In response to a petition from a coalition of consumer groups last year complaining about the need for disclosures by social media influencers, the FTC recently announced on April 19, 2017 that it had issued more than ninety letters reminding influencers and brands that “if there is a ‘material connection’ between an endorser and the marketer of a product – in other words, a connection that might affect the weight or credibility that consumers give the endorsement – that connection should be clearly and conspicuously disclosed, unless the connection is already clear from the context of the communication containing the endorsement.” The FTC explained that material connections could “consist of a business or family relationship, monetary payment, or the provision of free products from the endorser.” A copy of the form of the letter, which explains that clear and conspicuous disclosures are required can be found here. Continue Reading
On December 14, 2016 the United States Congress passed an act known as the “Consumer Review Fairness Act of 2016” (“CRFA”). The stated goal of this new legislation is “to prohibit the use of certain clauses in form contracts that restrict the ability of consumers to communicate regarding the goods or services offered in interstate commerce that were the subject of the contract.” The reach of the legislation’s protection of honest consumer reviews and opinions extends beyond content that may be posted on a company’s own website, as the Federal Trade Commission has clarified that the CRFA “protects people’s ability to share their honest opinions about a business’s products, services, or conduct, in any forum, including social media.” Subject to certain exceptions under the CRFA relating to content that a company may be able to remove, edit, or suppress, CRFA generally provides that a provision contained in a form contract is void at inception if the provision: (i) “prohibits or restricts the ability of an individual who is a party to the form contract to engage in a covered communication;” (ii) “imposes a penalty or fee against an individual who is a party to the form contract for engaging in a covered communication; or;” or (iii) “transfers or requires an individual who is a party to the form contract to transfer to any person any intellectual property rights in review or feedback content, with the exception of a non-exclusive license to use the content, that the individual may have in any otherwise lawful covered communication about such person or the goods or services provided by such person.” Sections of the CRFA prohibiting and invalidating covered contract clauses became effective as of March 14, 2017, while sections providing for Federal Trade Commission and State enforcement become effective as of December 14, 2017. Continue Reading
Last month, Sofia Vergara, star of ABC’s Modern Family, reached a settlement in a lawsuit brought by the actress against beauty company Venus Concept for alleged improper use of her likeness on television and in social media, which Vergara alleged created the false impression that she endorsed the Venus Concept brand or its treatment products. In the lawsuit, Vergara claimed $15 million in damages. Continue Reading
On April 6, 2017, the California Supreme Court struck another blow in its contentious battle with the United States Supreme Court on the enforceability of consumer arbitration clauses subject to the Federal Arbitration Act (FAA). In McGill v. Citibank, N.A., No. S224086, Slip Op. at 1 (Cal. Apr. 6, 2017), the Court held that an arbitration clause in Citibank’s credit card agreement purporting to waive the plaintiff’s right to seek public injunctive relief under the Consumers Legal Remedies Act (CLRA), the Unfair Competition Law (UCL), or the False Advertising Law (FAL) in any forum was unenforceable as against California public policy. The Court further held that, notwithstanding the U.S. Supreme Court’s decisions on the subject, including in AT&T Mobility v. Concepcion, 131 S. Ct. 1740, 1747 (2011), the FAA did not preempt California’s policy. As discussed below, these holdings are troubling and likely inconsistent with federal law. Continue Reading
Advertising for new games can present some troublesome legal issues, if due care is not taken. A recently concluded matter in the UK highlights an example of the potential issues. Hello Games was investigated by the Advertising Standards Authority (ASA), based on complaints from customers that advertised features of its game (No Man’s Sky) either did not actually appear in the game or did not appear in the way advertised. The ASA ruled, in this case, that the advertising was not in fact legally misleading. Notwithstanding this ruling, game publishers need to be careful when advertising new games.
On February 1, 2017, the Federal Trade Commission (“FTC”) and iSpring Water Systems, LLC (“iSpring”) reached a settlement regarding its false, misleading, and unsupported claims that its water filtration systems and parts are “Built in USA,” “Built in USA Legendary brand of water filter,” and “Proudly Built in the USA.”
Enforcement of the Digital Advertising Alliance “Application of the Principles of Transparency and Control to Data Used Across Devices” (DAA Cross-Device Principles) officially began on February 1, just a week after the FTC issued a staff report discussing the application of the FTC Online Behavioral Advertising Principles in the context of “Cross Device Tracking” and suggesting that the DAA Cross-Device Principles, while commendable, could be stronger. Continue Reading
The Federal Trade Commission (“FTC”) has been cracking down on brands for paying Instagram users to endorse their products or to share brand content without disclosing the relationship. Indeed, the recent settlements entered between the FTC and several media and entertainment companies as well as a specialty retailer make it clear that the FTC is paying close attention to endorsements of all kinds – whether by celebrities, sponsors, or paid “influencers.”
In its opinion in In re California Naturel, Inc., the Federal Trade Commission held that the California Naturel, Inc. advertising promoting its “all natural” sunscreen on its website as containing “only the purest, most luxurious and effective ingredients found in nature” violated Section 5 and 12 of the FTC Act. The opinion, written by Chairwoman Edith Ramirez, noted that California Naturel admitted that eight percent of its sunscreen formula is in fact dimethicone, a synthetic ingredient.
On Tuesday, January 12, the NFL owners voted 30–2 to formally approve the relocation of the St. Louis Rams to Los Angeles, which concluded a hostile, multiple-year-long review process that ultimately deprives the city of St. Louis of its beleaguered NFL franchise that has called that city home since 1995. Also in Tuesday’s vote, NFL owners approved the possible relocation of the San Diego Chargers to Los Angeles to share a new stadium with the Rams. Chargers owner Dean Spanos has one year to decide whether to move the team or stay in San Diego and attempt to construct a new stadium there, where efforts have, thus far, been wholly unsuccessful. Continue Reading