Advertising Law Blog

5-4 decision rejects traditional principles of contract interpretation

Olshan’s Advertising, Marketing & Promotions Practice Group chair Andrew Lustigman and associate Morgan Spina authored an article for the ABA’s Spring 2019 What’s In Store newsletter titled “Are FTC Enforcement Powers Being Reined In?”

As we have discussed previously, the prevalence of Internet usage in everyday life has led to an e-commerce market whereby consumers are able to post online reviews of a vast range of products and services. For the most part, such reviews are made public without regard to the relevant expertise of the reviewers, and with little to no oversight as to the legitimacy of such reviews. You can see our prior articles on this topic here and here. Against this backdrop, the Federal Trade Commission (“FTC”) has brought a claim against a marketer for the deceptive use of fake, paid-for reviews on an independent retail website for the first time. The FTC’s enforcement efforts in this regard should signal to marketers that the FTC is taking such actions seriously.

The Food and Drug Administration (“FDA”) and Federal Trade Commission (“FTC”) have issued joint warning letters focusing on disease claims being made by dietary supplement marketers. In addition, the FDA announced new steps it is undertaking with a goal toward protecting the public from potentially harmful products and unapproved claims.  

As we have previously reported, California’s Consumer Privacy Act (the “CCPA”) was passed in 2018 and goes into effect in January 2020, which provides broad protections for consumers in their ability to control the use of their personal data.  You can see our prior article here.  On February 25, 2019, California Attorney General Xavier Becerra and Senator Hannah-Beth Jackson introduced SB 561, legislation intended to strengthen and clarify the CCPA. The Attorney General’s press release can be viewed here.  Senator Jackson has stated that the bill is designed to ensure that “the most significant privacy protections in the nation are robustly enforced”. 

As we have discussed in previous blog posts, subscription-based business models and the automatic renewal techniques they popularly employ have garnered attention from regulators in recent years. The District of Columbia has now passed its own law regulating automatic renewals. With the passage of this law, D.C. joins many other states in requiring specific disclosures from advertisers who utilize automatic renewals as an integral part of their business model.  The law has provisions similar to those in certain states, but also has important timing requirements.

The repurposing of social media images has its risks and should only be undertaken in accordance with the platform’s terms of use and applicable law. PopSugar has been unable to shake a copyright infringement class action brought by social media Influencer and law school graduate, Nita Batra.

Reflecting California’s continuing challenge to automatic renewal programs, direct marketing firm, Guthy-Renker, agreed to settle claims brought by multiple California city and district attorneys (CART) alleging that the direct marketing firm engaged in improper automatic renewal practices with respect to its sale of ProActiv skin products and Wen hair products.

Businesses with websites have been besieged by plaintiffs seeking to assert ADA claims that e-commerce websites fail to comply with accessibility requirements. A recent Ninth Circuit decision finding that the ADA applies to websites and mobile apps strengthens these plaintiffs’ positions in what is at best a grey area for businesses to address compliance.

The Supreme Court has unanimously vacated a Fifth Circuit decision concerning arbitrability. The court held that courts my not override a contract that tasks arbitrators with determining whether a claim should be arbitrated or litigated, even in the case that the quest for arbitration is “wholly groundless.”

The recently enacted Farm Bill amends the Controlled Substances Act so that  hemp and CBD products containing trace amount of THC are not classified as Schedule 1 controlled substances.    While many are excited about this amendment, the law does not change FDA’s regulatory requirements for CBD-containing products under its regulatory jurisdiction.

Many online ecommerce companies operate on a subscription model.  Such companies need to be cognizant of federal and state laws governing advertising and enrollment in continuous service plans.   The failure to consider particular state requirements can have significant consequences given the aggressive plaintiffs’ bar.  A recent federal-court approved settlement between Yahoo Inc. and users of Rivals.com highlights this exposure.  

The FTC heavily relies upon its statutory authority to seek injunctive relief in federal court.  The FTC has broadly interpreted these powers to seek not just injunctive relief enjoining a particular practice, but monetary relief in the form of disgorgement.  Moreover, the FTC has taken the position that defendants in such actions are not entitled to a jury trial, because the relief being sought is merely equitable. 

The FDA and FTC together have recently issued 13 warning letters to manufacturers, distributors, and retailers, cautioning against the sale of e-liquids for use in e-cigarettes using labeling and/or advertising that is similar to that which is found on children’s food products, like juice boxes, candies, or cookies.  The warning letters were sent in furtherance of the FDA and FTC’s efforts to protect young people from the dangers of nicotine and tobacco products. 

The Federal Trade Commission (“FTC”) has approved revisions to its Jewelry Guides. The FTC’s Jewelry Guides aim to help marketers in the jewelry industry avoid consumer deception, while simultaneously interpreting how Section 5 of the FTC Act applies to certain practices in the industry. Section 5 of the FTC Act declares unlawful any “unfair or deceptive practices in or affecting commerce.” The FTC has released other similar industry-specific reports and guidelines including, for example, reports and guidelines related to the clothing and textiles industry, finance industry, and tobacco industry. As the jewelry industry evolved, it became clear to the FTC that a revision of its Jewelry Guides was warranted. As such, these recent revisions seek to encompass and address new issues facing the industry.

The New York Law Journal (subscription required) published an article authored by Andrew Lustigman and Morgan Spina titled "Deceptive Pricing: Unlawful Trickery or Skillful Selling?"

Olshan Advertising attorneys Andrew Lustigman, Safia Anand, Claudia Dubón, Katelyn Patton, and Morgan Spina will give a telephonic presentation for the Consumer Protection Monthly Update on June 18, 2018, hosted by the American Bar Association. This monthly update, which will be moderated by Andrew Lustigman, will summarize the significant developments in consumer protection law that occurred during May 2018. The presentation will include cases, settlements, and other initiatives at the federal and state levels, as well as consumer class actions, Lanham Act litigation, and National Advertising Division case decisions.

On April 26, 2018, the Senate unanimously confirmed all its nominees to the Federal Trade Commission (“FTC”), allowing the FTC to regain full strength for the first time since President Trump took office. In the months since President Trump’s inauguration, the FTC has been operating with just two Commissioners.

Andrew Lustigman and Morgan Spina published an article in Leading Internet Case Law entitled “Court Rules Embedded Photos on Websites May Constitute Infringement.”

Andrew Lustigman and Morgan Spina published an article in BNA Big Law Business entitled “Understanding Advertising Disclosure Obligations Within Virtual Reality.”

A recent decision highlights the risk in relying on confidential support, as well the difficulty in substantiating extraordinary cosmetic benefit claims. Benefit Cosmetics recently challenged Too Faced Cosmetics’ advertising before NAD. The challenge was focused on Too Faced’s mascara advertising claims relating to clinic studies, the degree to which the product increased eyelash volume, and the representations made in the advertiser’s use of “before” and “after” comparative photographic demonstrations.  

Online review websites typically offer reviewers the ability to post their views anonymously.  Given the lack of transparency, many times the subject business is unable to meaningfully address the allegations levied against it because it may not know the details of the reviewer’s experience.  A recent Ninth Circuit decision, may portend a change in the ability to hide a reviewer’s identity.  

The Federal Communications Commission (FCC) is seeking comments on proposed rules regarding carrier phone changes and charges for additional services.

Issue of Ascertainability Blocks Plaintiff From Proceeding On Class Basis