The Federal Trade Commission (“FTC”) approved a request for public comment related to updating its Guides Concerning the Use of Endorsements and Testimonials in Advertising. These are better known as the “Endorsement Guides” or just the “Guides.” The current version of the Guides can be found at 16 CFR part 255. These updates were released in May 2022.
The proposed updates are fairly sweeping and touch many aspects of the Guides. I recently discussed these updates at AM Days as part of Affiliate Summit East in New York. Here are the highlights from responses to the questions I get most frequently.
Affiliate Marketers: Want to learn best practices, strategies, and tactics from a seasoned legal professional who works with businesses and regulators at the federal and state levels?
David Adler takes clients through the ins-and-outs of providing advertisers, merchants, agencies and affiliates the tools they need for running a trustworthy and successful business.
On May 25, 2022 David Adler is presenting Trafficking in Trust: How to Enhance Affiliate Engagement an AMDays Workshop at Affiliate Summit East 22. In case you can’t make the presentation, here’s an excerpt of one of the topics covered:
The 3 C’s of Affiliate Marketing Disclosures: Clear Conspicuous Content.
Clients often seek my counsel on issues related to Affiliate Marketing legal disclaimers and disclosures. For example, this might require guidance on the substance and placement of legal disclaimers for a consumer-oriented, product review and ratings website. This type of website needs to include at least two different, but related, disclosures. First, it must disclose that it is compensated when a user clicks on a link. Second, it must disclose certain material connections.
Affiliate Disclosure Content
There are several factors to the affiliate commission disclosure. Appropriate disclosures have both the necessary content and the correct placement within a specified context.
What needs to be in your affiliate commission disclosure?
The disclosure must make clear that you earn a commission if a user buys something after clicking on a link on your site.
Affiliate Disclosure Context
Where is the optimal location for the disclosure?
Although there is a general practice of putting disclosures on the bottom of the website pages, it can be somewhat obscured and less effective. A location at the bottom of the page, in the same font style, font color, size, and placement as the rest of the text on the bottom of the page, does not help it “stand out.”
The key to proper affiliate link disclosures is making sure the disclosure is “clear and conspicuous.” This depends on both context (placement and proximity to the relevant content) as well as the content of the disclosure itself. The general rule is that the closer the disclosure is placed next to the relevant message, the better.
Although not required, it is recommended to add the affiliate link disclosure on the home page, above the fold. While there is no explicit requirement, FTC disclosure cases and guidelines suggest that, in their view, this is required for adequate disclosures.
What should I do now? Always seek experienced counsel. A seasoned lawyer will help you address other considerations including prominence, distractions, industry vertical (i.e. healthcare, financial services) requirements, and language.
Perhaps you’ve seen them, those television and radio ads that talk about the “creepy” nature of some adverting on the Internet that follows consumers across their social media. According to Pew Research, most Americans believe their online activities are being tracked and monitored.
The fact is, most companies can and do share data with social media platforms to ensure targeted advertising reaches receptive audiences. As more tools become available and the variety of data sources grows globally, platforms and advertisers are re-examining their rights and obligations when it comes to something as simple as matching customers’ email addresses with their Facebook accounts.
Facebook’s Customer List Custom Audiences (“Custom Audiences”) tool is one such tool that has the potential to expand an advertiser’s liability for unauthorized use of customer data. For EU customers, a German Data Protection Authority ruling requires a individual’s explicit consent to such sharing.
The Facebook Custom Audiences tool enables advertisers to create targeted advertisements to Facebook users by combining Facebook data with the advertiser’s data such as email addresses and phone numbers. To use marketing tool the advertiser must comply with the consent and privacy expectations of individuals who have provided email addresses.
Consent to Use Email Addresses
While the use and disclosure of email addresses is regulated in some countries, the U.S. does not have a uniform data privacy protection scheme. U.S. privacy rights are protected through a patchwork of laws addressed to specific types of harm, such as unauthorized access and disclosure of financial (Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681) or healthcare-related (Health Insurance Portability and Accountability Act of 1996 (HIPAA) 42 U.S.C. § 1320d–2) data. While the CAN SPAM Act (15. U.S.C. § 7701 et seq.) specifically regulates email, the Act excludes communications based on a previously existing relationship.
