NEWSLETTER: Advertising, Marketing & Promotions, Spring 2013
Dear Clients, Colleagues and Friends,
We are pleased to send you Olshan's Advertising, Marketing and Promotions Group's Spring 2013 Newsletter. Since our last edition, there have been a number of important developments and activities. We have summarized recent items that we believe are of particular importance. As always, if you would like to discuss any of these developments, have concerns about their impact on your business or marketing campaign, or have any questions about the legal aspects of advertising and promotional marketing, please feel free to contact us.
FTC SEEKS TO NARROW TELEMARKETING SALES RULE
The FTC has proposed new amendments to the Telemarketing Sales Rule ("TSR"). Importantly, the proposed changes would bar non-traditional payment mechanisms such as remotely created checks. The proposed rules also clarify other provisions of the TSR. The FTC issued a Notice of Proposed Rulemaking seeking comments on several proposed amendments.
FTC UPDATES DOT COM DISCLOSURES
The FTC released an update of its guidance known as Dot Com Disclosures guide, which was first released in 2000. The new guide, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, is intended to address the current online and mobile advertising environment. The update continues to emphasize that consumer protection laws apply equally to marketers across all mediums, whether delivered on a desktop computer, a mobile device, or more traditional media such as television, radio, or print.
NEW FTC MOBILE PRIVACY REPORT: TRUST THROUGH TRANSPARENCY
The FTC released its privacy-focused report, Mobile Privacy Disclosures: Building Trust Through Transparency. In the report, which arose from the FTC's May 2012 mobile privacy summit and other efforts and suggestions, the FTC offers guidance to the many types of organizations that contribute to how mobile devices collect and use personal information: the operating system providers/platforms (Apple, Google, Microsoft, Blackberry, Amazon and others), app developers, the advertising networks, analytic firms and other third parties whose products are integrated with mobile devices, and the broader trade and research communities.
PATH PAYS $800,000 TO FTC FOR ALLEGED PRIVACY VIOLATIONS
On the same day that the FTC released its new report on mobile privacy, the FTC announced an online mobile privacy enforcement action, an $800,000 settlement with the operator of the Path social networking app. In its complaint, the FTC charged that the user interface in Path's iOS app was misleading and provided consumers no meaningful choice regarding the collection of their personal information.
THE FTC ANNOUNCES ITS ANNUAL TOP 10 COMPLAINT CATEGORIES LIST
Last year, the FTC received more complaints than ever before - in excess of 2,000,000. The categories in the 2012 Annual Report are important as they typically portend future FTC scrutiny and enforcement in such areas.
|
Number |
Percent |
|
|
Debt collection |
199,721 |
10 percent |
|
Banks and Lenders |
132,340 |
6 percent |
|
Shop-at-Home and Catalog Sales |
115,184 |
6 percent |
|
Prizes, Sweepstakes and Lotteries |
98,479 |
5 percent |
|
Impostor Scams |
82,896 |
4 percent |
|
Internet Services |
81,438 |
4 percent |
|
Auto-Related Complaints |
78,062 |
4 percent |
|
Telephone and Mobile Services |
76,783 |
4 percent |
|
Credit Cards |
51,550 |
3 percent |
DO NOT TRACK BILL REINTRODUCED IN SENATE
In response to alleged industry inaction, Senator Jay Rockefeller reintroduced the "Do-Not-Track Online Act of 2013", which, if passed, would require all Web browsers, online companies, and app makers to give users a choice of opting-out of being tracked online. The bill would require the FTC to establish standardized mechanisms for people to use their Internet browsers to tell websites, advertising networks, data brokers and other online entities whether or not they were willing to submit to data-mining. The bill would also require the FTC to develop rules to prohibit online services from amassing personal details about users who had opted out of such tracking.
NEW FTC CHAIR CALLS FOR UNIVERSAL DO- NOT-TRACK
The new FTC Chair, Edith Ramirez, urged the advertising industry to give consumers "effective and meaningful privacy protection" by agreeing on a global standard that would let consumers signal with their browsers to websites, advertising networks and data brokers that they do not want their online activities monitored for marketing purposes. According to Ramirez, "consumers still await an effective and functioning do- not-track system, which is now long overdue."
FTC RELEASES REPORT ON MOBILE PAYMENT SYSTEMS
The FTC released, Paper, Plastic... or Mobile? An FTC Workshop on Mobile Payments, a staff report on mobile payment systems. The FTC notes that mobile payment systems, which are gaining popularity, can provide innovative and convenient options for consumers. The report, however, highlights three primary areas of potential concern for consumers: Fraudulent and Unauthorized Charges, Security, and Privacy.
HTC SETTLES CHARGES IT FAILED TO SECURE MILLIONS OF MOBILE DEVICES
A recent settlement with HTC America, a major mobile device manufacturer, illustrates that the FTC's interest in securing such payment systems isn't just academic. HTC agreed to settle FTC charges that the company failed to take reasonable steps to secure the software it developed for its smartphones and tablet computers, introducing security flaws that placed sensitive information about millions of consumers at risk.
