NEWSLETTER: Advertising, Marketing & Promotions, Summer 2010
Dear Clients, Colleagues and Friends,
We hope that you are keeping cool with the incredible temperatures outside as well as the new regulatory restrictions circulating around the industry. Indeed, there have been a number of important developments in the advertising and promotional marketing legal fronts since our last newsletter, including potential new substantiation requirements for health products, enhanced privacy restrictions, new restrictions on negative marketing and telemarketing, and mobile marketing. These and other timely topics are discussed in this newsletter.
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 give us a call.
IN THIS ISSUE
Meet us at DMA2010 in San Francisco
Attorneys from Olshan will be attending DMA2010 conference from October 10-12, 2010 in San Francisco. The show is always a great opportunity to network and hear the latest developments. If you are planning on attending, please let us know so that we can catch up in person!
New and Improved SweepstakesLaw.com Site Launched
We are proud to announce the re-launching of our popular website sweepstakeslaw.com. Check it out to learn the latest developments in Internet sweepstakes and contests promotions, social media promotions and sweepstakes basics.
Social Media Law Roundtable: Los Angeles, September 21, 2010
The ABA Special Committee of Intellectual Property Law Special Committee on Promotion and Marketing Law, chaired by Andrew Lustigman, invites you to attend a complimentary Social Media Law Roundtable to be held on September 21, 2010 at 6pm at the UCLA Anderson School of Management. Panelists include: Tammy Brandt, Toyota Motor Sales, USA, Bakari Brock, Twitter, Laura Berger, Federal Trade Commission, and Professor Sanjay Sood, UCLA. The conference is co-chaired by Tanya Forsheit of Infolawgroup LLP and Alan Friel of Wildman Harold.
Sweepstakes and Contests: All you Need to Know for Legal Compliance
In the Global Business & Legal Seminars continuing legal education (CLE) seminar "Sweepstakes and Contests: All You Need To Know for Legal Compliance" Andrew B. Lustigman and Adam Z. Solomon of Olshan, discuss how to structure a legally compliant sweepstakes promotion. Some of the issues covered are how a compliant promotion differs from a lottery, eligibility considerations, drafting the rules, awarding prizes and selecting winners. They also discuss skill contests, essay contest rules, user-generated content, copyright issues (including the Digital Millenium Copyright Act) and the Communications Decency Act.
STAY IN TOUCH
FTC Debt Settlement Telemarketing Restrictions To Take Effect in September and October 2010
The Federal Trade Commission has announced sweeping amendments to the Telemarketing Sales Rule that significantly restrict the marketing of what it broadly characterizes as "debt settlement" programs. The restrictions include an advance fee ban and mandatory disclosures. As part of its announcement, the FTC has published a comprehensive explanation - Debt Relief Services & The Telemarketing Sales Rule: A Guide For Business.
FTC Expands Claim Substantiation Requirements in Two Settlements
In two recent settlements announced the same day, the Federal Trade Commission expanded the type of substantiation required for a marketer making certain health claims. In those instances, the FTC requires that the claims be backed by at least two adequate and well-controlled human clinical studies. Moreover, under those settlements, certain disease or illness claims must now first be pre-approved by the Food and Drug Administration.
Am I Liable for a Blogger's Review of My Products?
Why should companies care about claims being made about their products in social media? As Andrew Lustigman recounts in this ABA feature, companies should care because there is potential liability surrounding those third-party claims.
FTC Issues FAQs on Endorsement and Testimonial Guides
The FTC recently issued an FAQ for business: The FTC's Revised Endorsement Guides: What People are Asking. The FAQs are intended to provide further clarity and explanation as to compliance with the revised Endorsement Guides that went into effect on December 1, 2009. The FAQs devote provide a significant emphasis on social media, blogs, Twitter, as well as the use of hashtags and other button-type disclaimers. Importantly, FTC states that merely providing a button that states "DISCLOSURE, LEGAL, or something like that" would not be sufficient disclosure. Instead, the FTC has opined that marketers should provide the disclosure as part of the message.
FTC Considers "Do Not Track" Registry for Behavioral Activity
At a recent Congressional hearing, Federal Trade Commission Chairman Jon D. Leibowitz said that the agency is considering assessing the viability of a do-not-track list for online advertising modeled on the national "do not call" list utilized in telemarketing. Details on the proposal are scare. However, the FTC plans to release a privacy report this fall which may include the agency's conclusions on such a program.
