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

On February 1, the FTC announced its largest settlement to date with a mobile app developer – an $800,000 penalty – in conjunction with the release of guidance on mobile app best practices for app platforms, app developers, third parties and app trade associations.  The guidance document and the enforcement action together demonstrate the need for companies with mobile apps to review disclosures, vendor agreements, and consumer consent mechanisms for data collection.

Please click here to read the complete report on our sister blog, Global Regulatory Enforcement Blog.

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After a swift left to the chin in early September from the Republican-controlled House Energy and Commerce Committee Chair, Rep. Fred Upton, David Vladeck, the FTC Director of the Bureau of Consumer Protection, testified before the Subcommittee on Commerce, Manufacturing, and Trade, and the Subcommittee on Health, October 12, 2011, discussing the International Working Group (IWG) and changes that are underway.

• The tone of Vladeck’s statement bore a marked respect for, though not deference toward, advertising self-regulation. This is in contrast to his speech before the self-regulatory National Advertising Division of the Council of Better Business Bureaus October 3, 2011, in which he only mentioned in passing the positive role of self-regulation. In his statement before the Subcommittees, he made a much more significant effort to acknowledge the success that has been achieved to date by self regulation both in the form of the Children’s Advertising Review Unit (CARU) and the Children’s Food and Beverage Advertising Initiative (CFBAI).
• Because there is no scientific link between marketing of food and obesity, Vladeck made it clear that the Commission is asking industry to take on a share of the responsibility for solving the obesity problem “regardless of whether or to what extent food marketing may have contributed to the problem of childhood obesity” in the first place. In other words, according to Vladeck, it is a proper role of government to pressure industry to help solve multi-factored social problems by not marketing (and therefore not selling) products that may have no relationship to the social problems that the government is seeking to address. Vladeck referred the Institute of Medicine (IOM) Report from 2008 to highlight the fact that marketing influences food and beverage preferences, purchase requests and short-term diets of children under 12 to support the Commission’s position that industry should use its marketing power to eat certain foods rather than other foods. One can interpret this initiative as simply government telling industry what to advertise and what to sell based on a stated political goal. “Children’s health is the ultimate goal, and marketing of more nutritious foods is one effective tool to help achieve that goal.” 
• Vladeck, who famously dismissed the notion that the IWG proposals could raise First Amendment concerns last summer in a blog post, apparently has been convinced that there may be some validity to the First Amendment arguments made by academics and lawyers in the advertising field. He states, “Our commitment to finding the best balance between what is best for children’s health and what is workable for industry has guided this entire process. . . . .The Working Group’s proposal is strictly voluntary. The Commission recognizes that some forms of regulatory action could raise First Amendment concerns.”
• After 29,000 comments and after new CFBAI guidelines, which go a long way toward achieving the government’s goal of restricting marketing behavior related to certain foods and beverages, the FTC is signaling significant changes to its proposals. Those changes include:
  • Limiting the scope of marketing to children to those aged 2-11, rather than the originally proposed 2-17. Vladeck: “It is often difficult to distinguish marketing designed to appeal to this age group from marketing directed to a general or adult audience.”
  • Limiting the scope of the marketing activities included within the proposals. Vladeck: “The FTC staff believes that philanthropic activities, charitable events, community programs, entertainment and sporting events, and theme parks are, for the most part, directed to families or the general community and do not warrant inclusion with more specifically child-directed marketing. Moreover, it would be counter productive to discourage food company sponsorship of these activities to the extent that many benefit children’s health by promoting physical activity.”
  • Eliminating recommendations regarding trade dress and brands. Vladeck: “The Commission staff does not contemplate recommending that food companies change the trade dress elements of their packaging or remove brand equity characters from food products that don’t meet nutrition recommendations.”
  • Eliminating recommendations regarding in-store displays and packaging of seasonal or holiday confections.
  • Adjusting the proposed audience share criterion for “traditional media marketing,” including television, radio, and print, from 30 percent children ages 2 to 11 years, to 35 percent – which is the same age criterion used by CFBAI.

