Since updating its Endorsement Guides in 2015 to keep pace with the meteoric rise of social media and influencers in marketing, the FTC has placed a significant emphasis on the need to disclose material connections between advertisers and endorsers. Through its Guides, informal business guidance, blog posts, warning letters, and multiple enforcement

Astroturf was again in the news last week, but not because the big game whose name we can’t mention was played on synthetic turf. Rather, last week, the office of the NY Attorney General (“AG”) announced it reached a precedent-setting settlement with artificial engagement company Devumi LLC and related companies (“Devumi”) over the selling of

In the iconic words of DJ Khaled: “Another one.” That’s right, folks. Another round of celebrities have fallen on the wrong side of the federal government’s enforcement of its advertising disclosure rules. Recently, the SEC announced that it settled charges against Floyd Mayweather (professional boxer) and DJ Khaled (entertainer and music producer) for failing to tell their social media followers that they received money for promoting investments in Initial Coin Offerings (“ICOs”). This case is especially noteworthy, considering that this is the first time the SEC brought an action against a paid celebrity endorser involving ICOs.

In Mayweather’s case, he received a $300,000 payment for ICO tweets like this one: “starts in a few hours. Get yours before they sell out, I got mine…”

Likewise, DJ Khaled received a $50,000 payment for this tweet: “I just received my titanium centra debit card. The Centra Card & Centra Wallet app is the ultimate winner in Cryptocurrency debit cards powered by CTR tokens! Use your bitcoins, ethereum, and more cryptocurrencies in real time across the globe. This is a Game changer here. Get your CTR tokens now!”

Continue Reading All I Do is Win, Win, Win?: SEC Settles Charges with Floyd Mayweather and DJ Khaled

Our Canadian partner in the Global Advertising Lawyers Alliance (GALA) wrote this post about influencer disclosure practices in Canada that we wanted to share with you.

On March 28, 2018, Ad Standards introduced new Disclosure Guidelines (the “Guidelines”). Developed with the cooperation of influencers and advertisers, the Guidelines are intended to provide suggested best practices for when, and how, to disclose any material connection between an advertiser or brand and the influencer.

The Guidelines inform an Interpretation Guideline under the Canadian Code of Advertising Standards (the “Code”), issued in October 2016, requiring that any “material connection” between an influencer and a brand be “clearly and prominently disclosed in close proximity to the representation about the product or service.” The Interpretation Guideline says what to do, but suggested looking to other sources including the FTC’s Guide to Testimonials & Endorsements for how to do it. The new Guidelines provide a Canadian resource, with illustrative examples of “dos” and “don’ts” to assist industry in complying with the Code.

Continue Reading Guest Blog: Ad Standards Introduces New Influencer Disclosure Guidelines

virtual currencyThe Senate Committee on Banking, Housing, and Urban Affairs held a hearing on Tuesday on virtual currencies and the role of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in overseeing the virtual currency industry. Witnesses included SEC Chairman Jay Clayton and CFTC Chairman Christopher Giancarlo.

A key takeaway of the hearing was a concern among regulators and Committee members of opportunistic fraud taking place amid the hype around virtual currencies, also commonly known as cryptocurrencies.

Among these concerns were those involving celebrity endorsements of token sales in Initial Coin Offerings (ICOs). In some cases these sales may be fraudulent. CFTC Chairman Giancarlo noted one example where his agency took action against a company that solicited customers for a virtual currency known as My Big Coin. Mr. Giancarlo stated that within the agency that coin came to be known as “My Big Con,” as the company used the funds to purchase personal luxury items rather than using the funds for their purported purposes.

