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

Federal Trade Commission FTC SealDid you get a letter in March with the Federal Trade Commission (FTC) seal inquiring about your use of material connection disclosures in influencer campaigns and politely reminding you about the Endorsement Guides? If so, you are in good company as many other brand companies have received such letters as part of the FTC’s most recent sweep effort. If not, don’t get too comfortable. We believe this is the beginning not the end. After successfully negotiating a closing letter in the Machinima case for a party based on the presence of an effective compliance program, we have been asked many times; “What do I need to do to have a viable compliance program if the FTC comes knocking?” We have consistently told companies that the goalpost is moving as the FTC expects companies to be more knowledgeable and rigorous as time goes on and awareness builds. But the basic requirements for a brand company engaging influencers will always include training influencers and agents; monitoring for compliance; and enforcing consequences when you become aware of noncompliance. And it takes a village — every actor in the influencer stream has responsibility from the brand to the digital media, PR or influencer agency to the influencers themselves.
Continue Reading Operation Full Disclosure Part 2: FTC Compliance Sweep—Influencing the Use of Influencers

football refereeIt’s our favorite time of year, when we get to see the best, boldest, and bravest duke it out. Oh sure, there’s the football, but we’re talking about the ads! It’s one of the busiest nights of the year for ad lawyers, enjoying ads we worked on come to life (and seeing the disclaimers we lovingly and painstakingly crafted) and responding in real time to “can we tweet this?” We blog every year about our favorites (see here and here and here and here) and trends. We were happy with a game in overtime, as it meant – that’s right – MORE ADS! And we understand social media was up over last year but did not exceed 2015’s record numbers. But still, 27.6M tweets, 240M Facebook interactions, and 150M Instagram interactions is pretty big stuff.
Continue Reading Annual Big Game Ad Review

turf toeWhen I think of Astroturf this time of year I think of football. That probably isn’t true for the New York AG’s office, which has continued its assault on the posting of fake reviews, also known as “astroturfing.” Earlier this month the NY AG announced two more enforcement actions against an urgent medical care facility and a car service. The two actions and the difference in their business models demonstrate that this issue is not going away and that any business type that uses online reviews to help market its product can be at risk. See these prior posts on the AG’s efforts: AG rips up Astroturf; and NY AG targets deceptive endorsements.

According to the AG, the urgent care provider Medrite paid Internet advertising teams thousands of dollars to post favorable reviews on Yelp, CitySearch, Yahoo Local Page, and Google Plus. Medrite also hired freelancers through Craigslist and other sources to post favorable reviews. Medrite did not require that the reviewers actually visit its clinics or that the reviewers disclose that the reviewers were being compensated for their reviews. Both are big no nos in using reviews to market your product.


Continue Reading NY AG Keeps up the Pressure on Astroturfing

Join Venable on October 27 for a half-day workshop in the firm’s Los Angeles office designed to make sense of recent enforcement actions involving social, influencer, and native campaigns. Venable’s Amy Ralph Mudge, Randy Shaheen, Melissa Steinman, and Po Yi will share best practices that in-house counsel and compliance personnel at brands,