New York CityWith the end of summer and the start of school also comes the fall advertising law conference season, starting with the annual NAD conference. We wanted to share some highlights of the two-day event from last week.

FTC Bureau Director Jessica Rich gave the keynote. While the FTC will not discuss pending cases, when discussing priorities, the Bureau Director is obviously aware of what is in the pipeline and where the staff is investigating and considering new cases, so we always give these remarks close attention. Jessica said when deciding what cases to bring, “we take our cues from the marketplace and target our enforcement on practices that limit consumer choice and do consumers harm.” She said the marketplace issues are currently closely tied to technology – how people shop for goods and engage with friends and with the products they buy. She flagged the establishment of the Office of Technology Research and Investigation (OTech) and credited it with helping the Bureau of Consumer Protection get on top of tech issues including training staff about new technology, hosting visiting scholars, engaging with the tech community and planning workshops. She said “we want to be the consumer protection agency for tech issues.” As far as current advertising enforcement priorities, Jessica noted 3 trends in Advertising Practices, in addition to the “steady diet” of health and weight loss claims and problems of disclosures. These are health apps, health claims targeting older consumers and advertising in new media. In more detail:

(1) Health apps and devices: She noted consumers are taking advantage of many programs to monitor health and fitness and social networks to share health information. While many innovations are convenient and even life-saving, there is also an unfortunate rise in false claims to cure illness and a lack of substantiation. The FTC has brought cases involving apps that purport to diagnose cancer and help train the brain and reduce cognitive impairment. Unsubstantiated health claims associated with apps “raise serious concerns and are a growing part of the [Ad Practices] program.”

(2) Targeting older consumers: “Turning back the clocks is a trend we see targeting older consumers. This is a large segment as baby boomers age.” Claims again promising to stave off memory loss are a big concern, but we are also seeing unsupported promises of arthritis cures, menopause fixes, grey hair reversal, and heart health. She noted that changing demographics affect the type of fraud the FTC sees as the population gets older and more diverse. She said that the FTC is broadly looking at the marketplace experience of different communities, as well as working with local enforcers and community groups. The agency also released a report to Congress and is hosting a workshop on changing demographics in December.

(3) The effect of new media on how consumers receive ads: In addition to the fact that screens continue to get smaller, there are new advertisers in the form of influencers. Identifying the source of information “counts more than ever before” as” native ads and deceptive endorsements are big concerns.” She said while there is lots of guidance for advertisers, it is important to go back to first principles and remember that “consumers have rights to know when what looks like objective information is in an ad.” She noted there will be more cases this year involving influencers and undisclosed endorsements. She noted it is challenging in space constrained media to provide clear and conspicuous disclosure, but she encouraged advertisers to experiment with icons and to test the sufficiency of disclosures with consumer research. On a related note, she expressed her concern with any use of gag clauses or other mechanisms to restrict or influence negative online reviews.

The FTC “remains focused on litigation and being prepared to litigate.” Jessica explained that for the FTC this means “there will be some losses but also gains. Our willingness to litigate helps our ability to facilitate meaningful settlement.”

Jessica was very complimentary of NAD and said she cites it as the model of self-regulation. She encouraged NAD to continue a robust program of monitoring cases, in addition to resolving competitive challenges. Mary Engle, the Director of the Advertising Practices Division detailed the FTC’s work in supporting NAD. She explained when there is a referral from NAD that all referrals are logged and assigned to an advertising practices staff attorney. “We review every referral. If they do not participate, we encourage them to do so or encourage them to abide by the decision, so we do engage in jaw boning. We will decide to open a case based on enforcement priorities and the facts. The referral alone is not determinative.” She gave some statistics on NAD referrals. Between 1/11-8/16, there have been 50 total referrals from NAD to the FTC. Of these cases: 11 matters were returned to NAD. FTC brought one enforcement action, in which the FTC won summary judgment in court, got full consumer redress and subsequently launched an investigation of an entire industry. In 11 cases, the FTC decided to take no action. Ten matters were resolved short of investigation. Four matters were formally investigated but subsequently closed. Four matters referred were already the subject of pending investigations. One matter was related to an existing FTC investigation and so the FTC decided not to expend resources. Finally, seven matters are currently under review.