On January 30, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit upheld claims of false advertising by POM Wonderful LLC (“POM Wonderful”), finding that the government could prohibit the pomegranate juice company from advertising its products as being effective in fighting heart disease, prostate cancer and erectile dysfunction.
Online Advertising Targeted by Federal Trade Commission
On May 15, 2014, Maneesha Mithal, Associate Director of the Division of Privacy and Identity Protection at the Federal Trade Commission (“FTC” or “Commission”) testified, on behalf of the FTC, before the U.S. Senate Committee on Homeland Security and Governmental Affairs addressing the Commission’s work regarding three consumer protection issues affecting online advertising: (1) privacy, (2) malware and (3) data security. Below is a summary of the Commission’s testimony regarding these three key areas and the Commission’s advice for additional steps to protect consumers.
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FTC Settlement with Snapchat – What Happens on Snapchat Stays on Snapchat?
Last Thursday, the Federal Trade Commission (FTC) announced that messaging app Snapchat agreed to settle charges that it deceived consumers with promises about the disappearing nature of messages sent through the app. The FTC case also alleged that the company deceived consumers over the amount of personal data the app collected, and the security measures taken to protect that data from misuse and unauthorized disclosure. The case alleged that Snapchat’s failure to secure its Find Friends feature resulted in a security breach that enabled attackers to compile a database of 4.6 million Snapchat usernames and phone numbers.
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FTC Has User Generated Content on the Run
In a recent letter to shoe retailer Cole Haan regarding its Wandering Sole Pinterest contest, the Federal Trade Commission (FTC) signaled a major change for promotional contests conducted through social media platforms. In the letter, the FTC determined that the Pinterest contest sponsored by the company was a form of product endorsement, subject to Section 5 of the FTC Act, which requires the disclosure of a material connection between a marketer and an endorser when their relationship is not otherwise apparent from the context of the communication that contains the endorsement.
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FTC to Media: Time to Lose Some Pounds
Just in time for the New Year, as thousands of people are making weight loss resolutions and searching for ways to stick to them, the Federal Trade Commission (FTC) released updated guidance for publishers and broadcasters on how to evaluate weight-loss claims when screening ads for publication. The imposition of liability on the media for deceptive claims that are published is not new, and major television networks already pre-clear advertisements to ensure that they not misleading violations of section 5 of the FTC Act. Thus, the guidance does not create new liability for publishers, but rather provides a reminder for publishers to be vigilant when it comes to weight-loss claims.
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DAA Continues Focus on Obligations for Website Operators Employing OBA
The Digital Advertising Alliance (DAA), the self-regulatory program for online behavioral advertising (OBA), was busy last week, releasing four formal review decisions.
The cases discussed below highlight DAA’s commitment to spreading consumer awareness about OBA, educating consumers on OBA activities, and providing consumers with options regarding the collection of their data. The cases were initiated by DAA itself, and not by competitors or consumers. OBA activity is a relatively unregulated area, and consumer protection authorities have largely relied on businesses self-regulating to protect consumers. To avoid heavier regulation, it is important that businesses make concerted efforts to be aware of and comply with DAA’s Self-Regulatory Principles for Online Behavioral Advertising (OBA Principles).
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Facebook Relaxes Guidelines for Promotions
In an effort to make administration of promotions on Facebook easier, the social media site released new rules permitting Facebook Page owners to host promotions and giveaways on their Page timelines. While hosting a promotion on a Page timeline is certainly more convenient and likely more cost effective for businesses from an administration standpoint, it does have disadvantages that businesses should keep in mind, such as the inability to require users to agree to Official Rules of the promotion and the inability to collect personal data about participants.
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Advocacy Groups Say FTC is at Odds with the First Amendment
Two nonprofits, the Alliance for Natural Health – USA, and TechFreedom, released a report last week alleging that the Federal Trade Commission broke free speech laws when in January 2013, it barred POM Wonderful from asserting that its pomegranate juice is “effective in the diagnosis, cure, mitigation, treatment, or prevention of any disease,” including heart disease, prostate cancer, and erectile dysfunction, unless the claim is supported by two randomized, well-controlled, human clinical trials. In their report, the nonprofits estimate that the two clinical trials required by the FTC could cost up to $600 million each.
The POM order highlights the balancing act between requiring substantiation to ensure a claim is truthful and not misleading to consumers, and overly burdensome substantiation requirements that suppress otherwise truthful speech. The nonprofits’ report criticizes the FTC’s ruling as falling into the latter category by requiring an enormously increased level of substantiation.
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FTC Names Jessica Rich its Bureau of Consumer Protection Director
On June 17, Federal Trade Commission (FTC) Chairwoman Edith Ramirez appointed FTC veteran Jessica Rich as the Director of the Bureau of Consumer Protection. Rich has been an attorney with the FTC for 20 years and is an expert in privacy, data and identity protection, and new technologies. Since January 2012, Rich has served as Associate Director in charge of the Division of Financial Practices. During her career at the FTC, she has also served as the Acting Associate Director and Assistant Director of the Bureau’s Division of Privacy and Identity Protection, Assistant Director in the Division of Financial Practices, and counselor to the Bureau Director. Chairwoman Ramirez, who was appointed in March by President Obama, has strongly articulated her interest in shaping privacy policy and bringing privacy enforcement actions. The appointment of Rich, who drafted the first iteration of the Children’s Online Privacy Protection Act (COPPA) and is considered one of the most influential attorneys at the FTC in the field of privacy and online behavioral advertising, signals a strengthening commitment to enforcing online consumer privacy protection.
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FTC Issues FAQs for Revised COPPA Rule
On April 25, 2013, the FTC provided additional guidance in relation to the revised COPPA Rule, set to go into effect July 1, with a detailed set of FAQs. Members of the business community have been calling for a delay in the effective date of the revised rules, so that businesses could have more time to get better acquainted with the rules.
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