All About Advertising Law

Regulatory & Litigation Developments for Advertisers and Marketers

Change Starts Within: FTC Process Reforms Address CID Practices

By Alexandra Megaris and Leonard Gordon on July 26, 2017

Back in February we blogged about Acting Chair Ohlhausen’s first keynote address in which she outlined her three consumer protection priorities. Consistent with those priorities, in April, the Federal Trade Commission (FTC) announced its agenda to eliminate wasteful, unnecessary regulations and processes. Within the FTC’s Bureau of Consumer Protection, the FTC’s goals included an effort to streamline demands for information in investigations and improve transparency in its investigations.

Last week, the FTC announced process reforms following up on the Ohlhausen agenda. In a press release, the FTC described Bureau of Consumer Protection (BCP) process reforms addressing the use of Civil Investigative Demands (CIDs)—which are administrative subpoenas used to collect information and documentation in investigations. These reforms, designed to minimize burden and increase transparency, include:

Continuity Plans Receive Renewed State Scrutiny

By Ellen Berge and Jeff Knowles on July 21, 2017

Risk-free trial Continuity, or “negative option,” marketing is a popular and convenient way for consumers to subscribe to products and/or services, receive new issues, receive product replenishment, or continue a service by making automatic payments at predetermined times. From skincare to dietary supplements, to groceries and periodicals, the popularity of continuity-based marketing with consumers is soaring. However, a proposed amendment to Section 17602 of the California Business and Professions Code that passed the California State Senate and is now winding its way through the state Assembly could leave marketers who use continuity-based offers feeling like they have recurring nightmares.

Senate Bill 313 (SB313) takes direct aim at continuity marketing that offers a free trial period or incentivizes consumers with free gifts when it results in an automatic enrollment of the consumer into a continuity program.

FTC’s Warning on Green Paint Claims Required a Second Coat

By Randy Shaheen and Amy Mudge on July 19, 2017

As we previously blogged, the FTC went after several paint companies (Benjamin Moore, ICP, YOLO and Imperial Paints) for advertising that their paints were VOC-free when that claim was true only before colors were added to the paint. Time and technology march on, and several manufacturers thought they had solved this problem, proclaiming boldly that their colored paint offers “zero emissions,” “zero VOCs” and “no harsh fumes” with lots of pictures of cute babies and/or pregnant women.

Golden Rules: The Rule 40 Deadline is Nearing the (Slalom) Gate; Advertisers Cannot Just (Figure) Skate Over the Regulation

By Po Yi and Jessica S. Borowick on July 18, 2017

Summer may just be heating up, but advertisers should already be thinking about and planning for the 2018 PyeongChang Winter Olympic Games because the “Rule 40” deadline is fast approaching. The opening ceremony of the PyeongChang Olympics isn’t until February 9th of next year, but advertisers that are not official Team USA sponsors but want to include Team USA members in campaigns that run during the PyeongChang Olympics must act by August 1, 2017.

As we discussed in our previous blog post titled Golden Rules: Diving Into Rule 40, Rule 40 restricts participants in the Olympic Games from allowing their “person, name, picture or sports performances to be used for advertising during the Olympic Games.” This restriction, which is contained in a bye-law to the International Olympic Committee (IOC) Charter, is administered by each country’s Olympic authority and was relaxed somewhat in 2015 to permit Olympic participants to be featured in so-called “generic” advertising during the Olympic Games.

Arla’s Dairy Campaign Goes Sour After Court Enjoins Ad Claims Attacking rbST

By Randy Miller and Kevin Weigand on July 17, 2017

Eighty-eight percent of consumers are willing to pay more for healthier foods. Manufacturers have responded by focusing marketing campaigns on the health and safety benefits of their products, often at the expense of their competitors. But when Arla Foods portrayed a seven-year old girl defining a common hormone used to increase milk production in cows as “weird stuff” akin to a “six-eyed monster” with “razor sharp teeth” and electric fur, a Wisconsin federal judge decided the ad went too far and would likely mislead consumers. Despite Arla’s reliance on a small disclaimer and “scientific debate” over the health and safety of dairy products made from cows treated with rbST, the Court enjoined Arla’s campaign, finding it was likely to mislead consumers into thinking rbST was unsafe, unhealthy, weird, and “altogether something you should not feel good about feeding your family.”

On April 25, 2017 Arla launched a $30 million advertising campaign targeting “ingredient savvy” U.S. consumers seeking more information about the products they are eating and feeing their families. The centerpiece of the campaign is a 30-second commercial titled, “Arla Cheese Asked Kids: What is rbST?”

FTC Updates COPPA Guidance for IoT and New Consent Options

By Julia Kernochan Tama and Jared Bomberg on July 14, 2017

On June 21, 2017, the Federal Trade Commission (FTC) updated one of its Children’s Online Privacy Protection Act (COPPA) compliance guides for businesses. Known as the “Six-Step Compliance Plan,” this document provides a step-by-step road map for determining if a company is covered by COPPA and what to do to comply.