Importantly, for most purposes, permission of the e-mail recipient is not required. However, messages MUST contain a mechanism to request to opt-out of future email messages. If email addresses are acquired from third-party sources, such as marketing databases or social media, ensure users are given reasonable notice and choice about the use of such data.
The Federal Trade Commission endorses a market-style model of ensuring the fair use of information that allows individuals to participate in decisions on the disclosure and use of their personal information. As articulated by the FTC, the elements of this approach are notice, choice, access, security and enforcement.
Contractual Requirements of Facebook Custom Audiences
In order to use the Custom Audiences tool, the advertiser must agree to additional terms and conditions. Facebook’s Custom Audiences terms require that the advertiser have both “all necessary rights and permissions” as well as a lawful basis to disclose and use the email addresses “in compliance with all applicable laws, regulations, and industry guidelines.”
Recommendations
Review your Privacy Policy, Website Terms & Conditions, and membership/subscription applications to confirm the existence of a clear mechanism to opt-out of future email messages. If email addresses are acquired from third-party sources, such as marketing databases or social media, review data gathering practices, review scope of permissions granted to the sources of data and ensure users are given reasonable notice and choice about the use of such data.
A recent article by Alexis Kramer, Legal Editor for Bloomberg BNA’s Electronic Commerce & Law Report, examines the nature of social media platform messenger applications and the move into e-commerce. This shift raises the implications for policing counterfeit goods and enforcement of online purchases.
The article entitled “E-Commerce May Come to Messaging Apps; Watch for Counterfeits and Contract Issues” highlights that “[b]uying and selling goods through messenger apps” … “is definitely the future of mobile.”
David M. Adler was interviewed for the article for insight around ecommerce legal issues, which include intellectual property and contractual issues, that arise when consumers transact business through messenger apps. Many of these issues were identified in his articlePinterest “Buyable Pins” And Ecommerce Liability.
The legal risks and issues vary widely depending on industry and product/service mix and encompass many interrelated areas of the law. Specifically, Adler inditified five main areas of concern for ecommerce, especially on mobile devices and/or through messenger apps:
Trade & Commerce Issues (Brand protections)
Online Agreements (limitations of liability)
Intellectual Property Issues (content ownership and use)
Human Resources & Employment Issues (reputation and social media use)
Facebook, WeChat, Instagram, Snapchat, Twitter and other social networks already allow users to send payments to one another through private messages. New tools such as the Pinterest “Buy Now” pin, and Twitter’s direct messages, facilitate commercial transactions with consumers.
As the article notes “enabling retail transactions via chat” opens the door for more counterfeit goods, difficulty monitoring the sales channel, increasing difficultly of enforcing online purchase terms, and lack of visual space to properly notify customers of the terms and conditions.
‘‘All the issues you would have when conducting transactions over the Internet are magnified when you’re using a messenger app,’’ David Adler, principal of Adler Law Group in Chicago, said.
Media Creation & Consumption is Challenging Traditional Legal Notions.
At a time when #media creation & consumption has transformed, two recent cases, both involving Fox News Network on opposite sides of the “fair use” defense to copyright infringement, highlights the evolving and dynamic legal challenges facing business and content creators. In each case, Fox News loses on Summary Judgment.
Photographs, Fair Use & Social Media
The first case, North Jersey Media Group, Inc. v. Jeanine Pirro and Fox News Network, LLC, involves what many recognize as the “now iconic photograph of the firefighters raising the American flag on the ruins of the World Trade Center on September 11, 2001.” The photograph – which bears a striking resemblance to Joe Rosenthal’s World War II photograph of the Iwo Jima flag-raising – has become a similarly striking symbol of American patriotism.
That similarity was not lost on a production assistant for a Fox News program “Justice with Judge Jeanine” who posted the two images, unaltered, on the show’s Facebook Page, along with the phrase “#neverforget,” allegedly to commemorate the twelfth anniversary of the attack.
