Ad Law Access

Ad Law Access

Updates on consumer protection trends, issues, & developments

FTC Settles with Health App Marketers for Unsubstantiated Melanoma Detection Claims

Posted in Federal Trade Commission, Food and Drug, Telehealth

The Federal Trade Commission announced this week that it has reached settlements with two marketers for “deceptively claiming their mobile apps could detect melanoma, even in its early stages.” MelApp and Mole Detective claim to have the ability to accurately screen for a mole’s analyzed melanoma risk despite the absence of clinical testing. The FTC alleged this was a deceptive tactic as the marketers lacked sufficient evidence to prove these claims.

The settlements prohibit each company “from claiming that a device, such as an app, can detect or diagnose melanoma, unless the representation is truthful, not misleading, and supported by competent and reliable scientific evidence in the form of human clinical testing of the device.” The agency will pursue litigation against two additional marketers who did not agree to settle.

These settlements are noteworthy because they signal that the FTC’s interest in health benefit claims is not limited to consumable products such as foods, which may be news to newcomers in the health technology area.  It is also a departure from the Food and Drug Administration’s enforcement discretion position relative to low-risk health apps geared toward consumers.  The lesson for industry is that even if FDA does not require a pre-market clearance showing of safety and efficacy in order to market apps such as these, the FTC still holds marketers to the “competent and reliable scientific evidence” claim substantiation standard.

Kelley Drye Webinar: Examining the FTC’s Report on the Internet of Things—February 23, 2015 at 1 PM

Posted in Federal Trade Commission, Kelley Drye

As discussed in this blog post, the FTC has issued its long-awaited report entitled The Internet of Things: Privacy and Security in a Connected World.  The report includes recommended privacy and security best practices for companies that create and sell connected devices.  But the line between best practices and alleged violations can quickly blur.  Please join us on February 23, 2015 from 1 – 2 PM for a webinar that will examine the FTC report and discuss compliance considerations for the design and marketing of such connected products and services. To RSVP, please click here.

Kelley Drye Speakers include Alysa Zeltzer Hutnik, Partner, Dana B. Rosenfeld, Partner, Margaret E. Hardon, Senior Advisor, Kristi L. Wolff, Senior Associate, and Jameson J. Dempsey, Associate.

FTC Administrative Law Judge Rejects Commission’s Definition of “Biodegradable”

Posted in Advertising Litigation, Federal Trade Commission, Green Marketing

Decision Also Reiterates Appropriate Standards for Consumer Perception Surveys

On February 6, 2015, Chief Administrative Law Judge D. Michael Chappell announced his decision (“Initial Decision”) in the case of FTC vs. ECM BioFilms.  The Initial Decision rejects the FTC’s position codified in the FTC’s Guides for the Use of Environmental Marketing Claims (“Green Guides”) that “[i]t is deceptive to make an unqualified degradable claim for items entering the solid waste stream if the items do not completely decompose within one year after customary disposal.”   Judge Chappell was unpersuaded by the survey results submitted by the FTC to support its interpretation of unqualified “biodegradable” claims, ruling that the survey design “fails to comport with generally accepted standards for survey research, as well as the legal standards used by the Commission, and is insufficiently reliable or valid to draw any material conclusions.”

Our advisory provides an analysis of the key takeaways from the Initial Decision.

New Jersey Relaxes Telemarketing Cell Phone Restrictions

Posted in Telemarketing and Call Center Operations, Uncategorized

Last month, we reported on a bill that would amend a key provision in New Jersey’s restrictive telemarketing law, which prohibited nearly all telemarketing calls to mobile devices, even when the telemarketer had the consent of the mobile device user.  At the end of January, New Jersey Governor Chris Christie signed the bill, S1382.  The amended law only prohibits unsolicited telemarketing calls to mobile devices.  As a result, telemarketing companies can now make sales calls to mobile devices when the call is either (1) made to a customer with whom there is an existing business relationship, or (2) in response to the customer’s written request.

The amended law became effective upon signing by Governor Christie.

Throttled: TracFone Enters $40 Million Settlement with FTC over “Unlimited” Plans

Posted in Federal Trade Commission, Mobile Marketing

Last week, the FTC concluded a $40 million settlement with TracFone – the largest prepaid mobile provider in the U.S. – over allegations that the company throttled customers’ purportedly unlimited data plans. The FTC alleged that TracFone advertised $45 per month unlimited plans, but systematically throttled and/or suspended customers’ connections after they passed a certain usage threshold, in violation of Section 5 of the FTC Act, which prohibits “unfair and deceptive” trade practices.

The landmark settlement is indicative of vigorous enforcement by the FTC in the mobile broadband space. Our advisory provides an analysis of the settlement and items of note for other companies considering similar claims or related business practices in the broadband space.

FTC Publishes Internet of Things Report

Posted in Advertising, Federal Trade Commission, Privacy and Information Security

Last week, the FTC issued its long-awaited report entitled The Internet of Things: Privacy and Security in a Connected World.  The report includes recommended privacy and security best practices for companies that create and sell connected devices.  But the line between best practices and alleged violations can quickly blur.

