Adlaw By Request : Advertising & Marketing Lawyer & Attorney : Reed Smith Law Firm : AdLaw By Request & KidAdLaw

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As President Obama visited Ireland and England this week enroute to the G8 meeting in France, much was said about the "special relationship" between the United States and England. Coincidentally, I happened to be in our London office participating in one of the firm's Consumer Goods and Brands Group Breakfast Seminar Series. The topic was the Advertising Standard Authority's new jurisdiction over digital advertising (website, mobile, etc.). The ASA is Great Britain's self-regulatory body akin to the National Advertising Division in the United States. At the conclusion of the session, I was struck, not so much by the special relationship between our two nations, but by how countries can be so divided when it comes to self-regulation.

Attending was Malcolm Phillips, the CAP (Committee of Advertising Practice) Code Policy Manager. (The CAP Code is independently administered by the ASA.) Mr. Phillips outlined how the ASA is proceeding with its new jurisdiction over digital content. I was there to provide the U.S. perspective. What was fascinating to me was how Mr. Phillips and I compared the two self-regulatory systems. Whatever our special relationship may be, when it comes to self-regulation, it's my impression that we're on two different planets. And the UK is in a far smarter place than the United States.

In the United States, one of the ways we tout the success of our self-regulatory system is to cite the level of compliance by advertisers with NAD rulings. Indeed, compliance is well into the 90 percentile. Impressive. The ASA compliance is just as effective, if not better. In the United States, we also cite the many supportive statements by federal regulators, most notably the FTC, about the efficiency and effectiveness of our self-regulatory system. On that level, both the UK and the Unites States are on the same page. But unlike the United States, the UK regulators mean what they say and have a true hands-off attitude with respect to ASA proceedings. While U.S. regulators and legislators are quick to compliment the NAD and its sister organizations within the National Advertising Review Council (NARC), those compliments are increasingly followed by calls for more regulation and greater governmental intrusion into free markets. Not so in the UK, where regulators and legislators take a clear "wait and see" approach and do not second-guess ASA rulings, but instead give them increasing authority to oversee marketplace activities. Contrast that with the developing trend in the United States that fails to give self-regulation a chance to mature and adjust to the marketplace before the government steps in, either from a bully pulpit or, worse, with its own regulations. As a result, self-regulators are forced to become overly aggressive where little or no proof exists that doing so will promote better consumer protection. In the UK, self-regulation is allowed to grow and adjust. Not so in the United States.

Moreover, the UK is not plagued with the specter of class actions and multi-state attorneys general actions that may spin off from self-regulatory rulings. This obviously makes dealing with self-regulators in the United States far more complicated than dealing with them in the UK (and most other countries that depend on self-regulation). Nor are advertisers in the UK faced with anywhere near the financial exposure present in the United States, where a challenged advertising claim can lead to millions in settlements, fines and other costs. In the UK, once the ASA rules against an advertiser, that's pretty much the end of it, particularly since media cooperates with the ASA and declines to run advertising the ASA has found unsubstantiated.

All this leads me to ask which system is better. Are consumers better-protected in the United States by an approach that depends on a hydra of protagonists and financial Armageddon, as opposed to one self-regulatory body? I think not. Consumers in the UK are just as smart as any U.S. consumers. Or, alternatively, they can be misled in the same fashion. Yet in the UK, brands, regulators, and consumers have come to truly respect self-regulation, resulting in a far less complex marketplace and, by definition, a more open market. In the end, that's all to the consumers' benefit.

So to all the U.S. federal regulators, state attorneys general, and judges in class actions, I say "Back off!" Give self-regulation a true chance and not just lip service. Because it really does work. Just take a look at the UK. Or is our special relationship truly divided only by a common language of consumer protection?

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Bloomberg Businessweek: Android Phone Users Sue Google Over Alleged Tracking of Their Movements

Two Android phone users sued Google Inc. (GOOG) over claims their phones secretly recorded and stored data about their movements.

