law practice at Rimon are ready to assist in guiding, advising and providing legal support where and when you need it. We’ve been changing tires for more than a century!

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Privacy: FTC Announces the First in a Series of Public Roundtables

Earlier today the Federal Trade Commission announced details of the first of a series of Public Roundtables being held to deal with continuing efforts to examine, evaluate and determine if, and to what extent, regulation may be needed in connection with consumer privacy. In its announcement, the FTC specifically cites its intention to review privacy practices related to social networking, cloud computing, online behavioral advertising, mobile marketing, and the collection and use of information by retailers, data brokers and third-party applications.

The FTC’s announcement acknowledges the beneficial uses of information and technological innovation, while seeking to balance those against the need to protect consumer privacy. The first full-day session will be held Monday, December 7, 2009, at the FTC Conference Center at 601 New Jersey Avenue, N.W., Washington, D.C., and no registration is required. Those who cannot attend in person are welcome to go to FTC.gov and will be able to view the proceedings as a webcast.

The FTC has invited individuals and organizations to participate and/or to suggest topics. To participate, your request can be submitted directly to the FTC by email sent to privacyroundtable@ftc.gov on or before October 30th, and comments surrounding the issues to be discussed can be submitted on or before November 6th. The FTC has prepared a list of specific questions it intends to use in opening the dialog at this first in its series of public roundtable discussions and has invited written comments, as well as research submissions. Details can be found at the Privacy Roundtable Workshop page of the FTC’s website. Comments can be mailed to the FTC, or you can check the FTC website for instructions as to submitting comments electronically. Of course, Rimon stands ready to assist clients in preparing comments or providing representation, and if we can be of assistance, don’t hesitate to contact us. If you need to know more, please feel free to call me or the Rimon attorney with whom you regularly work.

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Self-Regulatory Online Behavioral Advertising Principle No. 7: Accountability

This post was also written by Adam Snukal.

Well, here it is. A summary of the last of the seven principles contained in the Self-Regulatory Online Behavioral Advertising Principles released by the Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, and the Interactive Advertising Bureau, in concert with the Council of Better Business Bureaus. The seven principles are:

The Accountability principle is the one concerned with the “effect,” rather than the “cause” and calls upon the industry to establish and implement programs to monitor its online behavioral advertising activities and take steps to ensure compliance with the principles within a self-regulatory framework. In the context of the self-regulatory principles, Accountability means – monitoring, transparency, reporting and compliance.

  • Monitoring: Both random and systematic, depending on the circumstances;
  • Transparency: Widely available, easy to use communication tools and channels so that the public, competitors and government agencies can file complaints when the Principles are violated;
  • Reporting: Violators will be publicly reported, including the reason for a finding of violation, a description of the violation, and the actions taken in response to, and to correct, the non-compliance; and
  • Compliance: The establishment of mechanisms and procedures to bring any publicly-reported entity into compliance with the principles, or, if necessary, to refer the violation to the appropriate government agency.

The Accountability principle also notes the importance of coordination and consistency among programs to promote efficiencies in implementation, so as to avoid multiple enforcement actions against the same entity for the same violation.

While the blueprint for the specifics surrounding the proposed monitoring, transparency, reporting and compliance initiatives under this principle are yet to be drawn, the Direct Marketing Association (“DMA”) and National Advertising Review Council of the Council of Better Business Bureaus (“CBBB”), have agreed to cooperate and collaborate, with the stated goal of having something in place by early 2010. Both the DMA and the CBBB were called upon to provide leadership in this area because of their widely respected existing self-regulatory accountability programs. The DMA also has agreed to integrate the principles into its longstanding DMA Self-Regulatory and Compliance Tools.

If you would like to read the entire “Self-Regulatory Principles for Online Behavioral Advertising” report now, in its entirety, just follow the link, but stay tuned for next week, when we will post a short consolidated summary of all seven principles and you can always read the entire “Self-Regulatory Principles for Online Behavioral Advertising” report here. So now, as always, if you have any questions or need help, please feel free to contact Adam Snukal or me, or any of the Rimon attorneys with whom you regularly work.

