News & Resources

NEWSLETTER: Advertising, Marketing & Promotions, Spring 2013

June 4, 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.

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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.

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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.

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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.

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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.

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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."

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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).

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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.

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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.

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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.

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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.

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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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***

Advertising Marketing & Promotions Group

Andrew B. Lustigman

Scott A. Shaffer

Howard J. Smith

Adam Z. Solomon

Sheldon S. Lustigman

Jonathan I. Ezor

Safia  A. Anand

Alexander J. Sperber

****

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