NEWSLETTER: Advertising, Marketing & Promotions, Winter 2010

Dear Clients, Colleagues and Friends,

We hope that the 2010 is beginning well for each of you. A lot has happened in the marketing industry since our Fall newsletter. The new FTC Endorsement and Testimonial Guides have gone into effect and the National Advertising Division has already begun to enforce them in considering advertising challenges. Another developing story is the multi-front challenge to data-pass offers - i.e., upsells in which credit card offers are provided from one vendor to another allowing for a cardless upsell. Those programs are facing scrutiny by the United States Senate and the New York Attorney General and resulting in significant offer modifications by many vendors. This issue of the Olshan newsletter highlights these developments as well as other items of interest to marketers and suppliers alike.

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 marketing industry in general, please feel free give us a call.

Proposed Legislation Threatens Legitimate Suppliers and Media Businesses
Many marketers may be in favor of the proposed Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173) recently passed by the House in December 2009 and currently before the Senate because the bill seeks to address elements which caused the current financial crisis. Unfortunately, the devil is in the details. The proposed legislation is purportedly intended to provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding of insurance issues, to regulate the over-the-counter derivatives markets. However, hidden within the proposed legislation is the "Improvements to the Federal Trade Commission Act" and other provisions that would significantly expand the authority of the Federal Trade Commission (FTC) beyond the massive powers the agency already possesses. These proposed changes will place legitimate marketers, suppliers, and media businesses in an even more precarious position. Indeed, the DMA has gone so far as to call the proposed enhancements "The FTC on steroids." Continue Reading

New IAB/4As Standard Terms Published
The Interactive Advertising Bureau and 4As recently published the latest version of their Standard Terms and Conditions for Internet Advertising. What are they, and how can they be used?  Continue Reading

New York Attorney General Settles with Fandango and Investigates 22 Online Retailers for Linking Consumers to Discount Clubs
New York Attorney General forges groundbreaking agreement with Fandango to protect online shoppers from hidden charges.  Continue Reading

Membership Club Marketer Revamps Enrollment In Light of US Senate Scrutiny
This development occurs as a result of Senate hearings held last fall. The U.S. Senate Committee on Commerce, Science, and Transportation, released an investigative report entitled: "Aggressive Sales Tactics on the Internet and Their Impact on American Consumers." Continue Reading

Investigation Being Conducted Regarding the Online Marketing of Membership Clubs
The United State Commerce Committee has expanded its investigation into e-commerce companies which present membership club enrollment offers to their online customers and have the customers agree to pass their customers' credit card or debit card numbers to enroll in the membership club. Senator Rockefeller who is the Chairman of the Committee has entitled the investigation is focusing on this practice because it has been the center of criticism by consumer advocates. Click here for more information.  Continue Reading

Advertising Trade Groups Agree on Icon and Wording to Indicate Compliance With Behavioral Advertising Self-Regulation
A broad coalition of advertising associations have agreed on an icon and an information disclosure statement to consumers who are receiving online advertising.  Continue Reading

FTC Rejects FDA Defense in Dietary Supplement Marketing Action
In a recent administrative opinion, the Federal Trade Commission (FTC) rejected a defense that the marketing of dietary supplement products within FDA so-called structure and function claims, precluded enforcement by the FTC of deceptive health claims.  Continue Reading

The Truth Is Not Always Enough
When it comes to the rules of advertising, many remain confused by the legal doctrine that while a statement can be literally true, it still can be considered false or deceptive. Three advertisers learned recently this lesson the hard way in the last few weeks when the National Advertising Division of the Better Business Bureau (NAD) recommended that certain of their marketing claims, while literally true, should be discontinued.  Continue Reading

Appellate Court Upholds Verdict Against Company President in False Advertising Suit Regarding Fruit Juice
A distributor of pure pomegranate juice sued a competitor company and its president under the Lanham Act and California's false advertising and unfair trade practices statutes alleging that ads which claimed their juice was "100%" pure pomegranate juice with "no sugar added" were false, and the defendants knew or should have known that they were not true.  Continue Reading

FCC Proposes Further Restrictions on "ROBOCALLS"
The FCC has announced proposed revisions to its rules under the Telephone Consumer Protection Act (TCPA) to further restrict the transmission of pre-recorded voice calls to residential telephone subscribers. The proposals would require sellers and telemarketers to obtain written consent (including electronic methods of consent) from recipients before making prerecorded telemarketing calls, commonly referred to as "robocalls," even when the caller has an established business relationship with the consumer.

If enacted, these new restrictions would harmonize the FCC's rules with the Federal Trade Commission's (FTC's) recent amendments to its Telemarketing Sales Rule. See our prior discussion on the FTC's requirements here.  Continue Reading

New York Attorney General Sues Marketer and Finance Company of Home Study Courses
The New York Attorney General has sued not just the marketer, but the finance company that processed the contracts company to recover for alleged false advertising by marketer, even though the finance company was not alleged to have been involved in active wrongdoing. In its announced lawsuit, the Attorney General sued State National Training Services, Inc (SNTS) a marketer of study at-home courses, alleging that they falsely represented that purchasers of their $1000 course materials would obtain jobs.  Continue Reading

Facebook's New Promotions Guidelines
On November 4, 2009 Facebook issued new Promotions Guidelines which govern the publicizing or administering of any sweepstakes, contest, competition or other similar offering.  Continue Reading

See additional article - Facebook New Sweepstakes Rules Restrict Certain Sweepstakes.