The case is noteworthy for its analysis of the “fair use” defense in a social media context. While the Copyright Act grants authors certain exclusive rights, including the rights to reproduce the copyrighted work and to distribute those copies to the public (17 U.S.C. § 106(1), (3)) one often quoted and widely misunderstood limit to those rights is the doctrine of “fair use,” which allows the public to draw upon copyrighted materials without the permission of the copyright holder in certain circumstances. The fair use doctrine is an after-the-fact defense to infringement, not a pre-emptive justification to use another’s work without permission.
Educated in journalism and media studies, the production assistant acknowledged that she understood a copyright to be something that is owned by someone else although she had no training in copyright law either in college or during her tenure at Fox News. She had been working at Fox News for approximately three years, had previously sought legal advice regarding use of photographs on the broadcast, but never in connection with posting images to the program’s Facebook page.
The key take-away for businesses and digital marketers alike is the need for vigilance when using third-party content on social media. Employee education and training on what copyright protects, what it doesn’t, and how it works may help prevent your business form facing a similar situation.
Media Monitoring, Digital Content & Copyright Fair Use
The second case, Fox News Network, LLC v. TVEyes, Inc., involves a company that monitors and records all broadcasts by more than 1,400 television and radio stations twenty-four hours per day, seven days per week. This content is indexed and organized in a searchable database that allows subscribers to search terms, determine when, where, and how those search terms have been used, and obtain transcripts and video clips of the portions of the television show that used the search term.
Fox News Network, LLC sued to enjoin TVEyes from copying and distributing clips of Fox News programs. TVEyes asserted that its system and services are permitted under the doctrine of “fair use.”
The court found that TVEyes service was a fair use. Unlike other services that simply “crawl” the Internet, culling existing content available to anyone willing to perform enough searches to gather it, the indexing and excerpting of news articles, where the printed word conveys the same meaning no matter the forum or medium in which it is viewed, the service provided by TVEyes is transformative. By indexing and excerpting all content appearing in television, every hour of the day and every day of the week, month, and year, TVEyes provides a service that no content provider provides. Subscribers to TVEyes gain access, not only to the news that is presented, but to the presentations themselves, as colored, processed, and criticized by commentators, and as abridged, modified, and enlarged by news broadcasts.
The key take away for technology companies that rely on content is what the court says about features of the Services (as opposed to the technology itself, e.g. the software/platform): the issue of fair use is for the full extent of the service, TVEyes provides features that allow subscribers to save, archive, download, email, and share clips of Fox News’ television programs. The parties have not presented sufficient evidence showing that these features either are integral to the transformative purpose of indexing and providing clips and snippets of transcript to subscribers, or threatening to Fox News’ derivative businesses.”
In other words, evidence that certain features are essential to the use of a service, may be sufficient to show how the features (service) exist above- and-beyond what stale or static content can show.
You Don’t Have to Muddle Through
When it comes to understating evolving technology legal risks, your business can’t simply muddle through. The professionals at the Adler Law Group can help you adopt conduct risk assessments, provide employee training and methodologies for approaching these challenges by setting objectives, determining scope, allocating resources, and developing practices that will efficiently and effective manage risks, while keeping pace with the business.
Technology Continues to Test The Bounds of Copyright Law
The Internet is an unprecedented source of disruption. From retail services (e.g. Amazon) to media and entertainment, almost every industry has been forced to rethink its business model due to the accessibility, ubiquity and democratizing force of the Internet. Aereo was positioned to disrupt the traditional media distribution model by giving consumers greater control over what were otherwise “free” over-the-air transmissions.
The Aereo service was premised on the idea that consumers should be able to watch and record over-the-air broadcast television programming via the Internet. Major broadcast networks that owned the content made accessible through Aereo challenged the model on the grounds that Aereo was violating the exclusive “public performance” right guaranteed by the Copyright Act.
Copyright law provides copyright owners six exclusive rights. One of those rights is the exclusive right to publicly perform the copyrighted work. Because this right is a statutory construct, one must look to the statute to determine its meaning. To “perform” and to perform “publicly” means “to transmit or otherwise communicate a performance or display the work to a place … or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.”
While many reacted by asking whether the case would stifle innovation and have a chilling effect on start-ups, this case does highlight the increasing tension between technological advances and copyright law.