The IWG proposal is not dead, however. Expect to see the revised version focused more specifically on traditional media and on online, digital, and social marketing. Also, the IWG proposal will still seek to press its recommendations in the area of advertising or product placement in movies and video games. Additionally, it will cover sweepstakes and premium offers. And, in the one remaining proposal that will cover children and adolescents, Vladeck signaled that the proposal will cover marketing activities in schools for both children and adolescents.

Thus, the IWG proposal will be scaled back significantly. One important lesson: Self-regulation is critical, but industry must be careful of using self-regulation so aggressively that it creates a blueprint for “voluntary” regulation by governmental bodies. Cooperation between government and industry that results in co-regulation is not self-regulation. With the FTC standing right beside self-regulatory efforts, tweaking self-regulation as it deems necessary to advance espoused governmental goals of protecting children, the augmented CFBAI standards may be likely to be the presumptive norm for governmental expectations (and enforcement?). Let’s hope that the blueprint we’re now working off of will build a structure we can all live in.

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From the proposed changes to COPPA to the latest developments in the area of self-regulation of food marketing to children, the CARU conference to be held Wednesday, October 5, 2011 in New York City will be one of the best places not only to learn the details but also to interact with leaders in the industry to are on the front lines of self-regulation. Furthermore, FTC Commissioner, Julie Brill, will give a keynote address. Commissioner Brill tends to represent the more activist tendencies of the Commission, and those in attendance should be able to ask pointed questions and express concerns. The agenda and full conference information is located on the CARU website.

Because Reed Smith is a sponsor of the CARU conference, if you register by contacting Rey Persaud at 212-705-0113 or via email at rpersaud@narc.bbb.org and mention this blog post, you will receive a $100 discount on the conference fee. Offer expires October 3, 2011.

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The global attack on advertising to children draws broad battle lines. As proposed by the European Parliament Committee on the Internal Market and Consumer Protection on July 19, 2011, the draft agenda for 2012 demonstrates a distrust of advertising generally, not just in relation to marketing of food products. The Committee has proposed a ban on all advertising on television and on “direct advertising towards children under the age of 12.” The European lawmakers are basing their proposal on the reasoning that “children are children” and not “consumers.” The report does not explain this rationale. 

What about teenagers? Are they “consumers”? Can they make informed choices? At what age exactly does one make “informed choices” about things like which toy to desire, which sneakers to admire, which brand of yogurt to crave, or which activity to yearn for? And, when does a person learn how to discern the difference between a commercial and non-commercial speech? Furthermore, is it possible to restrict advertising to just children under the age at which they cannot appreciate the persuasive nature of advertising? How many media are segmented so clearly that one can be assured that a ban targeting children under 12 will not restrict advertising to those 12 years old or older? 

These questions are the same as those that are being researched and discussed in the United States, most recently in the context of the Interagency Working Group Proposal on Food Marketing to Children, which includes a proposal to extend restrictions (not a ban) to marketing activities directed to those 17 years of age or younger.  The primary difference, mentioned by many commenters in response to the IWG’s request for comments, is that in the United States, commercial speech is protected by the U.S. Constitution. Without that civil right, Europeans are vulnerable to governmental intervention that can chill truthful, informative speech and deny members of a consuming public – including children and adolescents – exposure to a world with choices and persuasive forces. Proposals for advertising bans such as the one in Europe may promote an extension of childhood ignorance and deny children the tools and experience by which they, along with their parents, can begin to discover what it means to be a discerning member of society.

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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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This post was written by John P. Feldman and Michael L. Sacks.

The Interagency Working Group of Food Marketed to Children (“Working Group”) today has requested comments on proposed nutritional principles that it hopes will help in the fight against childhood obesity. The Working Group, established in 2009 by the FTC, FDA, CDC, and USDA at Congress’s request, hopes that by 2016 industry actors will meet its two-pronged self-regulatory vision: a marketing environment in which advertisers encourage kids to choose foods that make for a healthy diet; and a production environment in which food companies will police limits on the fat, sugar, and sodium content of their products marketed to kids.

