It is no secret that influencer marketing—in which social media influencers have the ability to engage with their followers and create “organic” content about a particular product or service—is a huge asset for companies. It is also no secret that advertisers, agencies and influencers alike are often confused about how to comply with the FTC’s Guides Concerning the Use of Endorsements and Testimonials. While the FTC has attempted to clarify its position in subsequent FAQs and enforcement actions—and, most recently, in a “sweep” of “educational” letters we blogged about in April—it’s become increasingly clear that when and how to disclose might never be clear-cut. But it might be getting clearer, with some help from the social media platforms. Below are examples of how such platforms are taking new steps to address how branded content is disclosed:
It’s Not a Small World, After All, for Sweepstakes: Lessons Learned from International Sweepstakes
And the big “winner” is (drumroll) … the Italian Competition Authority. A multinational electronics company was a most recent victim of the stringent Italian prize promotion regulations — to the tune of € 3.1 million (or roughly US$3.37 million). The costly sanctions were imposed on the company by Italian authorities for, among other issues, unfair commercial practices. The authorities challenged the execution of some of the company’s promotions, claiming that the advertising for the promotions did not include clear and sufficiently visible explanations of how to win the prize, in violation of Italian customary commercial practices, and that the sponsor’s requirement that the winner must register and provide personal information in order to win the prize was in violation of Italian law as well. And the issues highlighted above are just some of the parameters a marketer needs to consider when running a successful sweepstakes in Italy, from a notary requirement to the need for a VAT (“value-added tax”) representative for non-Italian sponsors to the need for compliance with Italian privacy laws. The combination of these issues provided the perfect backdrop for an enforcer to make an example out of the multinational company’s marketing efforts, and gives us the perfect opportunity to remind companies to be diligent when running international promotions while we alert our base to these complex foreign issues.
Student Loan Market in FTC’s Cross Hairs
Lots of folks were wondering whether at the Federal Trade Commission (FTC) it was “School’s Out” with a shortage of Commissioners and a new administration in the White House. A recent case involving the telemarketing of student loan debt relief services makes clear that, at least in certain areas, school is still in session. The case also highlights the growing regulatory scrutiny on the student loan space.
In obtaining a temporary restraining order shutting down a group of related companies, the FTC alleged that in “many instances,” the companies failed to deliver any of the promised services. Specifically, according to the FTC, the defendants collected upfront and monthly fees in exchange for enrolling consumers in student loan forgiveness or income-driven repayment programs and to improve consumers’ credit scores. The FTC found that many consumers received no services and many went into further debt.
Digital Media Link, May 2017 – A Focus on Augmented and Virtual Reality
In the most recent edition of Digital Media Link, we explore the legal issues surrounding new technologies, with a particular focus on augmented and virtual reality. As we have seen time and again, new technologies do not necessarily mean new statutes or case law, which usually are slow to catch up. What is a lawyer to do, then, when advising on the legal issues associated with these new technologies? We do what we were trained to do – apply the existing rules and precedents to the best of our ability, use our knowledge of the technology and these laws to project how the law will develop, and track developments as they occur. Virtual reality and augmented reality remain so new – at least from the perspective of legal jurisprudence – that we are still in the stage of applying established rules and precedents to these up and coming technologies. In the articles that follow, we take a look at several different legal issues related to these new technologies.
Please click here to read the full issue.
How Many Calls Does it Take to Get to the Center of a TCPA Claim?
The answer is that it may depend on where your case is filed. Some courts have said one may be enough. But, according to two recent decisions from New Jersey, one is not enough (sometimes) and neither is three, at least under the factual scenarios alleged in those cases.
In Zemel v. CSC Holdings LLC, the District of New Jersey held that three text messages allegedly sent to the plaintiff using an autodialer without his prior express consent were insufficient to establish standing under the Telephone Consumer Protection Act (TCPA). There, defendant allegedly sent plaintiff an autodialed text message indicating that his mobile number was recently added to a particular service and inviting plaintiff to “Send STOP to opt out, HELP for info.” Plaintiff initially responded “Help” and received a response directing him to visit the defendant’s website for information. Plaintiff, thereafter, texted “Stop,” and received a response asking him to identify the type of messages – service alerts or appointment alerts – that he no longer wished to receive. Plaintiff alleged that these three text messages violated the TCPA and caused him to suffer “actual harm, including aggravation, nuisance, and invasion of privacy that necessarily accompanies the receipt of unsolicited text messages.”