FTC in Ongoing Review of COPPA
As we had first mentioned in April 2010 after our ABA Roundtable on Social Media Law, the FTC is conducting a review of its rules under the Children's Online Privacy Protection Act of 1998 ("COPPA"), to determine whether changes to technology since its adoption warrant changes to the rule. Under COPPA and the FTC's rules, Web sites may not knowingly collect personally identifiable information from children under the age of 13 without verifiable parental consent.
Since the adoption of the FTC's rules, the expansion of communication technologies (to "mobile communications, interactive television, interactive gaming, and similar activities", as the request for comments states) and increased adoption of such technologies by children (many of whom now regularly carry and use smartphones) have raised concerns about whether the COPPA rules give sufficient guidance to both parents and companies seeking to comply with them. The issues include both practical (how to request and receive verifiable parental consent) and technical (is a text message considered a "Web site"), and the overall concerns about how best to preserve children's privacy while enabling companies to communicate with (and market to) them.
Senator Rockefeller Introduces Legislation Banning Certain Internet Sales Practices
On May 19, 2010, Senator Rockefeller (D-W. Va.), head of the Senate Commerce Committee, introduced draft legislation that would ban certain internet sales tactics and restrict others. The legislative effort comes after a hearing investigation where Senator Rockefeller and other members of the committee determined that certain internet industry practices were unfair and deceptive. The legislation is cited as the "Restore Online Shoppers' Confidence Act."
Foremost among those activities deemed unfair and deceptive was Data Pass. The draft legislation defines "Data Pass" as the practice of an online retailer or website sharing their customers' billing information, including credit card and debit numbers, with third party sellers in exchange for "bounties" and other payments. The legislation would prohibit companies from enrolling consumers in paid-subscription programs unless the consumers entered their credit card numbers and agreed to the program. The measure would also restrict online companies' ability to use "negative options" which often involves offering people free trials and then charging them unless they cancel their accounts within a short time frame.
FTC Expansion Omitted in Final Wall Street Reform Bill
The major pending financial regulatory reform bill (the Dodd-Frank Bill (HR 4173/S3217), was finalized without providing the FTC with additional enforcement and rulemaking powers. As we had previously written, the House version of the bill included provisions granting the FTC greater discretion in initiating rulemaking, permitting the FTC the right to impose civil monetary penalties without the involvement of the Department of Justice, and increasing the exposure for suppliers to marketers.
New Legislation Targets "Cramming"
Following on the heels of increased class action activity, state legislatures are increasing the focus on attacking allegations of cramming. Virginia recently enacted a law effective July 1, 2010 requiring all authorizations for third-party charges to be verified by an independent third party. Maryland recently passed a law effective October 1, 2010 that requires "express authorization" for third-party services. New York is considering legislation that would require "valid proof" of authorization of third-party services. These laws combined with private enforcement, are increasing a service provider's obligation to ensure that authorization is valid and properly verified.
Telemarketer Scores Legal Victory in New York Lawsuit
A recent federal court ruling in the Southern District of New York was a blow to plaintiffs who seek to sue telemarketers under the Telephone Consumer Protection Act ("TCPA"). In the case of Leyse v. Bank of America, a June 14th ruling indicated only the "called party" can assert claims under the TCPA. The facts of the case were as follows: in 2005, a telemarketing call containing a pre-recorded message was made to a Ms. Dutriaux, who at the time shared an apartment with a Mr. Leyse. The roommate, Leyse, happened to answer the call and claimed his privacy was disturbed by the call. Both Dutriaux and Leyse filed separate class-action lawsuits under the TCPA. Dutriaux filed in New York, where her case was dismissed in 2008 because New York has a rule that does not allow class actions in TCPA cases. Leyse filed his case in North Carolina, and it was transferred to New York after some legal wrangling. The New York court threw out Leyse's case because he was not the intended recipient of the call or the "called party". The court stated, "the uncontroverted evidence shows that DialAmerica, the entity that placed the call on behalf of Bank of America, placed the call to Dutriaux, Leyse's roommate and the telephone subscriber. DialAmerica's records demonstrate that it associated the phone number with Dutriaux, not with Leyse. To the extent that Leyse picked up the phone, he was an unintended and incidental recipient of the call." In light of this ruling, any telemarketer threatened with a TCPA lawsuit should immediately check to see who was the intended recipient of the call in question.
