NCAA’s Consideration of Training Expenses for Olympic Athletes and Name, Image and Likeness Debate to Take Center Stage at Annual NCAA Convention

Last week, the National Collegiate Athletic Association (“NCAA”) proposed a new rule allowing elite Olympic and Paralympic athletes to have “additional training expenses” paid without jeopardizing their NCAA eligibility.

Athletes designated “elite” by the U.S. Olympic and Paralympic Committee and national sport governing bodies would be allowed to receive “developmental training expenses, including travel for parents, guardians, coaches and sports experts” under the proposed legislation, which is to be voted on at the NCAA 2020 Convention taking place this week in Anaheim, California.

The Olympic and Paralympic athlete rule marks one of several modernization updates that the NCAA is considering instituting to its rules and policies. In October 2019, the NCAA Board of Governors announced it would take steps toward allowing college athletes the “opportunity to benefit from the use of their name, image and likeness in a manner consistent with the collegiate model.” NCAA rules currently prohibit college athletes from being paid to play college sports beyond receiving a scholarship and aid package that covers the cost of their attendance and prohibits them from earning money from their publicity as a college athlete.

The NCAA’s proposed process to enhance name, image and likeness opportunities seemed to be a response to legislation introduced in several states that would allow college athletes to be paid for use of their name, image and likeness, including California’s “Fair Pay to Play Act” and several other bills in states such as Florida, Minnesota, New York, and New Jersey.

The NCAA Board of Governors Federal and State Legislation Working Group, which includes presidents, commissioners, athletic directors, administrators and student-athletes will gather feedback through April 2020, with each NCAA division having until January 2021 to create new rules.

Takeaway: The NCAA’s proposed new rules signify a potential marked change in the organization’s decades-old policies, including its traditional “collegiate model” of barring student athletes from earning any money from their name, image and likeness. Time will tell whether the NCAA’s openness to modernize its policies will lead to the organization enacting real reform.

Key takeaways from the ICO’s draft Direct Marketing Code of Practice

The UK Information Commissioner’s Office has published a draft Code of Practice on Direct Marketing, which is now out for consultation. Here we discuss the context for this and key takeaway points from its 120+ pages.

Why is the ICO publishing this document?

The ICO is required under the Data Protection Act 2018 to publish a statutory code of practice on direct marketing, so this is the ICO delivering on that requirement. It draws on the feedback from the call for views undertaken last year. As a statutory code, once finalised, it will need to be presented to government for review and sign off.

There is already an existing Direct Marketing Code which has long been one of the most well-read and useful codes of practice the ICO has produced and is regularly consulted by data protection and marketing teams alike for guidance on email, post and SMS marketing rules. The code contains key information and pointers given that fines for breaches of direct marketing rules remain the most frequent we see. However, this code is outdated and required updating in light of changes around GDPR and the Privacy and Electronic Communications Regulations 2003, as well as to adapt to new technologies and marketing techniques.

What does the new draft code cover?

The draft code covers much of the ground that was covered by the existing one but there are some new sections and a couple of surprises. Broad topics for guidance are as follows:

  • The scope of direct marketing

This is all common sense stuff and there is little new here – for example the ‘useful’ nugget that a message that says “your local supermarket stocks carrots” would be considered promotional. Good to know.

  • New details and practical guidance around expectations on accountability and planning of marketing campaigns

The buzzphrase ‘DP by design’ makes a frequent appearance here as you would imagine. Worth noting the reminder that data protection impact assessments are required for data matching in direct marketing, large scale profiling and targeting children (remember this is under 18s not just under 13s). This section also contains useful clarification around when legitimate interests and consent are appropriate with the ICO stating that it considers it will be hard to demonstrate the balancing test requirements for reliance on legitimate interests where the marketing involves collecting and combining large amounts of personal data from various different sources to create personality profiles.

The section on special category data is worth noting since it mentions that inferring special category data from customer lists (for example if a company sells disability aids) is not something which triggers the requirements for a lawful basis for special category data under Article 9 unless the data is specific to the individual or used to target marketing on the inference of their health status. This is confusing given the ICO’s updated guidance on special category data which states the converse by expressly includes inferences which it issued last year.

  • Advice on lead generation and collecting contact details

Useful details are provided in this section around the GDPR requirement to inform individuals that their personal data is being processed within one month of receiving the data from another source. This point has been overlooked by some companies to date and involves ensuring practical safeguards to ensure that data collected from public sources, social media or third parties is either deleted or the individual contacted within that time. The draft also indicates expectations around reliance on “disproportionate effort” to do so.

