Back By Popular Demand: Everything You Always Wanted to Know About Advertising

and Privacy Law but Were Afraid to Ask Presented by: Brian Heidelberger

Brian Fergemann Liisa Thomas

Today’s eLunch Presenters

Brian Heidelberger Chair, Advertising, Marketing and

Privacy Law Chicago

bheidelberger@winston.com

Brian Fergemann Partner, Advertising, Marketing

and Privacy Law Chicago

bfergemann@winston.com

Liisa Thomas Chair, Privacy and Data Security

Chicago

lmthomas@winston.com

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Overview • When do employees need to disclose their connection to the company in social

media?

• How serious is the FTC about requiring the inclusion of #sweeps/#contest in social media sweepstakes entries?

• What abbreviated legal do we need for sweepstakes/contests in Social Media?

• Where do we draw the line in real-time marketing?

• How do I handle notice and choice for mobile OBA?

• How much effort is too much to establish “consideration”?

• Does my website need to be ADA compliant?

• How do I get consent to send text messages?

• What are the requirements for testing a product to substantiate performance claims?

• Should I worry about non-US privacy laws?

• What else would be good to know about?

• What about kids?

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When Do Employees Need to Disclose Their Connection to the Company in Social

Media?

Any “Material Connection” Must Be Disclosed • FTC’s “Guides Concerning the Use of Endorsements and

Testimonials” require disclosure if there is a material connection between someone making an “endorsement” and the advertiser

• The FTC clarified that full disclosure of any material connection between an endorser and the company whose products or services are being endorsed is required • Could the connection materially affect the credibility of the

statement? If so, it should be disclosed

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What is a “Material Connection”?

• What constitutes a material connection? • A material connection includes any payment or incentive, including

free product or the chance to win a prize • Employees have a material connection to their employers • Agencies and their employees have a material connection to their

clients

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Agency Charged by FTC for Failure to Disclose • Assistant AE sent an agency-wide email to staff to Tweet

about Sony’s PlayStation Vita

• Agency employees tweeted from personal accounts • “This is sick . . . See the new Major Game System in action. The

gaming #GameChanger” 7

Agency Charged by FTC for Failure to Disclose • Employees were not notified of their obligation to disclose

their connection to Sony and most did not disclose • FTC stated that Deutsch LA “misled consumers by urging

its employees to create awareness and excitement about the PS Vita on Twitter, without instructing employees to disclose their connection to the advertising agency or its then-client Sony”

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Disclosure of Material Connection by Employees • Disclosure needs to be made if there is an endorsement,

which the FTC has interpreted broadly to include any reference to the employer’s goods or services

• Informational posts likely do not need a disclosure (where credibility and bias are not concerns) • Post announcing a job opening • Post touting recent company news or charity work?

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Disclosure of Material Connection by Employees • Disclosure can be done “organically” or by use of clear

disclosures that can be easily understood • My company just released this great new product, check it

out! • #employee

• Disclosure of employee status on social media bio pages is not adequate • Disclosure must be “unavoidable”

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When Do Paid Endorsers Need to Disclose Their Material Connection? • In general, a paid endorser should be disclosing his or her

status as a paid endorser each and every time he or she posts anything with a reference to the company’s product because otherwise the material connection may not be readily apparent to the reader • Unlike traditional advertising (where it is understood that the

celebrity is being paid), in social media there is no other way to tell what is personal and what is advertising

• Disclosure is necessary even if the celebrity is not specifically commenting about the product or its characteristics

• Disclosure is necessary even if the celebrity was not directed to make the specific post

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How Should Paid Endorsers Disclose Their Material Connection? • Disclosure may be “organic” or through the use of a

disclosure • Acceptable disclosures likely include:

• #Sponsored • Note: FTC staff has indicated they do not believe #Spon is clear

• #PaidAd or #Ad • #[Brand]Partner

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How Should Paid Endorsers Disclose Their Material Connection? (cont.) • “There are ways to abbreviate a disclosure that fits within

140 characters . . . if you cannot make the disclosure, you can't make the ad.” • Richard Cleland, Bureau of Consumer Protection

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How Serious is the FTC About Requiring the Inclusion of #Sweeps / #Contest in Social

Media Sweepstakes Entries?