Companies that provide an IoT product or service can benefit from considering how this latest guidance applies to their business practices, and whether there is an opportunity for enhancements to:

  • The existing privacy and data security product design and its implementation, as well as oversight and enhancements on privacy and security over the product’s lifecycle;
  • The amount and type of personal data collected and retained; and/or
  • The existing notice and choice mechanisms over the collection of personal information, and whether any of the FTC’s suggested, non-exhaustive list of possible options might be incorporated.

Taking proactive, reasonable efforts now on compliance considerations in the design and marketing of such products and services can mean the difference over whether a company’s brand becomes one of these 2015 enforcement examples.  Click here to read our full analysis of the report.

If this topic is of interest to your business, please register for our upcoming webinar on February 23, 2015 from 1- 2 pm EST where we will further examine the FTC’s IoT report and discuss compliance considerations for the design and marketing of such connected products and services.  Please click here to register for this free event.

Safety Nets for Fallen Stars

Posted in Advertising, Uncategorized

One of the most-negotiated provisions in endorsement agreements is the morals clause. While celebrities want those clauses to be as narrow and specific as possible, companies need to ensure they have enough flexibility to terminate an agreement if a celebrity is likely to damage their brand. But although termination can help curtail future losses, it won’t help the companies recoup the money they’ve already invested in the relationship.

To help companies deal with those losses, AIG recently announced Celebrity Product RecallResponse, a new insurance product “designed to help customers respond to risks from a celebrity endorser’s public fall from grace, scandal, or unexpected death.” Our friends a Drye Wit have more information here.

D.C. Circuit Upholds FTC on POM’s Advertising, Strikes Two-Study Standard

Posted in Advertising Litigation, Federal Trade Commission

The U.S. Court of Appeals for the D.C. Circuit issued an opinion on Friday, January 30, upholding the Federal Trade Commission’s findings that POM Wonderful’s advertising, in which it claimed that consuming POM Wonderful pomegranate juice could prevent or reduce the risk of heart disease, prostate cancer, and erectile dysfunction, was deceptive. Although the D.C. Circuit acknowledged the importance of clinical trial evidence in supporting disease risk reduction claims, the Court disagreed with the Commission’s application of the two randomized clinical trial (RCT) standard, finding it unjustified under the First Amendment.

The D.C. Circuit Held that POM’s Advertising was Deceptive

The Court’s opinion discusses the research that POM Wonderful conducted regarding heart disease, prostate cancer, and erectile dysfunction and how the studies were used to support the advertising.  In this analysis, the Court was critical of POM’s selective use of favorable small-scale studies in advertising while disregarding other, larger, unfavorable or inconclusive studies.  The Court also noted certain inconsistencies in POM’s arguments regarding the inability to conduct RCTs on certain food products, such as the hurdles of blinding and expense, both of which POM overcame to perform its own research.  The Court gave appropriate deference to the agency as an expert in determining whether an advertisement is deceptive and substantively upheld the Commission’s conclusion that POM’s advertising was deceptive.

Continue Reading

Association of National Advertiser’s Advertising Law & Public Policy Conference — March 31-April 1, 2015

Posted in Advertising, Advertising Litigation, Class Action Litigation, NAD

2015_Ad_Law_Conf_email_graphic_2Join Partner John Villafranco at the Association of National Advertisers’ Advertising Law & Public Policy Conference in Washington, DC on March 31-April 1, 2015. Mr. Villafranco’s session, entitled “The Current And Future State Of Advertising Self-Regulation,” will feature the findings of an antitrust law working group formed to examine self-regulation in the advertising industry. The program will include recommendations concerning National Advertising Division and National Advertising Review Board procedures and processes as well as measures intended to better promote competition while protecting consumers.

For more information, please click here.

From FitBit to Quitbit: The Role of Federal Agencies and Consumer Electronics

Posted in Telehealth

The annual International Consumer Electronics Show (CES), held each year in early January, is a showcase for the latest gadgetry trends.  The recently-concluded CES 2015 featured innovation in a variety of forms, not the least of which are products with a health-related focus.  From the FitBit to track steps to the Quitbit to track progress in quitting smoking, the number of products recording consumer behavior continues to proliferate.

Techies and ordinary consumers aren’t the only ones interested in all things electronic, however.  Numerous government agencies have jurisdiction over these products depending on their functionality, including the Federal Trade Commission (FTC), the Food and Drug Administration (FDA), and the Federal Communications Commission (FCC).  A few products featured at this year’s CES demonstrate this intra-agency overlap.

For example, the “Breathometer Breeze Breathalyzer” features the following claims:  it can detect blood alcohol levels with the same degree of accuracy as policy breathalyzers, tell consumers when their blood alcohol content will be 0.0, and has a “home safe” function that allows consumers to call a car service or friend to help them get home safely. The product purportedly is a Class I medical device that can connect to smartphone apps via Bluetooth.

Continue Reading