  • Profiling and data enrichment

Profiling is a big focus for regulators so it is good to see more detail in the new code on this area. There is information on data enrichment, matching and data cleansing. None of this is surprising but will be useful for marketing teams, including a checklist of due diligence questions to consider when engaging third party suppliers in this area.

  • Sending direct marketing messages

This section largely follows the existing code. It is a little disappointing that more detail has not been added on the thorny issue of what constitutes “negotiations for a sale of a product or service” in the context of the soft opt in consent for direct email marketing however. The code gives very obvious examples but does not cover issues such as free services, apps or competitions.

  • Online advertising and new technologies

This will be the section that attracts the most attention since the code picks up on new technologies such as on-demand and OTT content services, in-game advertising and mobile apps.

The most useful, but perhaps alarming, section relates to social media marketing. The code discusses commonly used tools such as custom audience and lookalike targeting. It is surprising the draft states that individuals are unlikely to expect custom audience targeting, therefore consent is likely to be the most appropriate lawful basis and that information about such processing should be drawn to the attention of individuals outside of privacy policies. It is incredibly rare to see this approach taken in practice and this is likely to raise an eyebrow or two, especially since elsewhere in the draft it is clear that such form of marketing does not fall within the Privacy and Electronic Communications Regulations.

Similarly surprising is the ICO’s advice that the use of personal data for lookalike audiences on social media platforms, another commonly used tool, is likely to make both brand and the platform joint controllers in relation to the data (and not just the use of pixels and plugins).

We would expect push back on this advice in the consultation responses.

On the other hand, the code does not go into detail around the use of cookies and programmatic advertising. This is largely because this is such a big topic where the ICO has issued recent guidance and, specifically in relation to the use of real time bidding, an investigation has been ongoing, with the ICO announcing in December that it continues to have concerns and is deciding on what action it will take.

  • Selling or sharing data

Helpful information is provided here on considerations that should be made if an organisation is relying upon legitimate interests in order to disclose or sell data, which the code makes clear is only available in certain circumstances. Further detailed guidance is also given on data brokering services and how to comply with transparency and consent requirements if you operate one.

  • Data subject rights

A reminder is given that data subjects should be informed, via your privacy notice, of their right to object to direct marketing, and guidance is given as to how a user may exercise that right. Additionally, when relying upon consent to process personal data for direct marketing purposes, the fact that you cannot swap from consent to another lawful basis when an individual withdraws  consent is repeated – hopefully we are all aware of this by now!

The code also states that (obviously) when operating a suppression list, withdrawal of consent will not preclude an organisation from keeping that user’s details on the suppression list, as the organisation’s lawful basis for operating this list is likely to be ‘necessary for compliance with a legal obligation’ (Article 6(1)(c)).

What is the deadline?

The draft is open for consultation is open until 4 March 2020. You can provide feedback here.

Former “Bachelor” Contestant’s $1 million Fantasy Football Win Under Investigation

Last week, sports gambling giant DraftKings announced that it is reviewing a former Bachelor contestant’s $1 million win in an online fantasy football contest after she and her husband were accused of cheating.

Jade Roper-Tolbert, a former contestant on the reality TV show “The Bachelor” beat more than 100,000 entries to win first place in the DraftKings’ Millionaire Maker Contest. Roper-Tolbert and her husband, Tanner Tolbert, also a former Bachelor contestant, both submitted the maximum of 150 lineups per person for the contest. However, nearly none of the couple’s entries duplicated the other’s, leading to accusations that that the couple may have colluded to increase their chances of holding the winning combination.

DraftKings CEO Jason Robins announced this week that the company is conducting an investigation into the contest to ensure that Roper-Tolbert complied with DraftKings’ terms of use, community guidelines, and applicable state regulations before it awards the prize.

Takeaway: Sponsors and promoters of contests should ensure that they have language in the official rules which permit disqualification of fraudulent content. Additionally, sponsors should ensure fraud-detection technology is in place during the duration of the promotion, and conclude no fraud has been committed before any winning announcements have been made.

 

 

Advertising law: hot topics and trends in 2020

As we look toward a new year and a new decade, advertisers will need to be a step ahead of the market, in order to keep up with changing trends, a world impacted by an increased sensitivity to privacy and the use of data, and consumers who have grown savvy to influencer marketing and product placement. This article published on Law360 by Jason Gordon and Casey Perrino notes some of the cutting-edge trends to watch in 2020, touching on topics such as new privacy legislation and tracking technologies, concerns over political advertisements, and the growing cannabis industry.