FTC Closes Investigation of Cole Haan

• Cole Haan “Wandering Sole” Pinterest Contest • Required entrants to create Pinterest boards with images of Cole

Haan products and include the hashtag #wanderingsole for a chance to win a shopping spree

• The FTC concluded that the pins constituted an endorsement of Cole Haan and that the chance of winning a prize by pinning those images was a material connection that needed to be disclosed

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Disclosure of Material Connection by Entrants • If a consumer is given an entry into a chance promotion or a contest by

posting anything that could be viewed as an endorsement of the sponsor or its product, require entrants to identify the post as a sweepstakes/contest entry • Only applies if the post constitutes an “endorsement”

• An image of the sponsor’s product likely = an endorsement

• Does a hashtag which includes the sponsor’s trademark or the requirement to include @BRAND constitute an endorsement?

• A generic hashtag (e.g., #mysummervacation) likely does not constitute an endorsement

• Only applies if the post is incentivized • A sweepstakes entry is a material connection

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Disclosure of Material Connection by Entrants • FTC noted that it did not believe that the #wanderingsole

hashtag adequately communicated the material connection • What constitutes an adequate disclosure?

• #Sweepsentry or #Contestentry

• #Sweeps or #Contest?

• #wanderingsolecontest?

• How serious is the FTC? • Disclosure of material connection in various contexts, including

sweepstakes and contests, has been a key point of emphasis for staff and we believe it will continue to be for the foreseeable future

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What Abbreviated Legal Do We Need for Sweepstakes/Contests in Social Media?

Traditional Sweepstakes Abbreviated Rules

• NO PURCHASE NECESSARY • ENDS [DATE] • MUST BE A LEGAL U.S. RESIDENT AND 18+ • VOID WHERE PROHIBITED • RULES FOUND AT XXX.COM

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Rules: bit.ly/15x2xf

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“Buy” = “No purch nec.”

Geo. Limit =

State List

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Entering on platform = more disclosure

Where Do We Draw the Line in Real-Time Marketing?

Find Your Risk Profile

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Event/Third- Party

Trademark

Copyrighted Works Celebrities

Event/Third Party Trademark

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1. One-Time Positive Comment to Another

Brand 2. Sharing Content

Posted By Third-Party Brand That Positively Mentions Your Brand

1. Posting Evocative Content That Does Not

Use Trademarks 2. Using Official

Hashtag Promoted By Event Owner

1. Creating and Using an Unofficial Hashtag

Containing Third-Party Trademark

2. Using Trademark of Event if Competitor is

a Sponsor

Copyrighted Works

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1. Re-purposing Quote 2. Linking to an Article

3. Posting Content Owned by Brand

1. Your Own Work Which is Evocative Of

Another 2. Using Name of a

Work One Time

1. Reproducing/Editing Another’s Photo,

Video, etc. 2. Taking Works From

Social Media and Using in Other Format

Celebrities

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1. Responding one time to Message or Mention

2. Interacting with Celeb. Content that Positively

Mentions Brand/Product

1. @mention one time for newsworthy event in

positive manner as part of current “conversation”

2. Liking a Post Mentioning Brand-Relevant Content

1. Showing Pic 2. Sales Message

3. Implying Endorsement

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9th Circuit’s Recent View on “Incidential Use” (Davis v. Elec. Arts Inc., 2015 BL 1633 (9th Cir. Jan. 06, 2015))

1. whether the use has a unique quality or value that would result in commercial profit to the defendant

2. whether the use contributes something of significance 3. the relationship between the reference to the plaintiff and the

purpose and subject of the work 4. the duration, prominence or repetition of the name or likeness

relative to the rest of the publication. Id. at *6 • No incidental use where:

• “the former players’ likenesses have unique value and contribute to the commercial value of Madden NFL”

• “[a]ccurate depictions of the players on the field are central to the creation of an accurate virtual simulation of an NFL game”

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How Do I Handle Notice and Choice for Mobile OBA?

In-Ad Notice

Logo in ad:

A hyperlink

Hover over logo: get brief disclosure

Click link:

Takes you to notice

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Website Notice

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Recent Accountability Program Enforcement • Buzzfeed, Go, Yelp, others • Publishers have to have notice when let third parties collect

information for OBA purposes • Some confusion, Accountability Program clarified and had a grace period

(Oct 2013-Jan 2014)

• Then did a sweep looking for non-compliance (found these)

• Tools used: ghostery.com

• Remember: this means not just in-ad, but on site itself • Accountability Program will look at your site and see if you have trackers…

you should, too!