Google Sues Marketer of "Google Money" Program
On December 7, 2009 Google filed a lawsuit against a U.S. company it alleges runs work-at-home scams that unnecessarily charge people's credit cards and spoof Google's brand name. Continue Reading

BusinessWeek Blog: Your Site, Others' Misbehavior: The Two U.S. Safe Harbor Laws
Web site owners are protected under US law from liability for what others do on their sites...if they know how to take advantage of the safe harbors. This blog article by Jonathan Ezor, originally posted to the BusinessWeek New Entrepreneur site, explains.  Continue Reading

NY Refund Policy Law To Take Effect
Retailers with stores in New York should take note that effective November 25, 2009, an amendment to the state's existing refund policy law takes effect. Set forth at New York General Business Law § 218-a, the law requires retailers to disclose the store's refund policy in one of four defined locations and to make a written policy available to consumers who request it. The refund policy must state whether or not it is the retailer's policy to give refunds and, if so, under what conditions, including but not limited to whether a refund will be given, including (i) on merchandise which had been advertised as "sale" merchandise or marked "as is;"(ii) on merchandise for which no proof of purchase exists; (iii) at any time or not beyond a point in time specified; (iv) in cash, or as credit or store credit only; or (v) subject to any fees, including a restocking fee, and the dollar or percentage amount of each fee; and (b) advise consumers that they are entitled to a written copy of the store's refund policy upon request.

FTC Extends Enforcement Deadline for Identity Theft Red Flags Rule
The Federal Trade Commission is once again delaying enforcement of the "Red Flags" Rule from November 1, 2009 until June 1, 2010, for financial institutions and creditors subject to enforcement by the FTC. The Rule was promulgated under the Fair and Accurate Credit Transactions Act, in which Congress directed the Commission and other agencies to develop regulations requiring "creditors" and "financial institutions" to address the risk of identity theft. The resulting Red Flags Rule requires all such entities that have "covered accounts" to develop and implement written identity theft prevention programs to help identify, detect, and respond to patterns, practices, or specific activities - known as "red flags" - that could indicate identity theft.  Continue Reading

District Court Decides that FTC Cannot Make Attorneys Comply With Red Flags Rule
On October 29, 2009 the District Court for the District of Columbia ruled that the FTC cannot force practicing attorneys to comply with Red Flags Rule.

The FTC's scheduled enforcement for the Red Flags Rule was November 1, 2009. The American Bar Association (ABA) challenged the Red Flags Rule's applicability to attorneys arguing that it would impose a serious and undue burden on law firms, and sought an injunction and declaratory judgment finding that lawyers were not covered. In response, the FTC stated that lawyers should be covered because billing practices, such as charging clients on a monthly basis rather than upfront, made them "creditors" under the plain language of the Red Flags Rule.

The District Court rejected the FTC's definition of a creditor stating that under the FTC's interpretation, a plumber who charges a customer after working on a toilet for two days also would be considered a "creditor."  Continue Reading

Lustigman to Present "Legal Do's and Don'ts of Mobile Marketing" at DMA's Mobile Marketing Day 2010
On March 4, 2010, Andrew Lustigman will participate at DMA's Mobile Marketing Day 2010 in New York as a panelist presenting on the "Legal Do's and Don'ts of Mobile Marketing". The panel, moderated by Mobile Marketer's Editor in Chief Mickey Khan will focus on the latest legal developments in this fast developing channel. Topics to be covered include permission -based requirements, advertising disclosures, and promotional challenges.

For more information on Mobile Marketing Law - Click Here

Lustigman to Speak at the American Bar Association's 25th Annual Intellectual Property Law Conference
On April 8, 2010, Andrew Lustigman will Speak at the American Bar Association's 25th Annual Intellectual Property Law Conference: "Texting, Toggling, Tagging, Tweeting: Copyright, Trademark and Advertising in New Media" in Arlington, VA.

Online and social media are increasingly popular with marketers who want to take advantage of new technology, viral marketing and word of mouth exposure. As these new marketing channels are exploited, new legal concerns arise both from copyright and trademark perspectives.This program will include demonstrations of new technologies and discussion of their impact on copyright law, while also considering the unauthorized use of trademarks on social media sites.

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We strive to stay on top of all relevant legal issues to provide our clients with the most effective and efficient legal advice. If you find any legal marketing news of interest, send it to us!

Please pass this newsletter on to your friends and colleagues and invite them to join our mailing list. As always, please feel free to contact us with any comments, questions or recommendations. Also, please follow us on Twitter @Advlaw.

Sheldon S. Lustigman
Andrew B. Lustigman
Scott A. Shaffer

This newsletter is a publication of Olshan, a law firm with offices in New York and New Jersey. This newsletter and the referenced articles are intended to provide a general overview of legal issues. It is not intended to cover all laws or to serve as legal advice or as a replacement for specific advice of counsel. The views, opinions, statements, analysis and information contained in this outline do not necessarily reflect the views of Olshan or any of its past, present and future clients. © MMVIII by Olshan.

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Originally published by The Lustigman Firm, P.C. and has been re-branded and edited to conform and to correct certain references.