what every marketer needs to know about the law in the digital age

S E A N J . Q U I N N

D e c e m b e r 2 0 1 4

WHAT EVERY MARKETER NEEDS TO KNOW ABOUT THE LAW IN THE DIGITAL AGE

Disclosures

.com Disclosures - “How to Make Effective Disclosures in Digital Advertising”

! FTC guidelines for mobile and other online advertisers.

! Explains how to make disclosures clear and conspicuous to avoid deception.

! Contains mock ads that illustrate the updated principles.

Disclosures

!  Rules: !  When it comes to online ads, the basic principles of

advertising law apply: (1) Advertising must be truthful and not misleading; - See FTC Policy Statement on Deception, appended to Cliffdale Associates, Inc., 103 F.T.C. 110, 174 - See FTC Policy Statement on Advertising Substantiation, appended to Thompson Medical Co., 104 F.T.C. 648, 839 (1984), aff’d, 791 F.2d 189 (D.C. Cir. 1986) (2) Advertisers must have evidence to back up their claims (“substantiation”); and (3) Advertisements cannot be unfair. - 15 U.S.C. § 45(n) - See FTC Policy Statement on Unfairness, appended to International Harvester Co., 104 F.T.C. 949,

1070 (1984)

Disclosures

! Definition of Disclosure:

! Statement needed for a claim to be: " Truthful and not misleading; " In compliance with the law; " Substantiated; or " Fair.

.com Disclosures

New Rules*: To make a disclosure clear and conspicuous, advertisers should [must]: (1) Place the disclosure as close as possible to the triggering claim. (2) Take account of the various devices and platforms consumers may use to view advertising and any corresponding disclosure.

(3) When a space-constrained ad requires a disclosure, incorporate the disclosure

into the ad whenever possible. (4) Hyperlinks (5) Design advertisements so that “scrolling” is not

necessary in order to find a disclosure.

.com Disclosures

New Rules* cont.: (6) Keep abreast of empirical research about where consumers do and do not look on a screen. (7) Recognize and respond to any technological limitations or unique characteristics of a communication method when making disclosures. (8) Display disclosures before consumers make a decision to buy. (9) Repeat disclosures, as needed, on lengthy websites and in connection with repeated claims. (10) Prominently display disclosures so they are noticeable to consumers, and evaluate the size, color, and graphic

treatment of the disclosure in relation to other parts of the webpage.

.com Disclosures

! Example #1

Example #2

Example #3

Example #3 cont.

Example #4

Example #5

Example #6

Operation Full Disclosure

!  FTC warning letters to more than 60 companies – targeted advertisements that were either: !  In fine print; !  Hard for consumers to read; or !  Otherwise easy for consumers to miss.

!  Examples of inadequate disclosures: !  quoting the price of a product or service without disclosing conditions for obtaining the

price; !  failing to disclose an automatic billing feature; !  claiming that a product capability of an accessory was included without disclosing the need

to first buy or own an additional product or service; !  claiming that a product was unique or superior in a product category without disclosing the

advertiser’s narrow definition of the category; !  making comparative claims without disclosing the basis of the advertiser’s comparisons; !  promoting a “risk-free” or “worry-free” trial period without disclosing that consumers have

to pay shipping costs; and !  making absolute or broad statements without explaining relevant exceptions or limitations.

Operation Full Disclosure

What’s next?

Endorsements and Testimonials

! FTC revised Endorsement Guides in 2009 - Same guides apply to endorsements and testimonials.

! Revised Guides reflect 3 basic truth-in-advertising principles: !  Endorsements must be truthful and not misleading; !  If the advertiser doesn’t have proof that the endorser’s

experience represents what consumers will achieve by using the product, the ad must clearly and conspicuously disclose the generally expected results in the depicted circumstances; and

!  If there’s a connection between the endorser and the marketer of the product that would affect how people evaluate the endorsement, it should be disclosed.


Example #1: A film critic’s review of a movie is excerpted in an advertisement. Example #2: An ad for an acne treatment features a dermatologist who claims that the product is “clinically proven” to work. Before giving the endorsement, she received a write-up of the clinical study in question, which indicates flaws in the design and conduct of the study that are so serious that they preclude any conclusions about the efficacy of the product.


Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers [see § 255.5]. Endorsers also may be liable for statements made in the course of their endorsements.


Example #3: A well-known celebrity appears in an infomercial for an oven roasting bag that purportedly cooks every chicken perfectly in thirty minutes. During the shooting of the infomercial, the celebrity watches five attempts to cook chickens using the bag. In each attempt, the chicken is undercooked after thirty minutes and requires sixty minutes of cooking time. In the commercial, the celebrity places an uncooked chicken in the oven roasting bag and places the bag in one oven. He then takes a chicken roasting bag from a second oven, removes from the bag what appears to be a perfectly cooked chicken, tastes the chicken, and says that if you want perfect chicken every time, in just thirty minutes, this is the product you need.


Example #4: An advertisement disseminated by a company that sells heat pumps presents endorsements from three individuals who state that after installing the company’s heat pump in their homes, their monthly utility bills went down by $100, $125, and $150, respectively. The advertiser does not have substantiation for the representation because, in fact, less than 20% of purchasers will save $100 or more.


Example #5: An advertisement for a recently released motion picture shows three individuals coming out of a theater, each of whom gives a positive statement about the movie. These individuals are actual consumers expressing their personal views about the movie.


Do these guides violate the endorser’s First Amendment rights?


Take Away

Using Copyrighted Content

Common Intellectual Property issues marketers are likely to encounter: Complying with Copyrighted Fair Use Violating Terms of Use Violating CAN-SPAM


Article I, Section 8, clause 8, of the United States Constitution states the purpose of copyright (and patent) laws is “to promote the Progress of Science and useful Arts, by securing for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Copyright attaches as soon as the original work is created.


The copyright owner has the right to do four things: 1)  Reproduce the copyrighted work; 2)  Display the copyrighted work publicly; 3)  Prepare derivative works based on the copyrighted work;

and 4)  Distribute copies of the copyrighted work to the public by

sale, rental or lending, and/or to display the image. See 17 USC Section 106.


Important Note re: copyrighted works: Copyright does not apply to works in the public domain;

words, names, slogans or short phrases (those may have protection in trademark law); blank forms; works that are not original; and government works. This is important to know because if the work is not protected by copyright, then there is no concern whether the Fair Use Doctrine will apply to allow you to use the work.


Fair Use Exception – 17 USC 107 Sets out four factors to be considered in determining whether or not a particular use is fair: 1)  The purpose and character of the use, including whether

such use is of commercial nature or is for nonprofit educational purposes

2)  The nature of the copyrighted work 3)  The amount and substantiality of the portion used in

relation to the copyrighted work as a whole 4)  The effect of the use upon the potential market for, or value

of, the copyrighted work

Fair Use

5 ways to avoid infringement when using (potentially) copyrighted material: 1)  Do the Fair Use Check 2)  Use Creative Commons Material 3)  Join a Stock Photo Site 4)  Pull from a Public Domain Repository 5)  Ask the Owner

Violating Terms of Use

Examples: -  Stock Photo Site Terms of Use

-  Twitter Embeds

-  TEDTalk Embeds

Violating the CAN-SPAM Act

!  Sets the rules for commercial email.

! Establishes requirements for commercial messages.

! Gives recipients the right to have you stop emailing them.

!  Spells out tough penalties for violations.

CAN-SPAM

Main Requirements: 1)  Don’t use false or misleading header information. 2)  Don’t use deceptive subject lines. 3)  Identify the message as an ad. 4)  Tell recipients where you’re located. 5)  Tell recipients how to opt out of receiving future

email from you. 6)  Honor opt-out requests promptly. 7)  Monitor what others are doing on your behalf.

Final Thoughts

!  Develop policies for reviewing ads at multiple levels before publication.

!  Frequently check the FTC website and subscribe to their blog.

!  When in doubt, check the guidelines and/or ask an attorney.

!  If you feel that a disclosure would help paint a more complete picture, include it.

!  Tell the damn truth.

what every marketer needs to know about the law in the digital age

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