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Are You Behaving Badly? Global Regulation of Behavioral Marketing

On Wednesday, September 30, 2009, from 12 noon – 1 p.m. (U.S. EDT), Rimon will be hosting a teleseminar as part of its “Doing Business Globally” series. Entitled Global Regulation of Behavioral Marketing, this seminar will be presented by Rimon partners Douglas J. Wood and Joseph I. Rosenbaum from New York, and Gregor Pryor from London. The seminar will explore the legal implications to advertisers, marketing professionals and brands associated with the labyrinth of global regulation increasingly applicable, or newly enacted, in connection with the targeting of consumers — on and off the web — through behavioral marketing.

Privacy and consumer groups object to such sophisticated techniques, fearful it further erodes what little privacy protection remains. Regulators are concerned such practices may violate privacy and data protection laws, or worse, are simply not covered by existing law and regulation. Marketers respond that such advances allow for a far more efficient, consumer-friendly marketplace, and that self-regulation has been a successful model in the advertising industry for more than 30 years. In this interconnected, networked age of social networking and global communication, understanding the implications and the legal and regulatory landscape is critical for every advertising professional and marketer, and the brands they represent. The camps remain far apart. Advertising industry associations call for self-regulation, recently releasing a report entitled Self-Regulatory Principles for Online Behavioral Advertising. Only about two months later, as previously reported in Legal Bytes, a coalition of 10 consumer advocacy and privacy groups released a fresh call for new regulation in a report referred to as a Legislative Primer, entitled Online Behavioral Tracking and Targeting Concerns and Solutions. The dividing lines remain drawn, tensions remain high, and the balance unclear – perhaps because the technology environment keeps rewriting the rules of engagement. Want to know more? Don’t miss this informative presentation.

Join us for this exciting and timely Rimon Teleseminar. You can view the Invitation to obtain more information, or go right to the Registration page. We look forward to your participation.

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Self-Regulatory Online Behavioral Advertising Principle No. 6: Sensitive Data

This post was also written by Anthony S. Traymore.

Almost down to the wire, here is the next installment summarizing the sixth of the seven principles contained in the Self-Regulatory Online Behavioral Advertising Principles released by the Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, and the Interactive Advertising Bureau, in concert with the Council of Better Business Bureaus. For reference, the seven enumerated principles are:

The Sensitive Data principle segments sensitive data into two basic categories – personal information of children under the age of 13, and financial and health-related information, regardless of the age of the individual.

The Sensitive Data principle segments sensitive data into two basic categories – personal information of children under the age of 13, and financial and health-related information, regardless of the age of the individual.

With respect to the collection and use of data for online behavioral marketing purposes, if you have actual knowledge that any of the information being collected is from individuals under the age of 13, or if your website is targeted at children under the age of 13, the Sensitive Data principle states you should not be collecting any personal information from or be engaged in any online behavioral advertising with regard to that individual, unless you comply with the Children’s Online Privacy Protection Act (COPPA), and then, only to the extent specifically allowed by COPPA.

In case you’ve forgotten, COPPA requires you to have “verifiable parental consent” prior to collecting any personal data from children under the age of 13. The Federal Trade Commission routinely enforces COPPA, and violations may carry fines in excess of $1 million, in addition to the damage to goodwill and public image that can result. Compliance with the provisions of COPPA is tricky. While this post will not belabor the ambiguities that have already been reported about what constitutes “verifiable parental consent“, suffice it to say that when dealing with children under the age of 13, it is best to exercise considerable caution in connection with online marketing efforts – behavioral or otherwise – and to always consult an attorney well-versed in guiding you through the compliance maze.