Spinning Gold Into Straw: FTC Obtains a Court Order Requiring the Sale of Defendant’s Home
Some marketers move to Florida believing that the state’s constitutional Homestead Act protects their house from the Federal Trade Commission’s (FTC) grasp. A recent case shows that the FTC may not share that belief, and a federal judge recently agreed with the FTC.
Sam J. Goldman tried looking for gold, but it didn’t pan out. In 2011, the FTC charged Goldman and others with violating the FTC Act and the FTC’s Telemarketing Sales Rule in connection with selling precious metal investments. Specifically, the FTC alleged that the defendants promoted a bogus investment scheme that conned consumers into buying precious metals on credit without clearly disclosing significant costs and risks. Subsequently, at the FTC’s request, a federal judge ordered a stop to the defendants’ deceptive practices, froze the defendants’ assets, and appointed a receiver to oversee the business. In 2012, the defendants agreed to a $24 million settlement with the FTC to resolve the matter. The judgement was not suspended. So the FTC sought to collect on same.
Consumer Financial Services Practice Digest
A circuit split regarding the SEC’s administrative law judges, an internal CFPB playbook and memo on their examination process, and a recent field hearing on small business lending are at the forefront of the May 18 edition of Venable’s Consumer Financial Services Digest.
In this issue, we highlight the circuit split between the Tenth Circuit and the D.C. Circuit regarding the status and appointment of the SEC’s administrative law judges.
We take a look at the CFPB’s Examination Playbook, revealing how key decisions are made throughout the examination process.
We provide an analysis on the CFPB’s field hearing on small business lending, including its goal to create a small businesses financing project.
We discuss how to minimize your risks following the recent ransomware cyberattacks.
Continue reading to review the Digest. You will also find a list of upcoming industry events you may be interested in attending.
Ransomware Cyberattacks: How to Minimize Your Risks
On Friday, an unprecedented cyberattack affected a large number of Microsoft Windows-based computers through a type of malware known as ransomware. Although ransomware has been increasingly prevalent over the last few years, this particular version, called “WannaCry,” spread quickly and widely around the world. Many believe that the cyberattack will continue.
Ransomware is generally spread via email messages that contain infected attachments. When a user opens the attachment, a program runs that encrypts the user’s computer and demands a ransom be paid, typically in bitcoin, for a key that will unencrypt the files. In this case, the attackers are asking for between $300 and $600 to unlock the files.
Consumer Finance Enforcement Activity in a New Administration
Members of Venable’s Consumer Financial Services Practice, along with Paula-Rose Stark, a former attorney at the CFPB, now with Chain Bridge Partners, LLC, recently discussed the current and evolving state of federal and state consumer financial protection law and policy. They outlined what you and your company need to know about what’s ahead and shared their experiences from the front lines, offering insights and strategies to help companies navigate the evolving legal and political landscape.
Topics included:
- The impact of the current political climate on enforcement actions;
- Interacting, negotiating, and litigating with the CFPB;
- Tips for managing risk due to enforcement investigations and actions;
- Crisis management strategies;
- New administration: prospects for reform and leadership changes;
- Examination: lessons learned and preparing for the future; and
- CFPB, State Attorneys General, and other enforcement agency developments, and what’s next.
Even Former Judges Can Be Exposed to False Advertising Liability
You think judges are immune to lawsuits? Think again, especially if you are a retired judge seeking to resolve disputes in the private alternative dispute resolution (ADR) business.
A San Diego jury is being asked to decide whether former California Court of Appeal Justice Sheila Sonenshine and ADR powerhouse JAMS, Inc. are liable for false advertising based on representations touting Sonenshine’s experience on JAMS’s website.
Kevin Kinsella, the plaintiff in the case, hired JAMS and Sonenshine to serve as a privately compensated temporary judge in his divorce dispute. Kinsella is a venture capitalist who had a number of profitable business ventures prior to his marriage and claims that he agreed to his now ex-wife’s request to hire Sonenshine because he wanted a judge with expertise in dissolution actions and business matters. Kinsella says that he reviewed JAMS’s website to evaluate Sonenshine’s experience in business, including investment banking, financial markets, business ventures, and private equity funding, but learned too late that Sonenshine’s biography was misleading.
