Ad Law Access : Washington D.C. Advertising Lawyer & Attorney : Kelley Drye & Warren Law Firm : New York, Chicago, Connecticut, New Jersey, Brussels

On February 24, 2010, an Italian court convicted three Google executives for violation of Italy's privacy laws resulting from a video that was posted to Google Video showing a group of teenagers bullying another teenager with disabilities. Judge Oscar Magi sentenced Google Global Privacy Counsel Peter Fleischer, Chief Legal Officer David Drummond, and former Google CFO and board member George Reyes to six-month suspended jail sentences and fines. The executives were acquitted of criminal defamation charges. This appears to be one of the first cases in which a privacy executive is held personally liable for the actions of a site's users

The prosecutors alleged that the executives did not take sufficient actions to keep the video off of Google's site, despite the fact that Google received only two complaints about the video, and it was taken down less than 24 hours after being posted.  Prosecutors stated that Google should have obtained consent from each party involved before permitting the video to be posted.  European law provides a safe harbor for ISPs and does not hold them liable for third party content, provided the ISP takes down any content that someone complains about and is considered offensive.

Members of the technology and privacy communities have described the decision as "terrible," "astonishing," and "troubling."  One commenter stated: "It is like prosecuting the post office for hate mail that is sent in the post."

If upheld on appeal, this decision could dramatically affect internet freedom.  It appears to continue Italy's strong consumer protection stance and attempted regulation of social media. In a previous post, we noted the recent draft decree issued by the Italian government that would require social media sites to screen all posted content that may be harmful to minors.

Although the Google executives will appeal the conviction, the case demonstrates that the Internet makes it easy to take actions globally, but what is permitted in the U.S. does not always work everywhere.

• Email This
• Print
• Share Link

This post was written by Dana B. Rosenfeld and Christopher M. Loeffler.

On February 22, 2010, the Federal Trade Commission (“FTC”) announced that it notified nearly 100 organizations that personal information about the organizations’ customers or employees is available on peer-to-peer (“P2P”) file sharing networks. [1] Most recently, it notified nearly 100 businesses and governmental entities through an Internet-wide sweep, the FTC discovered that sensitive data such as health-related information, financial records, drivers’ license numbers, and Social Security numbers have been shared from organizations’ computer networks and are susceptible to those who may use the data for illegal practices such as fraud or identity theft. The Commission has not publicly identified which organizations were notified, but it stated that letters were sent to large and small private and public entities including schools and local governments.

• Email This
• Print
• Share Link

This week, the New York Attorney General announced a settlement with PlasmaNet, the owner of FreeLotto.com, for using deceptive and misleading advertisements. Consumers can enter sweepstakes on FreeLotto.com for free if they agree to receive e-mails from PlasmaNet and visit the site every day. Consumers do not have to visit the site daily if they purchase the “FreeLotto Automatic Subscription Ticket” (“F.A.S.T.”) service, for $14.99 per month. With the F.A.S.T. service, consumers can program PlasmaNet to automatically enter the sweepstakes for them.

The Attorney General alleged that PlasmaNet sent misleading e-mails to FreeLotto.com players notifying them of “pending” prizes and directing them to claim their winnings. The players had not actually won these prizes -- instead, they were unwittingly led to purchase the “F.A.S.T.” service. The Attorney General also alleged that PlasmaNet ran banner ads that falsely stated that a consumer had already won a prize. PlasmaNet did not, however, disclose that the consumer had to register with FreeLotto.com and agree to receive advertising from PlasmaNet in order to collect it.

Under the agreement, PlasmaNet will pay $1.5 million in penalties, costs, and fees and will make refunds available to eligible consumers over the next six months. PlasmaNet must also significantly reform its advertising practices.

This settlement serves as a good reminder that companies need to clearly and conspicuously disclose the material terms and conditions of their offers and that they cannot hide costs in the fine print. Also remember that consumers cannot be required to pay money to enter sweepstakes and that it is unlawful to give any advantage to people who enter by making a payment.
 

• Email This
• Print
• Share Link

This post was written by Gonzalo E. Mon and David J. Ervin.

In a previous post and article, we discussed how the FTC's new Guides Concerning the Use of Endorsements and Testimonials in Advertising include various provisions that apply to messages in social media, such as blogs, word-of-mouth marketing, and other promotions in which companies encourage consumers to speak on their behalf. Among other things, bloggers and other endorsers are required to disclose whether they have any materials connection to the company whose products they are writing about, including whether the company has given them any free products or samples. In some cases, however, that may be easier said than done.

In an attempt to provide some guidelines about how to make the required disclosures, this week, the Word of Mouth Marketing Association ("WOMMA") released a Guide to Disclosure in Social Media Marketing. The WOMMA Guide provides sample disclosures for a variety of contexts, including messages on blogs, online discussions, microblogs (such as Twitter), and status updates on social networks. The WOMMA Guide should not be used as a replacement for an individualized company social media policy, but it does provides good examples that companies may want to incorporate into their policies.
 