In formulating its principles, the Working Group set its sights on the most heavily marketed foods to children and adolescents, ages 2-17: breakfast cereals, snack foods, candy, dairy products, baked goods, carbonated beverages, fruit juice and non-carbonated beverages, prepared foods and meals, frozen and chilled desserts, and restaurant foods. In a press release, the Association of National Advertisers, calling the proposals “sweeping” and “overly restrictive,” criticized the Working Group for inappropriately “treating teenagers as if they were young children” and employing “limited and outdated” data.

Despite these differences, the Working Group and Food Marketers can agree that these voluntary proposed principles respect industry’s preference for and progress in its self-regulatory efforts to keep our kids healthy.

Action item? Take time now to determine just how divorced from business reality these principles are for your company. If they end up suggesting that a formulation tweak would be all that it takes to be a poster child for the Working Group then go for it. If they suggest to you that it will be impossible or very costly to reformulate then get set to comment. Objective, quantifiable data is needed to make your comment useful. So, do the analysis as soon as possible and let's see if what they're imagining has any semblance of reason.

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The role of self-regulation is partially educational. Wayne Keeley's CARU has demonstrated once again why the self-regulatory body he heads up is relevant and focused on ensuring that the educational mission is not lost in the day-to-day cases they hear. CARU has produced a Public Service Campaign entitled “Do You Know Where Your Children Are…On The Internet?” And, with Mr. Keeley's background as a film director, CARU ended up producing something good enough to be nominated for an Emmy Award in the Public Service Campaign category. We understand that the CARU PSA campaign has aired on WABC (Live with Regis, GMA and Rachel Ray among others); CBS; and Discovery Kids. It is presently airing on Cartoon Network. The PSA Campaign can also be seen on CARU’s Facebook page and You Tube and Vimeo:
 

CARU Children's Advertising Review Unit Asks Do You Know Where Your Children Are...On the Internet? from CARU Staff on Vimeo.

Keep Your Children Safe on the Internet with the Children's Advertising Review Unit (CARU) from CARU Staff on Vimeo.

Children's Advertising Review Unit (CARU) asks Do You Know Where Your Children Are...On the Internet? from CARU Staff on Vimeo.

We often hear about educational solutions targeted at consumer protection problems. CARU is definitely contributing to that end. 

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This post was written by Shira Simmonds, President, Ping Mobile.

A 2007 study by the Nielsen Company reported that 35 percent of American "tweens" (kids 8‑12) now own mobile phones. How can we reach them via mobile marketing programs without violating any legal or ethical guidelines?

The answer turns out to be remarkably simple. The potential is enormous for mobile marketing to be used as a learning tool and to promote healthy, educational products and services. There is a tremendous opportunity to use mobile in creative ways that actually support good parenting while teaching kids how to be responsible, discerning consumers.

Here's how:

• Implement safety measures, such as parental consent – Smart kids with cell phones can easily respond to a call-to-action on a cereal box or TV commercial, and opt-in to promotions without their parents' knowledge or consent. As such, advertisers will often be required—or at least strongly encouraged—to add legalese that may range from asking respondents to confirm they are of a certain age, to expressly prohibiting the participation of certain groups from a program or promotion. Sometimes the best approach is to add extra precautions on top of the legal requirements, such as sending a confirmation link to a parent or guardian’s e-mail address before anything is activated. Some mobile phone providers, such as Kajeet, offer computer programs that allow parents to monitor activity on the child's cell phone account. 
• Market to both parents and kids by creating a marketing message that would be parent-approved and kid-friendly –If a brand's mobile marketing campaign offers healthy, educational products, such as an opportunity to join a book club, discounts on a local art class or coupons for healthy snacks, parents will be happy to opt-in. No matter how tech-savvy a 12-year-old might be, it's the parents who make the purchase. A brand is basically marketing to a parent via the child's cell phone. Promotions should be created with the parent in mind, but should be designed to appeal to the child.
• Follow all legal guidelines – Ad campaigns and programs targeting children should be analyzed on a case-by-case basis to determine both the legal requirements and the potential risks associated with such programs. This is an evolving area, and many issues still sit somewhere within a spectrum of different shades of gray. The laws and regulations governing this area of business can be complex and even conflicting at times. They can range from Federal Trade Commission laws (COPPA – Children’s Online Privacy Protection Act) and various state laws, to self-regulatory principles and best practices, like those promulgated by the Direct Marketing Association, the Children’s Advertising Unit of the Better Business Bureau, and the Mobile Marketing Association. While government regulators and self-regulatory agencies alike understand that no sweepstakes, contest or program is child-proof, they do expect advertisers to do their part to protect the safety of our kids. Along with a whole host of information on-line, sound legal advice in this area is key. Get it and follow it.
• Empower kids by giving them a voice, create a campaign that lets kids voice their opinion – In order to engage kids, create an interactive environment, such as a mobile game, a poll where they can vote for something, or interactive SMS or IVR that enables kids to participate and play. Kids learn through play, and brands will be most remembered when kids have had the opportunity to interact with the brand.

