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Venable partners Len Gordon and Alexandra Megaris will present “What You Need to Know About FTC’s Proposed Changes to Its Endorsement Guides.” The Endorsement Guides, first issued in 1980 and last amended in 2009, reflect the Commission’s interpretation of how the FTC

The Federal Trade Commission has requested public input about potential updates to its “Dot.Com Disclosures.” The guidance document was last updated nearly a decade ago and has not addressed much of the new technology that has emerged and the evolution in online advertising. As a result, the agency’s call for comments will allow those interested to provide feedback and suggestions to modernize the guides. Comments are due by August 2, 2022.

The FTC has asked for industry stakeholders’ input on many issues, including:

Continue Reading FTC Asks Online Advertisers to Weigh in on Dark Patterns, Calls for Comment on Its .Com Disclosures Guidance

Last week, the United States Department of Justice, acting on behalf of the Federal Trade Commission, took action against Twitter, Inc. for allegedly using private account security data to sell targeted advertisements without informing the platform’s users. To settle the matter, Twitter agreed to a stipulated order requiring the social media giant to pay $150 million in civil penalties, which the court entered a day after the complaint was filed.

Understanding the recent settlement warrants a quick history lesson on Twitter’s dealings with the FTC. In 2010, the FTC filed an administrative complaint against Twitter, asserting the company misrepresented the security measures it had in place to protect private user information from unauthorized access and to honor users’ privacy choices. This ultimately led to a 2011 FTC Order that barred Twitter from misrepresenting the extent to which it “maintains and protects security, privacy, confidentiality, or integrity of any nonpublic consumer information.”

Continue Reading Twitter Will Pay $150 Million to Settle Charges That It Misrepresented Its Privacy and Security Practices

“Free” must mean free?

Last week, the attorneys general for all 50 states and the District of Columbia announced a settlement with Intuit, Inc., the owner of TurboTax, which will require the company to hand over $141 million to consumers as restitution for allegedly tricking consumers into paying for tax-filing services when they qualified for free tax-filing services.

Recently, we wrote about the Federal Trade Commission’s legal action against Intuit for its advertisements regarding “free” tax-filing services. In that action, the FTC sought to definitively resolve that very question. As part of last week’s settlement agreement, Intuit will cease its advertising campaign promoting its “free, free, free” services in addition to paying the hefty restitution sum. The state settlement essentially ended the FTC action as well.

While the states’ investigation overlapped with the FTC’s action concerning Intuit’s alleged bait-and-switch advertising (i.e., representing the service is “free” but later requiring an upgrade to a paid version), their investigation also had another focus: “dark patterns,” which refers to a digital design feature that is intended to subtly influence a consumer’s online decisions.

Continue Reading Intuit Will Pay $141 Million in State Attorneys General Settlement Over Deceptive TurboTax Advertising

A lawsuit filed by the CFPB last week against a national credit reporting agency provides some insight into the types of website features and designs that regulators like the Consumer Financial Protection Bureau and Federal Trade Commission will target. As we covered previously, digital dark patterns—or website design, features, and interfaces used to allegedly deceive, steer, and manipulate users—are a priority for both rulemaking and enforcement actions by the FTC. Although the focus has been on website features that “trick or trap” consumers into subscriptions, the potential for broad and arbitrary application of this concept is worrisome. What is the line between a website that is acceptably optimized for conversion and one that is illegally steering users to make purchases?

In the highly detailed complaint, the CFPB alleged, among other things, that the net impression of various advertising messages, combined with the design of the webpage where users landed when clicking on the ads, obscured the nature of the offer (a month-to-month subscription of a credit-monitoring service and credit score), the status of a user’s enrollment in the service, and the purpose of collecting a user’s payment information.

More specifically, the complaint described how call-to-action buttons, email subject lines, font color and size, text placement, and website flow were employed to confuse consumers who were seeking information about or copies of their annual free credit report and steer them instead into unwittingly purchasing a subscription for credit monitoring.

Continue Reading Latest CFPB Lawsuit Sheds Light on Digital Dark Patterns

Last month, love was not all lost for the owner of Tinder and OKCupid when a Texas federal district court in FTC v. Match Group, Inc. granted in part the online dating service provider’s motion to dismiss. Specifically, the court agreed with Match that the FTC could not seek equitable monetary relief under Section 13(b) of the FTC Act and barred two claims based on Match’s immunity under the Communications Decency Act (CDA).

To set the scene, here is a recap of the legal landscape. In recent history, the FTC under Section 13(b) brought “proper cases” directly in federal courts without needing to conduct administrative proceedings. The agency also pursued permanent injunctions and equitable monetary relief.