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Apps/Mobile • Notice/choice for tracking

• Recent compliance warning from Accountability Program, applies regardless of technology

• Notice would work same way • Prior consent needed

• But choice?? • Web-based is easier:

www.aboutads.info/choices

• Tool has been developed, should be implemented soon

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Remember, It’s Harder in Europe

• Prior notice and consent… various options suggested by UK ICO:

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Expanding Technologies, Requirements Stay The Same • Different Advertising Activities: Native Ads

• These are ads that look like surrounding content

• Warning from DAA enforcement body: need to have notice/choice

• Non-cookie technologies (like mobile)

• Warning from DAA, still need notice/choice

• FTC had originally made clear: need to have notice choice

• FTC recent report on “Internet of Things,” this might get on FTC radar again?

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How Much Effort is Too Much to Establish “Consideration”?

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1. Short Survey/Trivia, 2. Photo,

3. Short Video, 4. Short Essay,

5. Social Media Post, 6. Watching Short Video,

7. Use of a Product Owned by Sponsor to Enter (as long as

ownership of product is limited to prior to the date) 8. Single Store/Event Visit 9. Entering inside a paid

event (provided promo not advertised outside)

1. Sharing Post/Email 2. Sending Text Message (without free method of

entry) 3. Entries in exchange for each friend who enters

1. Purchase or Payment Highly Personal, Financial or

Sensitive Info

Does My Website Need to be ADA-Compliant?

Title III of the ADA • Requires that any person who owns, leases, or

operates a place of public accommodation must provide a disabled individual the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of its place of public accommodation

• A “place of public accommodation” includes: • inns, hotels, restaurants, movie theaters, auditoriums,

bakeries, museums, parks, zoos, and health spas

What about websites and apps?

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Majority of Courts Apply “Nexus” Test • For ADA to apply to a website, the website must

provide individuals with some type of access, use, or enjoyment of an physical (bricks and mortar) place of public accommodation

• Applying the “nexus” test, courts have found a sufficient nexus between a retailer's website and a bricks and mortar store where the website offered:

• ability to refill prescriptions or order photos for in-store pickup

• ability to print coupons to use in-store

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Recent Increase in Complaints Alleging Websites Violate ADA • At least one court (D. Mass.) has held that the ADA applied to a

website with no nexus to a physical location • To date, courts in other circuits (such as the 9th Circuit) have

rejected attempts by plaintiffs to extend that holding to their forum

• Claims have been filed under California’s Unruh Act as well • No nexus requirements, but

• plaintiff must allege intentional discrimination, not just “disparate impact”

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DOJ Proposed Rulemaking and Enforcement • Regulations to address the obligations of private parties to make

their websites accessible to disabled individuals • Now expected in June 2015

• Settled with H&R Block over the accessibility of its website and app, but DOJ’s allegation in complaint were partially based on “nexus” theory: • Tax services provided through website linked online customers to tax

professionals at retail locations

• Recent settlement with online grocery delivery service, Peapod (which does not have physical locations) • Settlement suggests DOJ’s broad view of ADA’s application to

websites/apps even though no connection to physical place

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How Do I Get Consent to Send Text Messages?

Text Communications Consent Complexities

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Getting Consent: Marketing Text • Must be signed

• Electronic okay

• Content of request: • Consent is not required

• Consent is not a condition for purchase

• Messages will be sent “automatically”

• MMA/Carrier issues • STOP, HELP

• Don’t forget about “stop” cases, give alternative opt out method

• Standard text/data rates apply

• And… • Say who is going to send

• Don’t let consent last forever 47

Getting Consent: Not Marketing

• Still need express consent (do not need signature) • Easiest to follow the same process, though

• Still need to address carrier/MMA and other issues • Rare exceptions:

• When not sent using auto-dial technologies

• And don’t forget faxes! FCC Junk Fax Order • Must have opt-out in solicited faxes (not just unsolicited)

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What Are the Requirements for Testing a Product to Substantiate Performance

Claims?