Continue Reading Senate Banking Committee Holds Hearing on Virtual Currencies – Warns of Celebrity Endorsements

Seal of the Federal Trade CommissionA change in administration inevitably raises questions regarding the priorities and direction of federal agencies. To help set the record straight, Lesley Fair, a Senior Attorney with the Federal Trade Commission’s (FTC or Commission), Bureau of Consumer Protection, reminded us during last week’s NAD Annual Conference that the FTC has kept quite busy over the last year or so, with numerous enforcement cases arising out of the FTC’s Bureau of Consumer Protection. Ms. Fair also shared her views regarding the FTC’s key enforcement priorities that affect advertisers and marketers. Perhaps unsurprisingly, these priority areas generally relate to (i) advertising substantiation; (ii) use of social media, endorsements, and consumer reviews; (iii) matters involving privacy and data security; and (iv) allegations of financial deception. While such topics warrant serious consideration and attention for advertisers, one would be remiss in failing to mention that, in typical Ms. Fair fashion, she discussed these issues in a manner that not only kept the audience engaged, but largely entertained.

With respect to advertising substantiation, Ms. Fair took the opportunity to remind the audience that despite our obsession with smartphones—and our assumption that they can do almost anything except fold our laundry—the FTC will carefully scrutinize advertisers’ claims about their products, including health apps for smartphones, to ensure they are adequately substantiated. As an example, Ms. Fair mentioned the Commission’s January 2017 Settlement with Breathometer, Inc. and Charles Michael Yim in which the FTC alleged that marketers of two app-supported smartphone accessories, marketed to accurately measure consumers’ blood alcohol content (BAC), failed to adequately test the accuracy of the app and failed to notify customers that the app regularly understated BAC levels. In another smartphone settlement from December 2016, FTC v. Aura Labs, Inc. and Ryan Archdeacon, the FTC alleged that the marketer’s blood pressure app lacked reliable testing, and that the app’s readings were significantly less accurate than those taken with a traditional blood pressure cuff. In both of these cases, Ms. Fair suggested that FTC seemed particularly concerned due to potential safety issues arising from the lack of proper testing, especially where an intoxicated driver might get behind a wheel, or where a consumer may think his/her blood pressure does not present a health risk. These cases serve as a reminder that the FTC will evaluate substantiation with an especially critical eye where advertisers make health and safety-related claims.

Continue Reading What’s the Federal Trade Commission Been Up to Recently?

boy drinking from water bottleGatorade recently learned two timeless lessons the hard way from the State of California.  First, never mess with water.  Second, advertising claims are everywhere, including in what some might consider to be just fun and games.  In exchange for these lessons, Gatorade paid the State of California $300,000 and agreed to injunctive relief.

So what attracted California’s attention?  Gatorade in conjunction with Usain Bolt created a cellphone game called “Bolt” in which players help Bolt pick up coins.  Touching a Gatorade icon made Bolt run faster, while touching a water droplet slowed the world’s fastest human down (and decreased the “fuel meter”).  In case the point was too subtle, the game’s tutorial also instructed users to “keep your performance level high by avoiding water.”  California alleged that the game was downloaded 2.3 million times.

Continue Reading California to Gatorade – Don’t Mess with Water

Social Media AppsBig day at the FTC for influencer announcements! The FTC announced its first ever settlement with social media influencers. At the same time they followed up with a second round of warning letters to a large group of influencers. Finally the FTC updated its FAQs on endorsements with some guidance, including its current views about what phrases are and are not clear in disclosing a material connection. Let’s debrief:

Unlike the unfortunate settling social media influencers, the FTC in its consent order against the online gaming community influencers, Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell, is loud and clear about its stance regarding marketing and promoting on social media – clearly disclose any business ties or financial incentives. In other words, a social media influencer must disclose all material connections, if any, to the product or service he or she endorses.

Continue Reading The FTC’s Influence Reaches Influencers: FTC Settles First Ever Complaint Against Social Media Influencers

Olympic Bobsled TeamSummer 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.

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

hashtagWe previously blogged a few weeks ago about the FTC’s sweep of influencers and warning letters being sent regarding whether material connections are disclosed, and if so, if they are done clearly and conspicuously. The FTC has issued a press release with more detail. We now know there were over 9‎0 such letters sent. For