From a practical standpoint, one need not be alarmed about the impact of the decision on most types of innovation. For one thing, the Court went to some lengths to craft a reasonably narrow decision, which applies only to broadcast TV retransmitted over the Internet.
As with any type of innovation, there are different types of risk. On the one hand, there is technology risk: the risk that whatever technology is necessary for some business plan simply won’t work. On the other hand, there is legal risk, highlighted by the Aereo decision: the risk that the entrepreneur’s interpretation of some act or case law won’t ultimately prevail. That’s what happened to Aereo.
As an IP lawyer, I am somewhat perplexed. It is hard for me to understand why Aereo made such a bold move. However, at least the district court agreed with Aereo’s interpretation.
Oklahoma and Louisiana join Wisconsin and Tennessee in recent laws restricting access to applicants’ and employees’ personal online content by prospective and current employers. Adoption of Social Media platforms continues to grow as do new legal and business risks arise as well as state legislatures provide new rules, regulations and guidance. As state by state compliance requirements develop, businesses need to review frequently overlooked elements of key social media guidance, such as how to approach specific areas like Monitoring, Content Approval, Training and Information Security.
This latest round of bandwagon-jumping follows efforts by most other states that have addressed the issue. The key take-away is that business need to take a state-by-state approach to social media legal compliance.
Generally, most of these types of laws prohibit employers from requesting or requiring that applicants or employees disclose a username, password, or other means of authentication for their online accounts.
Employers should be on the lookout for laws that address whether an applicant or employee must accept a “friend” request, change privacy settings to permit access by the employer, or otherwise divulge personal online content.
Another area of concern is the definition of “personal,” “social media” and “account. ” these definitions vary and often cover far more than common notions of social media.
Some laws apply to any online account, including e-mail, instant messaging and media-sharing accounts. Some laws address the scope of use such as “exclusively for personal communications” as opposed to “business purposes of the employer” or “business-related communications.” This carve-out further narrows the scope of the Oklahoma and Louisiana laws.
While these laws generally prohibit adverse actions based based on a refusal to provide user name, password or other authentication information, each law should be scrutinized for broader prohibitions, such as those against penalizing or threatening to penalize an employee or applicant for refusing such requests.
Technology continues to evolve and so does the legal and regulatory environment. Businesses need to continually assess and address the risks created by new laws and new uses of tech in the workplace.
Contact us for a free consultation to learn what we can do to help your business navigate the ever-changing regulatory minefield. What you don’t know can hurt you. We are here to help you avoid getting hurt.
Online marketing continues to evolve and affiliate marketing can be a great method of building brand awareness. Online marketers need to stay ahead of legal and regulatory compliance trends. This article looks at recent Federal Trade Commission (“FTC,” “Commission,” or “agency”) activity that impacts online marketing.
Given the lack of a comprehensive federal regulatory scheme, and the increasing awareness of deceptive marketing practices, it is not surprising that the FTC has ramped up enforcement efforts against entities not covered by existing, industry-specific federal regulations over the last decade. Notably, one company has defended itself against the FTC by challenging the FTC’s authority to pursue such broad enforcement.
Jurisdiction
The widely-watched case of FTC v. Wyndham Worldwide Corp is not just about Cybersecurity.
The Federal Trade Commission (FTC) has just won the first major round of its fight with Wyndham Hotels over data security. However, the importance of the case has more to do with the FTC’s jurisdiction, challenged when Wyndham moved to dismiss the FTC’s case. Affirming the FTC’s broad jurisdiction, the federal judge overseeing the controversy noted that the case highlights “a variety of thorny legal issues that Congress and the courts will continue to grapple with for the foreseeable future.”
Affiliate Marketing: A Roadmap for Compliance: Text Message Marketing
The Commission is cracking down on affiliate marketers that allegedly bombard consumers with unwanted text messages in an effort to steer these consumers towards deceptive websites falsely promising “free” gift cards.