Mobile marketing doesn't have to turn kids into mindless consumers. Instead, it can open up a world of educational and developmental potential that parents can embrace rather than resist. Managing time and texting costs is a great way to teach kids how to budget their resources. Using advertised toys as an incentive for performance is an effective motivational tool. And mobile coupons that encourage kids to read books or participate in physical exercise is an idea that any parent would love.

###

Ping Mobile is a full-service mobile marketing and technology company providing a complete range of mobile marketing services, including SMS, MMS, IVR, WAP applications and Bluetooth. With an industry-leading focus on consultancy, reporting, data analysis and client services packages, Ping Mobile is the mobile marketing agency of choice for clients that have included Warner Brothers, Ford Motor Company, Days Inn, Disney's Soap Channel, Kentucky Fried Chicken, Arby's, Pizza Hut and Hawaiian Airlines.

Ping Mobile is headquartered in Englewood Cliffs, NJ with offices in Los Angeles, CA, Atlanta and Tel Aviv, Israel. For more information please visit www.PingMobile.com

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This post was written by John P. Feldman and Andrew R. Boortz.

Last year, the Maine Legislature adopted 10 MRSA c. 1055, which, among other things, attempted to extend COPPA-like protection to all minors (that is, children under the age of 18). The law was plagued by a number of issues, including questions regarding its constitutionality, and ultimately caused the Maine attorney general to promise not to enforce the law as written. Based on this, it was generally understood that the Maine Legislature would revisit the law in the 2010 legislature session.

The legislature did not wait long. On January 7, 2010, a new children's privacy bill was referred to the Maine Senate Committee on Business, Research, and Economic Development. The new bill, currently listed as LD 1677, would repeal the existing children's privacy law, but would enact a new prohibition on the collection and use of personal information that is: (a) collected and used on the Internet; (b) about a minor; or (c) for the purposes of pharmaceutical marketing.

Although this bill is narrower in scope than the law it seeks to replace, there are still problems with it. First, the bill applies to any personal information about a person under the age of 18, regardless of whether that information is related to health. Therefore, any information about a minor, including name, e-mail address, etc., would be covered. Second, the law seems to apply only to information collected on the Internet; it is unclear whether this information would apply to information collected through other means such as offline collection, mobile device, etc. Third, the text of the prohibition is poorly worded. The prohibition states that "any person may not collect and use information collected on the Internet ..." (emphasis added). Thus, by a literal reading of the text of the bill, a company could collect information about a minor for the purpose of pharmaceutical marketing and avoid liability if it does not use the information. Alternatively, a company could use information that is collected on the Internet by someone else since it would neither have collected nor used the information.

Of course, it is unlikely that the Maine attorney general would interpret the law in this way because this would create a substantial loophole. Instead, it is more likely that the law would be interpreted as creating two strict liability offenses—one for collection of information if the reason for the collection is to promote pharmaceutical sales, and one for the use of any information about a minor to promote pharmaceutical sales, whether or not the information was originally collected for that purpose.