NAI Issues New Guidance on Consumer Opt-In Consent for Sharing of “Sensitive” Data

The self-regulatory group, Network Advertising Initiative (“NAI”), has issued new guidance, in which it mandates that its members obtain opt-in consent from consumers before collecting or using “sensitive” data for ad delivery and reporting, as well as for ad targeting.

Specifically, the guidance states that a member must obtain a user’s opt-in consent for the use of precise location information, sensitive data such as sexuality and certain health-related data, sensor data, and personal directory data for tailored advertising or ad delivery and reporting (ADR). Opt-in consent requires “clear and conspicuous notice” that should take the form of a detailed just-in-time notice that is provided prior to the use of platform-provided consent mechanisms. The guidance describes the NAI’s goal in instituting this notice requirement as “ensur[ing] that a user is presented detailed notice of the uses of data prior to, not after, making a choice.”

Further, the guidance requires members that collect raw data and then convert it into a segment must now provide a detailed notice and acquire opt-in consent.

Because many NAI members do not themselves interact directly with users, they will need to implement the guidance through contracts with their publishers or app developers.

The guidance, which was issued as part of the NAI’s 2020 Code of Conduct, will go into effect on January 1, 2020.

Takeaway: The NAI’s guidance marks a significant change from previously allowing its members to rely on a platform for opt-in permission to now requiring just-in-time notice where consumers are provided clear, detailed information about the collection and use of their data before the give consent.

Proposed Class Action Targets CBD Chocolate Maker Over False THC and CBD Content

A class action filed this month in California alleges that Bhang Corporation, a Florida-based medicinal chocolate maker, violated several state and federal laws by claiming that its chocolate products contained much greater amounts of tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”) than they actually did, in order to charge consumers premium prices.

The complaint alleges that plaintiff Charles Ballard purchased Bhang Medicinal Chocolates from 2016 to 2018, which contained allegedly false, deceptive, and/or misleading product labels as to the amounts and/or levels of THC and/or CBD in the products. Independent lab testing commissioned by the plaintiff revealed that the amounts and/or levels of THC and CBD in the chocolate products were substantially less than as stated on the packaging and marketing materials.

The plaintiff alleged that the amounts and/or levels of THC and/or CBD are not only material, but the primary reason consumers purchase THC and/or CBD products such as these. Moreover, he alleged that the defendants knowingly misrepresented the amounts in the products to induce consumers to purchase them.  The plaintiff further alleged that but for the false statements, representations, and warranties contained on the Bhang Medicinal Chocolates labels, packaging, and marketing materials, he and the class members would not have bought the chocolates or paid the premium price for the products.

The class action allegations include fraud, negligent misrepresentation and violation of California’s unfair competition and false advertising laws. The plaintiff and the proposed nationwide and California classes are seeking compensatory and punitive damages, prejudgment interest, attorney fees and court orders “to correct, destroy, and change all false and misleading labeling terms relating to defendants’ statements and representations.”

Takeaway: This proposed class action is the latest example in a plethora of recent false advertising class action lawsuits against CBD companies in federal courts in California and across the United States. The action underscores, as we have previously written about, the critical importance for marketers selling CBD products to accurately label, market, and advertise their products.  Given that plaintiffs are sending products out to be tested, and because various state laws and the USDA interim final rule now affirmatively require that CBD products be tested, product makers should send their products to a reputable laboratory before marketing the products to consumers.

NAD Announces Updated Filing Fees for 2020

This week, the National Advertising Division of the Better Business Bureau (“NAD”), the investigative unit of the advertising industry’s system of self-regulation, announced changes to its filing fees that will take effect on January 1, 2020. The following price structure will apply to bring a challenge:

  • Under $250M – $10,000 (New Category)
  • National Partner – $25,000
  • Under $5B – $30,000
  • Over $5B – $35,000
  • NARB – $25,000

As indicated above, the filing fee changes create a new category, the under $250 million category, described by the NAD as intending to “encourage participation from small businesses and strengthen industry self-regulation.” The new category will allow small businesses with gross annual revenue under $250 million to initiate a challenge for a $10,000 fee.

The NAD further noted process improvements it seeks to make in 2020, including a new online submission process and a new challenge track for faster resolution of NAD challenges – investments intended to “increase the speed and efficiency of the process.”