NAAG ANNOUNCES ITS TOP TEN CONSUMER COMPLAINTS LIST
The National Association of Attorneys General (NAAG) has announced the Top 10 Consumer Complaints for 2012. Automotive complaints topped the list (the majority of which involved auto sales, but also included auto advertising practices, auto service contracts, auto rental, and auto repair). The second most highly ranked complaint was debt collection, and the third most highly ranked consumer complaint was home repair and construction.
- Automotive Complaints
- Debt Collection
- Home Repair / Construction Telemarketing / Do-Not-Call Predatory Lending / Mortgages
- Telecommunications / Slamming / Cramming
- Retail Sales
- Mortgage Foreclosure Rescue Landlord-Tenant / Mobile Homes Internet Goods and Services
VERMONT REVISES LAW TO PERMIT ENTRY FEE TO ENTER A SKILL CONTEST
Vermont enacted a law that now allows a contest sponsor to require an entrant to pay an entry fee or purchase a product to enter a skill contest or other promotion where the winner is not determined based on chance.
FLORIDA'S AMENDMENT TO LAWS REGARDING "GAME PROMOTIONS" AND "DRAWINGS BY CHANCE"
The State of Florida has amended its laws regarding "game promotions" and "drawings by chance." The amendments as well as an April 11, 2013 press release issued by the Florida Division of Consumer Services, have raised numerous questions regarding the impact on non-profit organizations. The new Florida laws provide that a game promotion may only be conducted by a for- profit commercial entity. The new Florida amendments prohibit a non-profit organization from operating a game promotion, such as a sweepstakes, in connection with and incidental to the sale of consumer products or services. However, Florida law continues to allow a non-profit to operate a "drawing by chance," as long as it is not a "game promotion," the game is a more traditional drawing
--i.e., no pre-selection is utilized, and no donation is required to participate.
TWO PENDING LAWS WOULD IMPACT SUBSCRIPTION ARRANGEMENTS
Recently proposed legislation in New York and Maine, if passed, would impact businesses that provide subscription arrangements. These laws reflect a growing legislative trend to regulate goods and services billed on an auto-renewal basis.
GOOGLE PAYS $7 MILLION TO SETTLE MULTISTATE INVESTIGATION
The Connecticut Attorney General announced a $7 million settlement with Google over its unauthorized collection of data from unsecured wireless networks nationwide through Google's Street View vehicles. The agreement also requires Google to: (i) engage in a comprehensive employee education program about the privacy or confidentiality of user data; (ii) sponsor a nationwide public service campaign to help educate consumers about securing their wireless networks and protecting personal information; and (iii) continue to secure, and eventually destroy, the data collected and stored by its Street View vehicles nationwide.
STATES CONSIDER PROHIBITIONS ON CREDIT CARD PAYMENT SURCHARGES
Despite what may be permitted under the proposed Visa/MasterCard antitrust class action settlement, a number of states are currently considering new laws designed to prohibit companies from imposing a surcharge on consumers who elect to pay for their goods or services by credit card. While many states (including New York and California) already ban such surcharges, most do not. Several states have recently introduced legislations that would ban or regulate such practices.
WASHINGTON AG SETTLES WITH PENNY AUCTION WEBSITE
The Washington Attorney General alleged that ArrowOutlet.com rigged its auctions for electronics and other goods. Bidders thought they were competing with other human beings. But in reality they were often battling or placing bets against "bots" - people that did not exist.
There have been a number of important developments in the TCPA arena. Our recent articles are below:
FCC RULES SELLERS CAN BE HELD RESPONSIBLE FOR UNSOLICITED ROBO- CALLS AND TEXTS SENT BY THIRD PARTIES
The FCC has clarified the extent to which sellers can be held liable for robo-calls and texts sent by third-party marketers on their behalf. Although it did not take the broadest definition of these terms possible, the FCC nonetheless broadened liability beyond the literal terms of the TCPA.
TCPA DAMAGES ARE INSURABLE, SAYS ILLINOIS SUPREME COURT
In Standard Mutual Insurance v. Ted Lay Real Estate, the Illinois Supreme Court ruled that the TCPA's $500-per-call damages provision is not punitive in nature. The significance of this ruling is that, at least in Illinois, TCPA damages can be insured by marketers. Had the court ruled that the damages were punitive, the insurance company would not have been on the hook to pay for an expensive settlement because public policy prevents intentional wrongdoers from passing penalties off to their insurers.
REMINDER: TCPA CHANGES ARE COMING - EXPRESS WRITTEN CONSENT REQUIRED FOR ALL PRE-RECORDED TELEMARKETING CALLS
Last year the FCC revised its rules for auto-dialed calls to completely eliminate the established business relationship (EBR) exemption for calls to landline numbers. The new regulations go into effect on October 16, 2013. The FCC will now require prior express written consent for all pre-recorded telemarketing calls to wireless and landline numbers.
TCPA CLASS ACTION ROUND-UP - A BRIEF LOOK AT FOUR RECENT LAWSUITS
Friedman v. Torchmark Corp. - The court dismissed a class action lawsuit because a prerecorded telephone call inviting the plaintiff to view a free recruiting webinar was construed as an offer of employment, not as an unsolicited advertisement or telephone solicitation.