Why This Matters: If enacted, this bill would place a higher burden on companies that sell either over-the-counter or prescription drugs, including pharmaceutical manufacturers and retailers. Such companies will have to be very careful with any marketing program that could conceivably collect or use information about a minor. For example, an e-mail blast with weekly offers that includes discounts on over-the-counter products could violate the bill's prohibition on marketing to children if a minor's e-mail address was included in the recipient list. Companies that sell pharmaceutical products should watch the progress of this bill closely to determine what kinds of systems should be created to avoid liability. There may be an opportunity to comment on rules that must be promulgated by the Maine attorney general within a year after enactment of the law.

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On December 3, 2009, the FTC released a report to Congress that outlined various ways in which self-regulation has not done enough to limit advertising to children of music with explicit lyrics, and movies and games that depict violence.

The report spans various media platforms and contains specific recommendations to the entertainment industry. 

• The movie industry and the music industry should develop specific and objective criteria to restrict marketing of violent movies and music to children.
• The FTC is looking for restrictions not only for advertising R-rated movies in venues reaching a substantial under-17 audience, but also for the advertising of PG-13 movies in venues reaching a substantial under-13 audience.

• These criteria should apply both to direct advertising of the movie and to indirect promotion of the movie through tie-in advertising of foods, toys, and other licensed products appealing to children.

• The FTC also recommends that the music industry should implement restrictions for all Parental Advisory Label (PAL)-stickered music in venues reaching a substantial under-17 audience.

• The criteria implemented by the movie and music industries should include not only the percentage of the underage audience, but also other factors like the absolute number of children reached, whether the content is youth-oriented, and the youth popularity and apparent ages of the characters and performers.
• The movie, music, and electronic game industries should evaluate their restrictions and tighten them as necessary, paying particular attention to online and viral marketing, to ensure that advertising is not placed in venues reaching large underage audiences.

• The movie industry should increase enforcement efforts against online posting of “red tag” trailers without adequate age-based restrictions on access.

• The movie industry should carefully examine the content of “appropriate audience” trailers for consistency with the feature films they will precede.

• The movie industry should place all rating information prominently on the front of DVD cases and other packaging for home releases of movies and should make disclosure of both rating and rating reasons prominent in all advertising venues.

• The music industry should display the PAL more prominently in advertising, particularly in television and online venues, and should provide information about the specific type of explicit content.

• The electronic game industry should include content descriptors with the rating on the front panel of game packaging and should continue to provide more detailed rating summaries for parents online.

• The movie industry should take steps to better inform parents about additional adult content in unrated DVDs and should give parents a way to assess the appropriateness of unrated versions for their child.

• Specifically, the industry should either re-rate DVD releases that contain additional content or, at a minimum, extend the new disclosure rule regarding the content of unrated DVDs to all forms of advertising and improve the level of compliance with the rule.
• Retailers and theater owners should continue to strengthen enforcement efforts restricting the sale of tickets to R-rated movies, R-rated and unrated movie DVDs, PAL-stickered music, and M-rated games to children, paying attention to possible enforcement gaps created by the use of gift cards for online purchase.

Since the FTC issued its first report on marketing violent entertainment to children in 2000, the agency has called on the entertainment industry to be more vigilant in three areas: restricting the marketing of mature-rated products to children; clearly and prominently disclosing rating information; and restricting children’s access to mature-rated products at retail.  This latest report found areas for improvement among music, movie, and video game marketers, but credited the game industry with outpacing the other two industries in all three areas.

The report, entitled “Marketing Violent Entertainment to Children: A Sixth Follow-up Review of Industry Practices in the Motion Picture, Music Recording & Electronic Game Industries” analyzed information from sources including marketing documents submitted by industry members, an undercover “mystery” shopper survey, consumer surveys conducted in shopping malls and by telephone, “surfs” of industry Web sites, and data acquired from proprietary ad-monitoring services.  Findings included:

• Music: While the music industry’s Parental Advisory Label alerts parents to explicit lyrics in recordings, it does not provide information about the nature of that content.  The music industry has declined to implement rules restricting the marketing of explicit-content labeled music to children.  The report does not find any indication of specific targeting of children, but does show numerous examples of ads for explicit-content music on television programs popular with teens.  Disclosure of the label in advertising is still spotty, including on official artist and company Web sites, where the label usually is not readable.  Television ads display the explicit content label only half the time and even then usually not prominently.  Music CD retailers and online download sites, by contrast, do an excellent job of displaying the parental advisory label.  Finally, retailers do not effectively prevent children from buying explicit-content music, with seven in 10 underage shoppers able to buy CDs with a Parental Advisory Label.
• Movies: Although the movie industry determines on a case-by-case basis whether a PG-13-rated film may be advertised to children under 13, there is no explicit policy restricting such marketing.  As detailed in the marketing plans reviewed by the Commission, movie studios targeted violent PG-13 films to children under 13 both through advertising and promotional tie-ins with foods, toys, and other licensed products.  Studios continued to place a significant number of ads for violent R-rated movies on television shows and Internet sites highly popular with children under 17.  Increasingly, industry members post “red tag” trailers for R-rated movies, intended for age-restricted audiences, on the Internet without age-based access restrictions.  Although the MPAA rating and rating reasons are not always prominent, the industry generally does display the MPAA rating in advertising. Rating information on DVDs is not prominently placed; moreover, more and more DVD versions of movies are not rated, and some studios hype the lack of a rating.  The Commission’s research shows that parents are not adequately informed that unrated DVDs may contain additional violent or adult content.  On the positive side, theaters denied 72 percent of underage shoppers admission to R-rated movies, a significant improvement from 2006 and even more so from 2000. Most retailers, however, continue their poor record of enforcement against underage purchase of R-rated and unrated DVDs.
• Electronic Games: The FTC finds a high degree of compliance with the video game industry’s marketing and advertising rules, although these standards allow game marketers to advertise on many television shows and Web sites popular with children.  Further, retailers are enforcing age restrictions on the sale of M-rated games to children, with an average denial rate of 80 percent.  The report notes, however, that children may be able to obtain M-rated games by, for example, using retailer gift cards online.  Finally, the proliferation of game applications for mobile devices provides challenges – for example, some companies do not provide any rating system for games available on their networks, and there is no consistent system of age-based parental controls for these applications.

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This post was written by Peter Le Guay, Partner at Thomson Playford Cutlers.

The Initiative

Childhood obesity has become a major public health issue in Australia with evidence showing that excessive consumption of foods high in fat, sugar and salt is a major contributor to childhood obesity.

One of the most recent steps implemented to combat childhood obesity is the Quick Service Restaurant Initiative for Responsible Advertising and Marketing to Children (“Initiative”) developed by the Australian Association of National Advertisers (“AANA”) in conjunction with a number of fast food companies in Australia.

The Initiative, a self-regulatory scheme, commenced on 1 August 2009 and covers fast food ads run during children’s television viewing times as well as internet sites and computer games targeting children.

The aim of the Initiative is to ensure that only food and/or beverages that represent healthier choices are promoted directly to children (defined as being persons under the age of 14 years) and to ensure that parents or guardians can make informed product choices for their children.

The Initiative requires signatories to ensure that advertising or marketing to children for food and/or beverages represents:

(a)   healthier choices as determined by a defined set of nutritional criteria (being new sugar, salt and fat limits prepared in consultation with dieticians); and
(b)   a healthy lifestyle designed to appeal to the audience through messaging which encourages healthier choices and physical activity.

In addition, signatories must:

• not engage in product related communication in Australian schools except where specifically requested or agreed to with the school administration;
• not use popular personalities or licensed characters to promote food or beverage products to children unless that communication complies with (a) and (b) above;
• not advertise premium offers in any medium directed to children; and
• ensure that nutritional information is provided on packaging wherever possible including on company websites or upon request.

Major fast food companies such as McDonalds, KFC, Pizza Hut, Hungry Jack’s, Oporto, Red Rooster and Chicken Treat have supported the Initiative. However, other major fast food companies such as Nandos and Dominos Pizza are yet to sign.

Complaints in relation to alleged breaches of the Initiative can be made in writing to the Advertising Standards Bureau.