Takeaway: The announcement of the NAD’s new under $250 million filing fee category marks a significant change to the NAD’s prior filing fee structure, now allowing small businesses to initiate a challenge for less than half of the fee for that of a National Partner.

Today’s Hot Topic: News Simulation

“We interrupt this program to bring you the following update…”

From time to time I like to remind clients of specific network guidelines to keep in mind when developing advertising. One such guideline involves news simulation in advertising.

A few years ago we published an article regarding the use of news simulation techniques in advertising. Below is an updated version of the previous article adapted to today’s standards.

According to network guidelines, advertising may not contain language, visual techniques, or sound effects associated with newscasts when such advertising is likely to confuse or alarm the audience, or trivialize actual newscasts.

Examples of language and techniques that are unacceptable include: “Breaking News,” “Bulletin,” “Flash,” “Live,” “Special Report” and “We interrupt this program to bring you…,” horizontal crawls at the bottom one-third of the screen and teletype sound effects. Such techniques are reserved specifically for news broadcasts.

Use of newsroom settings is usually not acceptable. However, this technique, as well as simulated interviews or newscasts in commercials, will be considered on a case-by-case basis by some networks, with approval contingent on the determination that viewers would not confuse the commercial with an actual news broadcast. Requests for scheduling of such commercials in news programming will be reviewed by Broadcast Standards and Practices.

The networks have strict policies regarding the use of news simulation techniques in advertising. So, if you have plans to create advertising which utilizes such techniques, make sure the advertising complies with the network guidelines. And remember, when it doubt, ask questions.

Marilyn Colaninno is Director of Rights and Clearances for Reed Smith and is responsible for clearing commercials for the firm’s many clients in the advertising industry. If you have specific questions, please contact Marilyn directly at 212-549-0347 or at mcolaninno@reedsmith.com.

 

 

FTC Releases Guidance for Influencers

On Tuesday, the FTC released a set of guidelines for online influencers dictating when and how influencers must disclose sponsorships to their followers. The guidelines, available here, break down disclosure requirements and provide tips for influencers on how to avoid deceptive advertising.

In general, the guidelines largely reflect what the industry has gleaned from FTC actions and guidance over the years regarding what is and is not sufficient. We summarize some highlights from the guidelines below:

When to Disclose:

  • Influencers should not assume that followers are aware of their brand relationships.
  • The FTC labels tags, “likes”, and pins as endorsements.
  • Influencers merely telling followers about products that they like do not need to disclose the absence of a brand relationship.

How to Disclose:

  • Disclosures should not be included only in an influencer’s profile page or indecipherable in a group of hashtags and links.
  • For picture endorsements with time limits (e.g., Instagram Stories or Snapchat), influencers should superimpose the disclosure over the picture and ensure that viewers have enough time to notice and read the disclosure.
  • For picture endorsements without time limits (e.g. Instagram posts), the disclosure can be included in the comments of the post, but should be clear and obvious. Disclosures are likely to be missed if they are later in the comment and require a follower to click “MORE.”
  • For video endorsements, the disclosure should be in the video itself; including the disclosure in the description alone is not enough.
  • For live stream endorsements (e.g., Instagram TV or Facebook Live), influencers should repeat the endorsement periodically so that viewers who only see part of the stream still get the disclosure.

The FTC will be performing a regulatory review of its Endorsement Guides in early 2020, which could trigger changes in the FTC’s perspective on what is or is not a sufficient disclosure given increased consumer familiarity with platform partnership tools, changes in social media platforms, and new content methods. Check back for updates.

 

USDA Issues Highly Anticipated Interim Domestic Hemp Production Rule

On October 29, 2019, the United States Department of Agriculture (“USDA”) released its highly anticipated interim final rule establishing rules and regulations for domestic hemp production. These interim regulations were required by the 2018 Agricultural Improvement Act (2018 Farm Bill), which tasked the USDA with promulgating a regulatory framework for hemp production in the United States.

Under the USDA rule, states and tribes will have the option of either submitting a proposed hemp regulation plan to the USDA for approval or agreeing to submit to the USDA’s general requirements. The regulations include requirements for maintaining information regarding land used for growing hemp, sampling and testing procedures for delta-9 tetrahydrocannabinol (“THC”), disposing of non-compliant hemp products, licensing requirements, and ensuring compliance with the requirements.

The rule has been formally published in the Federal Register and comments may be submitted until December 30, 2019.

To read more about the USDA hemp rule, visit Reed Smith’s website.

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