With respect to personal information related to an individual’s financial or health status, age is not relevant to this sixth principle. What is relevant is the requirement that you obtain the consent of the individual if you are collecting the information online and you intend to use it. Prudent practice would indicate you should affirmatively obtain the individual’s consent in advance – whether during the process of registration, through formal acceptance of terms of use that clearly solicit consent, or through any other means. Clearly, if you plan to share this information with third parties in connection with online behavioral marketing efforts, you should indicate that to the individual. In all cases, the principle notes that you should always provide the individual with the right and an option, at any time, to opt-out of the use of his or her information for such purposes.

As mentioned, this is the sixth of the seven principles being highlighted, but if you would like to read the entire “Self-Regulatory Principles for Online Behavioral Advertising” report now, in its entirety, just follow the link. Legal Bytes will be bringing you a summary of the remaining principle next week. And now, as always, if you have any questions or need help, please feel free to contact Anthony S. Traymore or me, or any of the Rimon attorneys with whom you regularly work.

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Privacy and Consumer Groups Want More Than Just Self-Regulation

This post was also written by Adam Snukal.

As previously reported in Legal Bytes, it seems that not everyone is satisfied with the Self-Regulatory Principles for Online Behavioral Advertising recently promulgated by several leading advertising associations. A group of 10 consumer and privacy advocacy organizations (i.e., Center for Digital Democracy, Consumer Federation of America, Consumers Union, Consumer Watchdog, Electronic Frontier Foundation, Privacy Lives, Privacy Rights Clearinghouse, Privacy Times, U.S. Public Interest Research Group and The World Privacy Forum called on Congress earlier this week to enact legislation in response to what they feel are genuine threats to privacy arising from online behavioral tracking and targeting.

The guiding principles the coalition wants Congress to follow in its enactment of privacy legislation are substantively contained in the following Fair Information Practices (“FIP”), which the coalition claims has been the foundation of U.S. privacy policies for decades: collection limitations, data quality, purpose specification/communication, use limitation, security safeguards, appropriate openness, individual participation and knowledge rights, accountability, and redress. FIP was coined by a U.S. government advisory committee in 1973 in response to the use of automated data systems that contained information about individuals. The U.S. Privacy Act of 1974 established a code of fair information practices, and the FTC refers to these practices in a report entitled, Privacy Online: Fair Information Practices in the Electronic Marketplace (May 2000).

A sample of the principles contained in the coalition’s Legislative Primer, entitled Online Behavioral Tracking and Targeting Concerns and Solutions, includes:

  • A definition of “sensitive information,” along with guidelines as to the kinds of data that should not be collected or used for behavioral tracking/targeting
  • A prohibition on the collection or use of data from anyone under the age of 18
  • The right of an individual to obtain access to his/her personal or behavioral data
  • Personal and behavioral data collected must be relevant for the purposes for which they are to be used
  • A private right of action given to each individual whose data is collected and tracked, along with liquidated damages and appropriate federal/state regulation and oversight

Given the July release of self-regulatory principles, crafted and widely embraced by the advertising industry, with explicit support for self-regulation from the FTC itself, and three decades of successful self-regulation in the advertising industry (guided by the Council of Better Business Bureaus), it is not clear why a spokesperson for the Privacy Rights Clearinghouse would take the position that “The record is clear: self-regulation doesn’t work. It is time for Congress to step in and codify the principles into law.” Or why a spokesperson for Consumer Watchdog commented: “We’ve seen in industry after industry what happens when the fox is left to guard the chicken coop – consumers lose.”

With Congressman Boucher (D-Va.), Chairman of the Subcommittee on Communications, Technology and the Internet, indicating that his Subcommittee intends to visit this issue in the fall, it is not clear whether Congress will allow the industry and the FTC an opportunity to give self-regulation time to work, or if a perceived need to “do something” and change the status quo remains. One thing has not changed: the positions of the industry and consumer and privacy advocacy groups.

Legal Bytes will keep you posted on developments in this area as they evolve, but if you need help or want further information, feel free to contact Adam Snukal, me, or any of the Rimon attorneys with whom you regularly work.