In the past few years, courts have become increasingly less enamored with the FTC’s interpretation of its authority under Section 13(b). The first blow was FTC v. Shire Viropharma, Inc., in which the Third Circuit concluded that under Section 13(b), the FTC cannot base claims on “long-past conduct” alone, but must affirmatively plead facts that a defendant “is violating” or “is about to violate” the law, i.e., that there is “existing or impending conduct.”

Continue Reading FTC v. Match Group, Inc.: Court Gets Cold Feet on the Standard Set Forth in Shire

It might be hard for some to imagine, but the Federal Trade Commission (FTC) is feeling groovy. This month, the agency released two guidance documents that track best practices to prevent consumers from being misled when marketers solicit and pay for online reviews and when review platforms feature online customer reviews.

The new documents are like two sides of an old-school vinyl album. Side A is for online retailers and marketers, while Side B is for review platforms (i.e., consumer review websites). The lyrics might be slightly different, but the tunes make for a pretty good mash-up.

Continue Reading Federal Trade Commission Releases Online Customer Review Guidance

Background

Advertisers, e-commerce websites, affiliate networks, and publishers each play a large role in the development of the Internet. One reason they have been able to do so is Section 230 of the Communications Decency Act of 1996 (CDA), which immunizes online interactive services from liability arising from third-party content on their platforms. The CDA does so in twenty-six words:

“No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

Through this immunity, the CDA allows online services to host the speech of others, without assuming responsibility for what those users may say or do. No one disputes the premise that Section 230 fosters free expression and the creation of vibrant marketplaces for advertisers and merchants to efficiently and effectively reach consumers. Recently, however, confusion and controversy have arisen as to exactly who and what Section 230 does and does not protect, leading to divisions among court decisions and to calls for legislative “overhaul.” A quick review for merchants, advertisers, agencies, and affiliate networks seems desirable.

Continue Reading An Advertiser’s Guide to Section 230 of the Communications Decency Act

On April 29, 2021, the Federal Trade Commission (“FTC”) held a virtual workshop, Bringing Dark Patterns to Light, which discussed the use of “dark patterns,” how they impact consumers, and ways the FTC can combat these methods.

What are dark patterns?

The FTC has defined “dark patterns” as website design features or interfaces which are used to deceive, steer, and manipulate users into behavior that is profitable for the website owner but detrimental to consumers. The panelists agreed that while the term “dark patterns” is useful as a general characterization, it does not adequately convey the term’s meaning from a legal standpoint. According to the panelists, dark patterns are also difficult to identify because many are intentionally designed to be covert.

Although many of the panelists used terms like “manipulative tactics” or “deceptive practices” to describe dark patterns, one of the most comprehensive definitions came from Arunesh Mathur, a Postdoctoral Research Fellow at Princeton University, who described six attributes that make up dark patterns:

Continue Reading FTC Holds Workshop on “Dark Patterns” and Seeks Public Comments

With the rise of social distancing and stay-at-home orders, the demand for online content has increased exponentially. Given this new reality, online content creators must take steps to ensure that their online creations don’t land them in legal hot water. One of the most prevalent cross-industry issues is music licensing. Music is everywhere in online content and often plays an integral part in the overall experience. From video game players streaming music as they show off their skills on the largest video platforms to fitness instructors using popular music to pump up their workout classes, individuals and companies must ensure that they don’t run afoul of the copyright laws when they incorporate music into their online content.

Copyright owners are granted an exclusive bundle of rights in relation to their copyrighted works, including the exclusive rights to reproduce, perform publicly, and distribute their copyrighted works.1 The copyright in music is broken down into two separate rights—one for the music’s composition (i.e., music and lyrics) and one for the actual sound recording (i.e., a fixed performance). Because of these dual rights, using copyrighted music may require two different licenses.

Whenever you release a video with a song that someone else wrote and composed, you need a synchronization (sync) license. For example, if you release a video of your band playing an Incubus song, you need a sync license to use the music and lyrics of that song, even if it’s a small portion of the song. You do not, however, need a sync license for songs that you wrote and composed yourself or songs in the public domain, so you’re free to use the song “Danny Boy” in your next YouTube video. But if you use a copyrighted sound recording in your video, you will need a sync license for the composition and a master use license for the original recording. Again, this applies even if you’re using a small portion of the original sound recording. Master use licenses are negotiated with a song’s owner—typically, a record label or the recording artist. Sync licenses and master use licenses are separate and distinct from public performance and personal entertainment licenses, which are not covered in this article. For a broader look at music licensing, please read this companion article. The following examples and best practices illustrate and address the challenges associated with using music in online content.

Continue Reading Legal Implications of Syncing Copyrighted Music with Other Content