Reuters:  Lawmakers: extend privacy codes to app makers

Mobile privacy safeguards should also extend to third-party application developers, two lawmakers said after reviewing the practices of four major U.S. wireless carriers.

CNN:  Verizon to put location-tracking warning sticker on phones

Verizon says it will soon begin placing a sticker with this warning on all new devices.

In the wake of a giant brouhaha over the news that Apple's iPhones record and store users' locations, Verizon Wireless says it will start slapping 'we can track you!' warning stickers on its products.

The Hollywood Reporter:  Mike Tyson Tattoo Artist Sues Warner Bros. to Stop Release of 'Hangover 2'

S. Victor Whitmill, who calls the Tyson design "one of the most distinctive tattoos in the nation," is asking for an injunction to stop the release of the highly-anticipated comedy sequel

The man who gave Mike Tyson his distinctive facial tattoo has sued Warner Bros. over the similar-looking facial art on Ed Helms' character in the upcoming The Hangover: Part II.

MediaPost:  Do-Not-Track Bill Clears California Judiciary Committee

A proposed privacy bill in California aimed at ensuring that consumers can opt out of online tracking has cleared the state's Senate Judiciary Committee by a 3-2 vote.

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This post is written by John Feldman and Amy Mushahwar.

Bill Adds to the Web of Proposed Privacy Legislation and Contains Much More Than Kids Do Not Track

Today, Rep. Ed Markey (D-Mass.) circulated a discussion draft of his kids online do-not-track bill, co-sponsored by Joe Barton (R-Tex.) that proposes to make it illegal to use kids' or teens' information for targeted marketing and require parental consent for online tracking of the info. Both Congressmen co-chair the House Privacy Caucus and their kids' privacy bill will join other more generally-applicable privacy legislation pending in the 112th Congress by Representatives Cliff Stearns (R-Fl.), Fred Upton (R-Mich.), Jackie Speier (D-Calf.) and Bobby Rush (D-Ill.) and Senators John Kerry (D-Mass.) and John McCain (R.-Ariz.) with Senator Jay Rockefeller (D-W.Va.) promising to release a generally-applicable privacy bill containing Do Not Track provisions next week.

But, members of the privacy community were expecting this piece of proposed legislation. Markey had promised since late 2010 that the bill was coming. Specifically, the bill would update the Childrens' Online Privacy Protection Act of 1998 ("COPPA") provisions relating to the collection, use and disclosure of children's personal information. Further, it would establish protections for personal information of teens who were previously not addressed in COPPA at all.

Key provisions of the bill include:

Scope Updates: The bill would expand the scope of the definition of covered Internet operators to include online applications and the mobile web. The Federal Trade Commission ("FTC") would also be empowered with rulemaking authority to create more flexible definitions of operators that account for the development of new technology. The also expands the personal information protected to include IP Addresses, mobile SIMs or any other computer or other device identifying numbers.

Privacy Policies/Disclosure: The bill would require online companies to explain the types of personal information collected, how that information is used and disclosed, and the policies for collection of personal information.

Further Parental Choice: In addition to keeping the existing requirements for online companies to obtain parental consent for collection of childrens' personal information, the bill also includes provisions requiring companies to provide parents access to the information collected about their child and the opportunity to opt-out of further use of maintenance of their child's data.

Targeted Marketing Prohibitions for Kids & Minors: Website operators and other online providers would be prohibited from knowingly collecting personal information for behavioral marketing purposes from children and minors. The FTC would be required to issue regulations within one year of the bill's passage.

Digital Marketing Bill of Rights for Teens & Fair Information Practices Principles: This section incorporates the Fair Information Practice Principles ("FIPPs") concept that was in the Department of Commerce's Privacy Green Paper. Under this proposed bill, website operators and other online providers are prohibited from collecting personal information from any minors, unless they adopt a Digital Marketing Bill of Rights for Teens. Such a bill of rights or FIPPs must include provisions regarding data: collection, quality, purpose specification, use limitations, security, use transparency, access and correction.

