On February 12, 2020, the Federal Trade Commission (“FTC”) announced that it had voted 5‑0 to approve a proposed Federal Register Notice, seeking comment on whether to make changes to its Guides Concerning the Use of Endorsements and Testimonials in Advertising (“the Endorsement Guides”), which were enacted in 1980 and amended in 2009, as part of a systematic review of all current FTC rules and practices. The FTC’s Endorsement Guides have evolved over the past forty years from regulating celebrity endorsements and testimonial advertisements to policing social media advertising, including influencer endorsements and native advertising. The Endorsement Guides have steadfastly required transparency in advertising and that, if there is a connection between an endorser and the maker of a product being advertised or promoted which, if disclosed, might affect the weight or credibility of the endorsement, such connection must be disclosed clearly and conspicuously. In the proposed notice, the FTC requested comment on a variety of questions, including the following: Continue Reading
On November 5, 2019, the United States Federal Trade Commission (“FTC”) issued a guide entitled “Disclosures 101 for Social Media Influencers” and a video “Do you endorse things on social media?” to alert influencers to the laws governing endorsement or recommendation of products or services and provide social media influencers with “tips on when and how to make good disclosures.” The FTC’s written guide states that “[a]s an influencer, it’s your responsibility to make these disclosures, to be familiar with the Endorsement Guides, and to comply with laws against deceptive ads.” The guide explains to influencers that disclosures must be made when an influencer has a “material connection,” that is “any financial, employment, personal, a family relationship with a brand” and that receiving “free or discounted products or other perks” requires a disclosure. In addition, the FTC notes that “tags, likes, pins, and similar ways of showing you like a brand or product are endorsements.” The FTC guide also instructs influencers that “[i]f posting from abroad, U.S. law applies if it’s reasonably foreseeable that the post will affect U.S. consumers. Foreign laws might also apply.” The FTC notes that disclosures must be in simple and clear language that is placed “so it’s hard to miss” and should be placed with the endorsement itself. Disclosures that “appear only on an ABOUT ME or profile page, at the end of posts or videos, or anywhere that requires a person to click MORE” will not be sufficient. The FTC gave the following guidance with regard to endorsement posts in photographs, video and live streaming: Continue Reading
Sunday Riley launched her skincare firm Sunday Riley Modern Skincare, LLC (“SRMS”) in 2009 and its skincare products, including Good Genes, Power Couple, U.F.O., C.E.O., Luna and Tidal, have enjoyed tremendous success, having been featured, promoted, and sold online through Sephora and its website, www. Sephora.com. On October 21, 2019, the Federal Trade Commission (“FTC”) announced a consent order in an action for violation of Section 5 of the FTC Act against Ms. Riley and SRMS for posting false reviews of its Sunday Riley products and falsely representing that the false reviews reflected the opinions of ordinary customers of the products. The FTC’s proposed continuing consent order provides: (1) Riley and SRMS are prohibited from misrepresenting the status of any endorser or person providing a review of a product, including misrepresenting that an endorser or reviewer is an independent or ordinary user of the product; (2) Riley and SRMS are required to clearly disclose any unexpected material connection between SRMS and anyone reviewing a product; (3) Riley and SRMS are required to instruct employees, officers and agents as to their responsibilities for disclosing their connections to SRMS and any Sunday Riley product they endorse and that SRMS obtain signed acknowledgments from any endorser; and (4) Riley and SRMS are required to submit compliance reports to the FTC within one‑year of the order and to create records for twenty years and retain them for five years. Continue Reading
We previously wrote about California Senate Bill 206, the “Fair Pay to Play Act,” back in April, and now Gov. Gavin Newsom has signed that bill into law. The law becomes effective on January 1, 2023. After numerous revisions to the bill since our last post, here is a quick look at the final product.
The new Fair Pay to Play Act allows California student-athletes to earn compensation from licensing their name and image and to obtain professional representation by lawyers and agents to assist with that effort, all without losing scholarship eligibility or amateur status under the National Collegiate Athletics Association’s (NCAA) Division I and II eligibility criteria. Importantly, the law specifically prohibits colleges, athletic associations and intercollegiate conferences from paying such compensation to prospective student-athletes. Continue Reading
Owlet Baby Care, Inc. advertised its “Smart Sock” baby monitor with prominent claims that the monitor offers parents “peace of mind,” and promises that babies will “be ok.” The ad message is qualified by disclaimers that the monitors are not medical devices and cannot be used to prevent or treat health conditions. The National Advertising Division (part of the Council of the Better Business Bureau), however, recently declared these disclaimers insufficient. The NAD was concerned that the advertising could be interpreted as saying the monitor could prevent SIDS or other illnesses. Continue Reading
We recently wrote about the Children’s Advertising Review Unit’s privacy-related enforcement against two mobile apps for children on our Eye on Privacy blog. But there’s more! CARU also took action based on several advertising-related violations.
For the first app, “My Talking Tom,” CARU addressed in-app advertisements to children. Under CARU’s Guidelines the “net impression” of an ad directed to children must not be misleading, must not blur the distinction between ad and game content, and must not advertise products that pose safety risks or portray inappropriate behavior. CARU identified several ads that promoted inappropriate products and services, others that did not contain adequate disclosures, and still others that contained content that appeared to be an integral part of the game, rather than ad content. CARU issued its decision on these issues, and the game operator modified the ad positioning and disclosures. CARU took no further action on these issues. Continue Reading
California Senate Bill 206, the “Fair Pay to Play Act,” was amended again last month, and is making its way through the legislature under sponsorship by Sen. Nancy Skinner-D and Sen. Steven Bradford-D. If passed, the new law would pave the way for college athletes in California to earn compensation—including a stipend or other financial incentive from the college itself—for licensing their name, image, or likeness. The law would also allow athletes to obtain legal representation in connection with their participation in college sports, all while maintaining scholarship eligibility and amateurism under the National Collegiate Athletics Association’s (NCAA) Division I and II eligibility criteria. Continue Reading
On November 20, 2018, the United States Federal Trade Commission (“FTC”) proposed two FTC consent orders against two Georgia-based companies, Creaxion Corporation (“Creaxion”) and Inside Publications, LLC (“Inside”) and their principals concerning the promotion and advertising of Health Pro Brands, Inc.’s new FIT Organic mosquito repellant during the 2016 Zika virus outbreak and allegations that they had misrepresented paid athletes’ endorsements as independent consumer opinions and commercial advertising as independent journalistic content. The proposed FTC consent orders prohibited Creaxion and Inside from making any false representations in the future and required that they ensure all endorsers disclose all material connections going forward and monitor compliance by any endorsers. Continue Reading
With the backdrop of November midterm elections and social media executives testifying before Congress about foreign efforts to interfere in U.S. democracy, California lawmakers are working on finalizing a new bill aimed to promote transparency and accountability around political advertisements on social media platforms. The “Social Media DISCLOSE Act” (the “Act”) seeks to build upon the existing California DISCLOSE Act, established in 2017, by extending political advertisement disclosure requirements to online social media platforms. Continue Reading
The United States Securities and Exchange Commission (“SEC”) has indicated that nearly all initial coin offering (“ICO”) filings they have seen are securities offerings. Based on this expansive view, it may be more likely to find a Unicorn than an ICO that is not a securities offering. Ironically, a recent lawsuit was filed against Unikrn, a block-chain based betting platform, primarily focused on esports betting. Continue Reading