In addition to adhering to the specific rules set out in the Initiative, signatories are also required to abide by the following Codes of the AANA:

1.      AANA Code for Advertising & Marketing Communications to Children

The object of this Code is to ensure that advertisers and marketers develop and maintain a high sense of social responsibility in advertising and marketing to children in Australia. The Code contains, among other things, a prohibition on the sexualisation of children (defined as being a person aged 14 years or younger) or using sexual imagery in advertising/marketing to children that is contrary to prevailing community standards, as well as a prohibition on the portrayal of unsafe situations or unsafe use of products which may encourage children to engage in dangerous activities.

2.      AANA Food and Beverages Advertising & Marketing Communications Code

The object of this Code is to ensure that advertisers and marketers develop and maintain a high sense of social responsibility in advertising and marketing food and beverage products in Australia. The Code states, among other things, that advertising/marketing to children (defined as being 14 years or younger) must be designed and delivered in a manner to be understood by those children and shall not mislead or deceive in relation to any nutritional or health claims. Also, such communications must not state or imply that possession of or use of a food or beverage product will provide physical, social or psychological advantage over other children and shall not include any “pester power” appeal to children to urge adults responsible for their welfare to buy a particular food or beverage item for them.

3.      AANA Code of Ethics

The object of this Code is to ensure that advertisements are legal, decent, honest and truthful and that they have been prepared with a sense of obligation to the consumer and society and a fair sense of responsibility tocompetitors.

The Initiative follows recent changes to the new Children’s Television Standards (2009) which come into effect on 1 January 2010. Details of the 2009 Standards are set out below.

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To:              ANA Washington Reps and Legal Affairs Reps

From:         Dan Jaffe

Subject:    Congressman Kucinich to Introduce Ad Tax Bill

Date:          October 29, 2009

We have learned that Ohio Congressman Dennis Kucinich plans soon to introduce legislation to eliminate the tax deduction for certain food advertising directed to children.

This comes on top of the legislation introduced on October 8^th by Senators Al Franken (D-MN), Sherrod Brown (D-OH) and Sheldon Whitehouse (D-RI) to disallow the deduction for DTC prescription drug advertising and promotion expenses.  They intend to try to move that bill as part of the Senate’s consideration of health care reform.

The tax deduction for advertising costs is the number one bottom line issue for the entire marketing community.  In addition to product-specific attacks on food and pharmaceutical advertising, we face a serious threat of an across-the-board attack on the tax deductibility of all advertising expenditures as the Congress looks for revenue to fund various programs.

We need your help to protect the deductibility of all marketing costs.  It would be very helpful if you would contact the members of Congress where you have employees or operations to express your opposition to any restriction on the deduction for advertising costs for any product or service.  If we don’t oppose attacks on product-specific categories, we will face increasing pressures across the board.  As Benjamin Franklin said, “we must all hang together or most assuredly we will all hang separately.”

ANA is working with all other marketing and media associations to let Congress know that we stand united in opposition to any attack on ad deductibility, on an across the board or product specific basis.  It is critical that members also hear directly from the companies that provide jobs in their states and districts.

We will provide more information on the Kucinich legislation on food advertising deductibility as well as Senator Franken’s bill as it becomes available.

If you have any questions about this matter, please contact Dan Jaffe (djaffe@ana.net) or Keith Scarborough (kscarborough@ana.net) in ANA’s Washington, D.C. office at (202) 296-1883.  Please let us know of any feedback you get from these contacts.

Dan Jaffe
EVP, Government Relations
Association of National Advertisers
202-296-2359 office
646-369-4886 cell

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Following the U.S. District Court's statement last month regarding the dubious constitutionality of Maine's Act To Prevent Predatory Marketing Practices against Minors has been recommended for repeal by a special committee of the Maine legislature. MediaPost reports that last Friday, the state's judiciary committee conceded that the constitutionally flawed statute, which had been questioned but not invalidated by the Court, could only create unnecessary costs in a flurry of private actions. That said, the committee was committed to the original purpose behind the law, that is, to enact a carefully tailored measure to address the collection of minors' health-related information.

Why This Matters

Advertisers and marketers can go back to their normal age filters and can once again include Maine in their promotions and marketing plans.

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