FTC Stops Robocalling Operation
The Federal Trade Commission obtained a temporary restraining order against a telemarketing operation that allegedly made millions of illegal phone calls pitching extended auto warranties and credit card interest rate-reduction programs.
Rhode Island to Regulate Discount Buying Clubs
Effective June 12, 2010, Rhode Island has enacted the Discount Buying Clubs Act (2009 RI HB 7597). The law requires Discount Buying Clubs to have a signed written contract with the consumer. The contract will be required to disclose certain terms and provide for a 3-day right of cancellation.
FTC Extends Deferral of Red Flags Enforcement - December 31, 2010
The Federal Trade Commission announced that it is further extending its deferral of enforcement of the Identity Theft Red Flags Rule through December 31, 2010, while Congress continues to consider legislation that would impact the scope of entities covered by the Rule.
T-Mobile Florida Attorney General Mobile Content Settlement Announced
Florida Attorney General Bill McCollum has reached an agreement with T-Mobile concerning unauthorized billing for third-party charges on consumers' mobile phone bills. The settlement is the third in a continuing series of enforcement actions against mobile carriers relating to the charges assessed by third-party mobile content providers on customer's phone bills. The settlement requires T-Mobile to enforce what the state has determined to be various best practices regarding the advertising and marketing of content provider services. Read the Mobile Marketer article here.
Why is the Mobile Industry So Susceptible to Shakedowns?
The Mobile Marketer article "Why is the mobile industry so susceptible to shakedowns? discusses some of the reasons why the mobile industry is facing so many different kinds of lawsuits, ranging from patent infringement to consumer protection issues.
The Mobile Marketer Article Americans Want to Move Toward an Opt-in Paradigm
This article summarizes "Mobile Media and Law: Legal Dos and Don'ts" seminar at the Mobile Marketing and Media 2010 conference on June 30, 2010 at the Direct Marketing Association in New York, in which Andrew Lustigman participated. The panel discussed the fact that mobile marketing messages require express opt-in, as well as the proposed federal Boucher-Stearns privacy legislation.
Overcoming Legal Hurdles of Mobile Marketing
Mobile marketing is different from any other form of marketing because it requires express consent, or opt-in, from consumers to be able to contact them. Other forms of marketing such as email or telemarketing only require that consumers have the option to opt out. This MobiMatter article "Overcoming legal hurdles of mobile marketing", discusses the greatest legal compliance challenges in this new and developing marketing channel.
Class Action Lawsuit Over New England Patriots' Cheating Is Dismissed
A class-action lawsuit filed by a football fan angered over one team's documented cheating has been dismissed on the basis that the fans did not suffer any loss by watching an NFL game that was not played according to the rules. The lawsuit was filed by a New York Jets season ticket-holder over the "Spygate" videotaping scandal of 2007, which arose when the New England Patriots were caught secretly videotaping the sideline signals of the Jets and relaying those signals down to the sidelines. The fan, Carl Mayer, sued the Patriots, the team's head coach, Bill Belichick, and the NFL for over $100 million because, on September 9, 2007, an agent of the Patriots videotaped the Jets coaches and players on the field in order to illegally capture and steal the Jets' signals and visual coaching instructions to their players. The Patriots were subsequently found by the NFL to have engaged in improper conduct.
Sheldon Lustigman to Speak at ACI's 4th Annual Focus on Sweepstakes Contests and Promotions
On Friday, September 24, 2010 Sheldon Lustigman will present along with Leonard Gordon, Northeast Regional Director of the Federal Trade Commission at ACI's 4th Annual Focus on Sweepstakes, Contests and Promotions. Sheldon will be speaking at the session entitled: "Adapting to Changing Government Enforcement Priorities: Complying with New Sweepstakes Legislation and FTC Regulatory Requirements."
The session will cover the following topics:
- Sweepstakes and contest enforcement activities
- Applying the FTC's Endorsement Guidelines and CAN-SPAM rules to sweepstakes, contest, and promotions
- Balancing the company's information storage proactives with state data breach notification laws
- Organizing legally-compliant sweepstakes when dealing with 50 different state laws
- Aligning in-house practices with changing (and at times conflicting) laws
- Bonding and registration requirements
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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!
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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.
Marketing & Administrative Manager