For example, in eight different complaints filed in courts around the United States, the FTC charged 29 defendants with collectively sending more than 180 million unwanted text messages to consumers, many of whom had to pay for receiving the texts. The messages promised consumers free gifts or prizes, including gift cards worth $1,000 to major retailers such as Best Buy, Walmart and Target.
By now, many in the Affiliate Marketing industry are familiar with the Legacy Learning Systems case. In March, 2011 the FTC settled charges against Legacy — which sells instructional DVDs — that Legacy represented, directly or indirectly, expressly or by implication, reviews of their products were endorsements reflecting the opinions of ordinary consumers or independent reviewers, when many of the favorable endorsements were posted by affiliate marketers who received a commission from Legacy for sales they generated.
Regardless of the form of affiliate marketing – email campaigns or text message campaigns – there are a couple key take-aways here.
First, identify and disclose a material connection between a product user or endorser and any other party involved in promoting the product. A “material connection” is a relationship that affects the credibility of an endorsement and wouldn’t be reasonably expected by consumers. See our article about complying with the endorsement guides here.
Second, set up and maintain a system to monitor and review affiliates’ representations and disclosures to ensure compliance. For example, Legacy looked at its top 50 revenue-generating affiliates at least once a month, visiting their sites to review their representations and disclosures. It has to be done in a way designed not to disclose to the affiliates that they’re being monitored.
Third, understand he requirements for conducting legally-compliant text message marketing. The Telephone Consumer Protection Act (TCPA) makes it unlawful to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice … to any telephone number assigned to a . . . cellular telephone service … or any service for which the called party is charged for the call. The prohibition on calls to cell phones applies to text messaging.
AUSTIN, Texas — A divided House vote provides momentum for Texas employees who wish to shield personal text messages, email passwords under a bill backed by Democratic State Rep. Hellen Giddings and given preliminary approval Thursday.
Proponents say Texas workers need the same social media protections provided in several other states. The bill prohibits employers from asking job applicants or employees for passwords to access their Facebook, Twitter or other personal accounts. Opponents argue it will provide “safe harbor” for employees to steal proprietary information at the workplace through their personal accounts.
No specific penalties are spelled out for employers who would violate the law.
The Texas law is another reminder of the ongoing evolution of Social Media law and regulation as legislators and private businesses struggle to understand how these technologies affect everyone’s rights, obligations and remedies.
If you or your business is concerned about social media legal and regulatory compliance, contact David Adler at Leavens, Strand, Glover & Adler. 866-734-2568 dadler@lsglegal.com.
By using a hosted version of 17a-4’s DataParser for Social Media schools, financial institutions, government agencies and other regulated institutions can now avail themselves of this free option to capture social media public profiles and other web content into their email archive. (PRWEB) July 24, 2012 … Most regulated institutions have archival systems in place to support the monitoring of textual content, the retention of the data, and the facilities to run legal holds and e-Discovery productions.
July 22, 2012 – Social media agency Maximize Social Media LLC announced its social media marketing program today for personal injury attorneys, providing needed support to law firms nationwide.
Join us after work on 1 August at the Vibe Hotel in Sydney’s Milsons Point to hear from super connector Iggy Pintado, Switched On Media’s head of social media Hannah Law, and Amelia Zaina, director of Small Business Services at American Express.
So if she had just toned it down a bit, perhaps suggesting that younger people shouldn’t be ruled out for their youth, or that age and experience are different qualifiers in the context of social media, I might actually agree with her. What I believe, firmly, is that the 25-year-old should not be excluded from leadership.
Quote start The ConnectedCOPS Awards were created with the intent of recognizing the great work being done with social media in six categories, by individual sworn officers and law enforcement agencies.
A 2011 survey of 800 law-enforcement agencies conducted by the International Association of Chiefs of Police found that 88 percent of the agencies used social media, mostly for investigations. Almost half of those agencies have a social media policy.
LexisNexis® Risk Solutions today announced the results of a comprehensive survey focused on the impact of social media on law enforcement.
SOCIAL MEDIA AND CYBERSECURITY Workplace Diversity, Social Media Implications, Cybersecurity
CHICAGO, July 19, 2012 — Ensuring a diverse and inclusive workplace, the implications of social media on law practice and privacy, cybersecurity, and access.
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