Geolocation Information Collection of Kids and Minors: Website operators and service providers must establish procedures for notice and choice regarding geolocation information. In the case of information collection from children, an operator/provider must obtain verifiable parental consent before this information would be collected, in most cases.

Eraser Button: Website operators must create an "Erase Button" for parents and children by requiring companies to permit users to eliminate publicly available personal information content when technologically feasible. (Such a provision, however, could lead parents and children into a false sense of security on the web. With multiple outlets for data cashing, it is difficult to wholly erase data on the web.)

Expansion of FTC Jurisdiction to Telecom: In keeping with the Kerry bill, the Markey bill also seeks to expand FTC jurisdiction to telecommunications carriers.

We will be carefully evaluating these provisions while this bill pends, but we can readily identify that complications are likely to arise for marketing to young adults. For example, teens are far more likely to lie when faced with traditional age screens. So, even though the statute contains a 'knowing' information collection requirement, to what degree would marketers be required 'fortify' their existing age screens to account for teens? If more stringent age screens must be employed, will the more tedious screens reduce marketing to adults, too?

If this bill advances on the Hill, please lookout for upcoming privacy bill updates from our team.

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The Judiciary Committee of the California State Senate on Tuesday passed SB761, legislation that would broadly regulate all online data collection and impose a “do not track” regulatory regime for online behavioral advertising.  The bill was approved on a 3-2 vote and now goes to the Senate Appropriations Committee.  We need your help to defeat this proposal.

Senate Bill 761 was introduced on March 24th by Senator Alan Lowenthal.  The bill covers an overly broad range of information collected online, both personally identifiable information and anonymous data such as IP addresses and click-stream data.  It would direct the California Attorney General, in consultation with the California Office of Privacy Protection, to develop a regulatory regime to require companies engaged in online behavioral advertising or other Internet information collection to provide consumers with notice and the ability to opt out of the collection and use of information for those purposes.  Any company that failed to comply with the regulations would be subject to civil penalties of up to $1,000 and possibly punitive damages.  The bill authorizes the Attorney General to impose a requirement that companies provide access to consumers to all of the information collected about them online. 

ANA joined with a broad coalition of state and national industry groups to file comments describing the serious problems with this legislation.  We also filed separate comments with the Judiciary Committee members.  We will now be reaching out to the Appropriations Committee members.

It would be very helpful if your company would also contact the members to express your opposition.  Contact information is available at http://www.sen.ca.gov.

This bill is bad for consumers, bad for the business community and bad for the national economy.  We agree with the bill’s sponsor that consumers are entitled to notice about the collection of data for interest-based advertising and should have the ability to opt out of those practices.  However, we believe this can be best accomplished through strong, effective self-regulation rather than through government regulation.  ANA and other leading marketing associations launched a comprehensive new self-regulatory program for online behavioral advertising last October.  Information about the program is available at http://www.aboutads.info.

Consumers can go to that website today and opt-out of information collection for interest-based advertising.  We have encouraged all of our members to join this program, which covers the entire online ecosystem.  You can access our OBA toolkit here.

By imposing state-specific rules on information practices in a global medium, SB761 raises very serious interstate commerce concerns.  The bill is similar to the approach of legislation introduced in Congress by Congresswoman Jackie Speier (D-12/CA), the “Do Not Track Me Online Act” (H.R.654).   A government-imposed “Do Not Track” regime is a bad idea at the federal level and an even a worse idea at the state level where a checkerboard of inconsistent state regulation is almost certain to occur.

If you have any questions or comments about the California bill, please contact Dan Jaffe (djaffe@ana.net) or Keith Scarborough (kscarborough@ana.net) in ANA’s Washington, DC office at (202) 296-1883.

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The following article appeared in AdAge and we acknowledge the author's consent to repurpose it for AdLaw By Request.