COPPA applies to operators of websites and online services that collect “personal information” from children under 13 years of age, where the site or service is directed to children or has actual knowledge that it is collecting personal information from a child. COPPA’s coverage extends to a variety of online services, such as mobile apps, internet-enabled gaming platforms, and – in some cases – companies that collect personal information directly from users of another website or online service (such as ad networks and plug-ins).

CFPB Issues Final “Arbitration Agreements Rule:” New CFPB Rule Bans Class Action Bars in Arbitration Clauses

By Allyson Baker, Jonathan Pompan, Andrew Hernacki and Jennifer Talbert on July 13, 2017

On Monday, July 10, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a final rule – the “Arbitration Agreements Rule” – regulating arbitration agreements in contracts for certain core consumer financial products and services. Venable has been monitoring the development of this rule, and our past coverage can be seen in a webinar and a blog post.

In prepared remarks, CFPB Director Richard Cordray explained the Bureau’s reasons for ultimately promulgating this regulation, and he stated that such clauses “force consumers either to give up or to go it alone – usually over relatively small amounts that may not be worth pursuing on one’s own. Including these clauses in contracts allows companies to sidestep the judicial system, avoid big refunds, and continue to pursue profitable practices that may violate the law and harm large numbers of consumers.”

Consumer Financial Services Practice Digest

By Andrew Arculin, Allyson Baker, George Kostolampros, Jonathan Pompan, Meredith Boylan, Alexandra Megaris, Kara Ward, Erin Zacuto Cass, Peter Frechette and Evan Minsberg on July 7, 2017

In this issue we discuss that under the cloud of speculation hanging over the CFPB they continue to launch supervisory examinations and enforcement investigations, and also held a public event on June 22 discussing the Public Student Loan Forgiveness Program.

Also in this issue is commentary around a top state regulator issued a reminder to obtain prior approval of acquisitions or changes in control, the division between the courts on the ALJ Appointments issue and also how new bills would require disclosure of beneficial owners.

Continue reading, to review the Digest. You will also find a list of upcoming industry events you may be interested in attending.

If a Call Is Made From the Woods and Nobody’s Around To Receive it, Is it a TCPA Violation?: Ringless Voicemail FCC Petition Post-Script

By Daniel S. Blynn and Christopher Boone on June 28, 2017

Am I crazy? Did my phone ring? These questions may have crossed your mind during that moment when you look down at the top left corner of your cell phone and see the universal icon for new voicemail. Many marketers are now using or considering using ringless voicemail technology, or Direct-to-Voicemail cell messaging, to leave messages directly on a cell phone’s voicemail server. In simplistic terms, ringless voicemail technology allows for voice messages to be deposited directly into a consumer’s cell phone voicemail box, without any ringing on the cell phone and without being carried over the cellular network.

We recently blogged about a March 2017 petition filed at the Federal Communications Commission (FCC) by All About the Messaging, LLC (AATM), which sought a pronouncement that the deployment of ringless voicemail technology does not constitute a “call” under the Telephone Consumer Protection Act (TCPA). AATM’s petition turned out to be a lightning rod for supporting and opposition comments.

“Tie Me Up! Tie Me Down!”: Second Circuit Rules That Parties May Contractually Agree that TCPA Consent is Not Revocable

By Daniel S. Blynn on June 26, 2017

Can a seller contractually prohibit a customer from revoking his or her consent to receive autodialed and/or pre-recorded message calls under the Telephone Consumer Protection Act (TCPA)? According to the U.S. Court of Appeals for the Second Circuit, the answer is “yes.” On June 22, 2017, in Reyes v. Lincoln Automotive Financial Services, No. 16-2104 (2d Cir. June 22, 2017), a first-of-its-kind decision, a three-judge panel of the U.S. Court of Appeals for the Second Circuit unanimously affirmed a district court’s award of summary judgment to defendant Lincoln Automotive Financial Services on the plaintiff’s TCPA claim, which alleged that Lincoln violated the Act by placing autodialed and pre-recorded message calls to the plaintiff’s cell phone without appropriate consent.

The underlying facts were relatively straightforward: in 2012, the plaintiff leased a new car; Lincoln financed the lease. The lease contained a provision, to which the plaintiff assented, stating:

You [plaintiff] also expressly consent and agree [that Lincoln] may use written, electronic or verbal means to contact you. This consent includes, but is not limited to, contact by manual calling methods, prerecorded or artificial voice messages, text messages . . . and/or automatic telephone dialing systems. You agree that [Lincoln] may use . . . any telephone number you provide, now or in the future, including a number for a cellular phone or other wireless device, regardless of whether you incur charges as a result.