What Substantiation is Required?

• Federal law requires that an advertiser possess adequate substantiation at the time the claim is made • “Prior substantiation” requirement

• The type of substantiation required depends on the nature of the claim, but in general, substantiation should be reliable, objective, unbiased written evidence establishing a reasonable basis for the claim

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What Substantiation is Required? (cont.) • What constitutes a “reasonable basis” will depend on the

claim • A factual issue which will be affected by the interplay of overlapping

considerations: • the type and specificity of the claim made

• the type of product

• the possible consequences of a false claim

• the degree of reliance by consumers on the claims

• Pfizer, Inc., 81 F.T.C. 23 (1972)

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What Substantiation is Required? (cont.) • “Advertising claim substantiation is based, not on

perfection, but, rather, on a determination of whether an advertiser has provided a reasonable basis for its claims.” • Johnson & Son, Inc., NAD Case Reports (September 2006)

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What Substantiation is Required? (cont.) • Claims relating to a product’s performance will require

thorough and scientifically valid laboratory or clinical studies on the product • Studies on an ingredient, as a general rule, are not sufficient to

support product performance claims. Biotech Corporation, NAD Case Reports (October 2008).

• Establishment claims, such as “tests prove,” generally require a higher level of substantiation • More rigorous testing • Multiple tests

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What is Not Adequate?

• Anecdotes about performance or isolated personal experiences/testimonials • Santica, NAD Case Reports (Jun. 2009)

• Isolated studies which run counter to the weight of previously published studies

• Internal memos touting a product

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What is Not Adequate? (cont.)

• Tests performed according to a narrow unrepresentative set of conditions that are not disclosed in the ad • Example: Cleans carpet better than any other vacuum

• If testing was only conducted on one style of carpet that is rarely found in homes, this would be insufficient to support the broad, unqualified claim

• If the substantiation only applies to certain conditions or circumstances, the claim must be appropriately qualified to limit the scope of the claim

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Should I Worry About Non-U.S. Privacy Laws?

Complex Compliance for Global Email Campaigns

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Enforcement Increasing Worldwide Sample 2014 Cases

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• Allocate more compliance $$ for global programs

• Where you could “skate by” in U.S. for consent, may really need it elsewhere

• Manage lists: where did you get that email address?

What Else Would Be Good To Know About?

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What Else Would Be Good To Know About? • NAD Holds “Up To Claim” Only Requires “Appreciable Number”

• AT&T Services, Inc. (U-Verse) (NAD Case No. 5781)

• Use of “May” or “Helps to” Doesn’t Obviate Need for Substantiation • Dietary supplement “may relieve symptoms including, impulsiveness,

inattention” still requires backup that some improvement will occur (ADD-care, LLC, NAD Case No. 5785)

• Offer to Refund a Ticket isn’t Appropriate for “Best Price Guarantee” • Requires price matching (Fareportal, NAD Case No. 5789)

• California’s “Made in the USA” Law Is Stricter Than Federal Law • Makes having any foreign parts illegal (not “virtually all”) (Sect. 17533.7)

• Promo Can Be Offer (Not Just An Invitation, Make An Offer) • Oregon court holds “Buy 10 gallons of fuel, get a voucher for a free lift

ticket!” promotion to be an offer (Kearney v. Equilon Enterprises, LLC)

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What About Kids?

Kids, Kids, Kids – Is COPPA Really Working? • Will FTC investigate Topps?

• Consumer advocacy groups asked FTC to investigate

• #RockThatRock alleged to have collected photos w/out consent

• Kids told to upload photos thru FB, Twitter, Instagram and use hashtag

• In contest rule said "by using hashtag you have gotten parental consent"

• Were they "collecting" on social media sites?

• Can you rely on social media site age gating?

• OBA and COPPA – safe harbor all the more important • Verifiable methods of obtaining parental consent

• Some companies are coming up with “new” ways for FTC approval, but are they really new??

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Questions?

Thank You.

Brian Heidelberger Chair, Advertising, Marketing and

Privacy Law Chicago

bheidelberger@winston.com

Brian Fergemann Partner, Advertising, Marketing

and Privacy Law Chicago

bfergemann@winston.com

Liisa Thomas Chair, Privacy and Data Security

Chicago

lmthomas@winston.com

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