Much has been presented and written about the increasing use and success of performance incentives in the Client/Agency relationship. Industry bellwethers P&G and Coca-Cola, and more recently Intel, are all touting and branding their own versions of “value-based” compensation. Regardless of what you may call it, be it pay-for-performance, enhanced profitability, or just plain incentive compensation, these are all just words meaning different things to different people. What is clear is that beyond the major creative and media advertising relationships, the use of performance incentives of any type is paltry, at best. Results from the ANA’s triennial Trends in Agency Compensation Survey, published last year, indicate that other marketing services, such as Interactive / Internet / Digital show a 14% utilization of Agency performance incentives, going all the way down to merely 2% for Public Relations firms. (Other marketing disciplines falling between these lows are Promotion / Event Marketing, Multicultural, and Direct Marketing.)

So what are the reasons for the disparity in the adoption of these much publicized arrangements that marketers profess are leading to Agency performance and overall relationship improvements? Many of them can be traced to a reluctance by the service provider community -- in particular executive management and that “new” Agency stakeholder, the CFO -- to embrace placing any compensation at risk in categories where results are difficult to measure and an Agency’s impact on marketers’ key performance indicators is suspect. All too often, and mainly due to insufficient trust in the relationship, Agency management view these arrangements as marketers’ way (and Client Procurement) to gain unnecessary transparency, to give them a “haircut,” or to make promises which they may or may not choose to fulfill. This situation is most acute in the Public Relations discipline, where firms of all sizes, whether independent or part of a holding company, are stubbornly refusing to play and/or clinging to a remuneration model which Client Procurement and Strategic Sourcing are scratching their collective heads to logically understand.

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Doug Wood's latest social media piece on Law.com smacks a little of Animal Farm, a little Fountainhead, and a little…well you judge for yourself. Enjoy.

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Environmental Leader:  Green Consumerism in Doubt

As companies push to capitalize on eco-sensibilities this Earth Day (see our wrap-up), a suite of reports suggest mixed prospects for such products and marketing efforts.

Sales of Green Works, the Clorox environmental cleaning line launched with great fanfare and a Sierra Club endorsement in 2008, have fallen from about $100 million to $60 million a year, according to the New York Times. The paper reports that many green products are struggling to keep up sales during recession.

paidContent.org:  Less Than 1 Percent of Firefox Users Using ‘Do Not Track’ Option

Is it because it’s tucked away in an “advanced” menu that users don’t know about? Or is it because most users simply aren’t that bothered by targeted advertising? Whatever the reason, less than 1 percent of users of Firefox 4 are adopting the “Do Not Track” option, according to Jules Polonetsky, founder of the Future of Privacy Forum think tank. Firefox 4 is the first web browser to send a Do Not Track signal to websites based on users’ requests.

Bloomberg Businessweek:  Apple, Google Queried by U.S. Lawmakers on Tracking Technology

Apple Inc. and Google Inc. were among six companies that drew inquiries from U.S. lawmakers seeking to determine whether their products breach privacy rules by tracking, storing and sharing user locations.

Reuters:  Government to regulate electronic cigarettes as tobacco

The government said on Monday it plans to regulate electronic cigarettes as tobacco products.
The U.S. Food and Drug Administration's announcement came after the U.S. Court of Appeals for the D.C. Circuit issued a decision that electronic cigarettes are not drugs or devices unless they are marketed for therapeutic purposes.

MediaPost:  Supreme Court Weighs Privacy Against Marketers' Rights

Lawmakers have recently proposed measures that would require Web companies to allow consumers to opt out of online data collection, but significant questions remain about whether such laws would violate companies' First Amendment rights to communicate with each other.
On Tuesday, the U.S. Supreme Court heard arguments in a case that could go a long way toward answering those questions. The matter stems from a Vermont law that prohibits pharmacies from selling records of prescriptions written by doctors without their opt-in consent.

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