Spring 2021 Edition: Not a Symposium, but a Virtual Ad Law CLE Bonanza

In a recent series of webinars, members of Venable’s advertising law practice, Reed Freeman, Len Gordon, and Shahin Rothermel, along with some leading industry figures, explored and addressed key issues of concern to companies in the advertising space.

Our attorneys along with Panelists Mary Engle and Laura Brett from BBB National Programs, which administers the National Advertising Division (NAD), the investigative unit of the industry’s system of self-regulation; Lou Mastria from the Digital Advertising Alliance (DAA); and Daniel Kaufman from the Federal Trade Commission (FTC) also answered some audience questions. Below are some highlights from each session.

Session #1: NAD at 50 Years: Regulation and Self-Regulation Over the Past 50 Years

Q: To what extent does the NAD support the work of the FTC in enforcing self-regulation?

A: There has always been a strong relationship between the FTC and the NAD in supporting self-regulation. The FTC has limited resources, and it considers the NAD to be another cop on the street. There are always going to be cases that the FTC will want to pursue, regardless—for example, when it’s important to get money back to consumers. But anytime the NAD can define advertising as misleading and cause an advertiser to modify or discontinue the advertising, it frees up resources for the FTC. To show its support, the FTC prioritizes referrals from the NAD (as opposed to letters from competitors sent directly to the FTC). Similarly, after cases are referred to the FTC, it encourages the advertiser to participate in the NAD process and comply with the NAD’s decisions. So broadly speaking, the FTC really believes in the NAD’s role in encouraging self-regulation and in promoting truthful and non-misleading advertising.

Q: In terms of advertising substantiation, what types of cases does the NAD typically handle and what can be learned from their decisions?

A: Very often, the kinds of claims that come before the NAD are comparative claims, where a company declares its product is preferred over a competitor’s. Courts reviewing false advertising cases also often address these issues. Occasionally, the FTC does too, but anyone looking for guidance on claims substantiation should refer to NAD decisions. Aside from consumer preference claims, the NAD also looks at comparative performance claims, and taste and sensory preference claims. In such cases where industry standards are available, the NAD will rely on those to inform its decision. Another area of focus for the NAD is disparagement claims. It can be helpful for advertisers to look at NAD guidance on how to carefully craft a comparative claim so that a company doesn’t overstate the benefits of its products and avoids falsely disparaging a competitor.

Session #2: What Advertisers Need to Know About Privacy

Q: How does the Digital Advertising Alliance (DAA) program extend beyond cookies and identifiers?

A: As industry moved to adopt new identifiers, the DAA has moved with industry. So, it was originally assumed that the DAA program would apply to cookies only, but then a web test opt-out tool was made available in 2017 that could send an opt-out request for both cookie-based identifiers and probabilistic identifiers. The DAA also made an app available in 2014 that allowed consumers to opt out of identifiers in the mobile space, so IDFAs and GAIDs were available then to consumers. And, as we speak, the DAA is looking at the future types of identifiers that marketers are going to need to use inside their systems for efficiency, effectiveness, attribution, targeting, and so on, which are going to be important for their growth. The Alliance is also examining how it can afford consumers a centralized way to make choices around those identifiers.

Q: Is there any indication that nonprofits will be exempted from legislation?

A: Currently, the FTC act exempts nonprofits from the FTC’s jurisdiction. The FTC, in its call for legislation, has indicated that it would like to include nonprofits within its authority. So right now, nonprofits are exempted, but the FTC wants that to change.

Q: What is the status under the California Consumer Privacy Act (CCPA) of online behavioral tracking and the sale of (personal?) information to Adtech networks, particularly as it relates to how privacy policies are drafted?

A: The CCPA defines “sale” as essentially providing information for any form of valuable consideration. I take that to mean “providing personal information (as defined) to anyone other than a ‘service provider’ (as defined) for anything that involves a business purpose.” The status under the CCPA of online behavioral tracking and the sale of information to AdTech networks is not quite settled. The California attorney general has not brought any cases on the issue yet. Many companies in the industry believe that the transfer of information in the chain—that is, the AdTech chain—does, in fact, involve the “sale” of “personal information,” and thus requires a “Do Not Sell My Personal information” link. But it’s not a settled question. The DAA has made some resources available on its site for understanding and managing information transfer inside the AdTech space, which can be found at https://digitaladvertisingalliance.org/ccparesources.

The other issue here is that the California Privacy Rights Act (CPRA) will replace the CCPA in 2023, and it makes clear that the law governing sales doesn’t just apply to “sales” of “personal information” for monetary or other viable consideration, but that any kind of “sharing” of “personal information” to anyone other than a “service provider” will also require an opt-out link like the one required by the CCPA.

Session #3: FTC Enforcement Priorities in the New Administration

Q: What should companies keep top of mind when negotiating with the FTC about compliance?

A: One thing that’s important when meeting with the FTC is to always strive for credibility. Companies often have several arguments they want to raise, but they should focus on one that is both specific and strong. No one wants to read a fifty-page white paper, so companies should keep their arguments short and focused: the FTC will always want to hear the best argument. Companies should also keep in mind during negotiations with FTC staff that the staff have already worked out their strategies in advance and have worked through those strategies with the team. So, if a company feels that the FTC representative is taking a position that is overly burdensome, the company’s best option is to explain in the most concrete terms possible why the position is overly burdensome. The FTC will want to understand how and why a specific provision is going to impact the company’s bottom line or how it’s going to be detrimental to the company’s ability to succeed. So, when raising objections, the company should always focus on the specifics of the issue.

Click here to watch the full series of webinars and here to learn more about our Advertising and Marketing practice.