Hurst v. Mauger - The plaintiff sued a payment processor whose website address was contained in an unsolicited text message. The court granted summary judgment to the payment processor because it was not legally responsible for a text message sent by its client, the seller of a product to the plaintiff, regardless of the commission earned.
Emanuel v. The Los Angeles Lakers, Inc. - A class-action lawsuit over a single unsolicited text message was dismissed. The text message in question was a thank you sent by the Lakers in response to the plaintiff, who sent in a text message of his own hoping to have it displayed on the scoreboard.
Dominguez v. Yahoo!, Inc. - Plaintiff's new cell phone number received 4700 unwanted text messages from Yahoo! because the phone's prior owner had signed up for them. Plaintiff made multiple complaints to Yahoo! and the FCC but Yahoo! refused to stop the texts. Yahoo!'s customer service supervisor allegedly said "sue me," and the plaintiff did just that.
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ARBITRATION CLAUSE PREVENTS TCPA LAWSUIT
Commercial text messagers, take note: an Alabama-based bank avoided a federal lawsuit by putting an arbitration clause in its terms and conditions. A federal court has enforced an arbitration clause that the plaintiff accepted via his cell phone when registering for online banking.
SUPREME COURT AIDS ACCESS TO FEDERAL COURTS UNDER CLASS ACTION FAIRNESS ACT
The Supreme Court of the United States has closed a loophole used by class action plaintiffs to avoid trying their cases in federal court. In Standard Fire Insurance v. Knowles, the court closed a loophole designed to avoid application of the Class Action Fairness Acts (CAFA).
NAD RECOMMENDS ADVERTISER MODIFY IN- STORE PRICE MATCHING GUARANTEE
The BBB's National Advertising Division recently recommended that Toys "R" Us modify or discontinue a price-matching claim advertised. Specifically, Toys "R" Us advertised its price matching claim as follows: "Price Match Guarantee-Spot a lower advertised price? We'll match it. See a Team Member for details" on in-store banners. NAD reviewed this claim in response to a complaint by a consumer who reported that he had unsuccessfully attempted to purchase a game at Toy "R" Us for the same price offered online by a Toys "R" Us competitor. Toys "R" Us claimed that it would match prices in competitor's print ads, but, with certain limited exceptions, does not match online pricing.
GOVERNMENT RELEASES NEW VERSION OF IP AWARENESS ASSESSMENT TOOL
The U.S. Patent and Trademark Office and the National Institute of Standards and Technology recently unveiled an updated beta version of the web-based IP Awareness Assessment Tool, which is designed to help manufacturers, small businesses, entrepreneurs and independent inventors easily assess their knowledge of intellectual property (IP) as it relates to their IP asset protection needs.
NEW ICANN TRADEMARK CLEARINGHOUSE OPEN FOR BUSINESS
In anticipation of the rapid expansion of the number of top-level domain names from the current handful (.com, .net, .mobi, .jobs, etc.) to well over 1,000, ICANN's new Trademark Clearinghouse opened for business. The Trademark Clearinghouse is a global repository for trademark data. The new Trademark Clearinghouse will allow trademark owners to submit qualified trademarks to a central repository as a tool to help protect their marks. The verified data in the Trademark Clearinghouse will be used to support both Sunrise Services and Trademark Claims, required in all new gTLDs.
COPYRIGHT ACT'S "FIRST SALE" DOCTRINE APPLIES TO COPIES OF A COPYRIGHTED WORK LAWFULLY MADE ABROAD
In the decision Kirtsaeng v. John Wiley & Sons, Inc., the United States Supreme Court held that the "first sale" doctrine under the United States Copyright Act applies to copies of a copyrighted work lawfully made abroad. The decision is the culmination of a legal battle fought by John Wiley & Sons, Inc., a publisher of academic text books, against former student Supap Kirtsaeng, since 2008.
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ACTRESS SUES IMDB FOR REVEALING HER AGE; SEEKS $1 MILLION IN DAMAGES
The New York Post ran an interesting article about a trial now under way in Seattle in which actress Junie Hoang is suing popular film website IMDB for publicizing her true age. According to the article, Hoang says she has been struggling for years to make it in Hollywood, but after nearly two decades in the business she has yet to break though. According to the Post, Hoang claims that all hope of joining the A-list ended when IMDB violated her privacy by posting her real age on its site, and she's suing IMDB for $1 million to prove it.
HIT SHOW "MAD MEN" SUED FOR UNAUTHORIZED USE OF A FORMER MODEL'S IMAGES
Celebrities, even former celebrities, are extremely protective about the use of their names and likenesses without permission. Rightfully so, since celebrities often receive significant sums of money from the use of their names and likenesses. Thus, when using images in advertisements, movies and television shows, all images, even images from the past, should be cleared prior to use. Recently, 79-year old model Gita Hall May ("Hall") filed suit against Lions Gate Entertainment in Los Angeles Superior Court, alleging that the opening title sequence of the hit show "Mad Men" uses her iconic image without permission.
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