• Email This
• Print
• Share Link

This post was written by Kristin A. Hird and Dana B. Rosenfeld.

A broad coalition of advertising associations has agreed on a standard icon – a white “i” surrounded by a circle on a blue background dubbed the “Power I” – which will be added to websites and will link consumers to a page explaining how the advertiser uses their demographics and behavioral data to send certain ads. Developing the new symbol is part of self-regulatory principles agreed to by major advertising groups including the American Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, and the Interactive Advertising Bureau, in an effort to address the FTC’s concerns about the behavioral advertising industry’s activities.

There is no legal requirement that the groups’ members adopt the icon but the advertising coalition expects that most of its members, including many major online retailers, will begin running it by midsummer. It is anticipated that the icon will initially appear with phrases such as “Why did I get this ad?” and the Interactive Advertising Bureau has started an online advertising campaign to explain the icon to consumers. The idea is to establish an immediately recognizable and trusted symbol as well as provide a link to information.

It’s yet to be seen how widespread implementation of the self-regulatory principles will be by the coalition’s members, much less whether the coalition’s steps will be sufficient to ward off regulation by the FTC. But keep an eye out for the little blue icon appearing on websites this summer.
 

• Email This
• Print
• Share Link

The law of comparative advertising covers advertising that compares alternative brands on price or other measurable attributes and expressly or impliedly identifies the alternative brand by name, illustration, or other distinctive information.

A new article in IP Litigator, “The Law of Comparative Advertising in the United States,” provides an overview, including the treatment of comparative advertising claims by the Federal Trade Commission and the National Advertising Division of the Council of Better Business Bureaus, Inc., and a discussion of some of the particular proof and burden-shifting issues triggered when comparative advertising claims are challenged under the Lanham Act. The article then provides practical guidance to in-house attorneys and outside counsel on strategies for challenging comparative advertising claims made by a competitor when the client contends that the claims cannot be substantiated.

• Email This
• Print
• Share Link

The Federal Trade Commission told the U.S. Senate Committee on Commerce, Science and Transportation on Thursday, February 4, 2010, that additional law enforcement powers would allow the agency to protect consumers more effectively.

While much of the testimony detailed the FTC’s efforts to protect consumers from financial fraud that has occurred in connection with the downturn in the economy, the additional powers sought by the FTC would enhance its ability to protect consumers for any violation of one of the laws that it enforces.  The agency encouraged Congress for authority:

1. to use more efficient rulemaking procedures to address consumer protection issues and enhance the agency’s ability to stop financial fraud;
2. to seek civil penalties for violations of the FTC Act rather than just rules or orders that have already been promulgated;
3. to act against those who assist others they know, or consciously avoid knowing, are engaged in unfair or deceptive practices under the FTC Act; and
4. to prosecute civil penalty cases in federal court in its own name so that it can bring cases more quickly and more effectively.

Interestingly, Commissioner Kovacic dissented from the Commission’s endorsement of authority to use, for promulgating all rules respecting unfair or deceptive acts or practices under the FTC Act, the notice and comment procedures of the Administrative Procedures Act (“APA”). While other agencies have the authority to issue significant rules following notice and comment procedures, Commissioner Kovacic stated that the Commission's rulemaking authority is unique in its range of subject matter (unfair or deceptive acts or practices) and sectors (reaching across the economy, except for specific, albeit significant, carve-outs). Except where Congress has given the Commission a more focused mandate to address particular problems, beyond the FTC Act's broad prohibition of unfair or deceptive acts or practices, Commissioner Kovacic believes it prudent to retain procedures beyond those encompassed in the APA. However, he supports sector-specific APA rulemaking to promulgate rules that set forth unfair or deceptive acts or practices relating to all financial services. Further, he would be willing to consider more generally whether all the procedures currently required to issue, repeal, or amend rules issued under the FTC Act are necessary.

Commissioner Kovacic also dissented from the Commission's endorsement of across-the-board civil penalty authority.  Commissioner Kovacic believes that the existing consequences attendant to a finding that an act or practice is unfair or deceptive under the FTC Act are generally appropriate remedies, and they are consistent with the goal of developing FTC law to develop new doctrine and to reach new and emerging problems. In his view, the routine availability of civil penalties, even if subject to a scienter requirement, would risk constraining the development of doctrine, much as judicial concerns about the availability of private litigation with mandatory treble damages appear to be constraining the development of antitrust doctrine.  Commissioner Kovacic would prefer that Congress grant more targeted authority to seek civil penalties, perhaps including civil penalty authority where financial services are involved, and particularly including civil penalty authority in matters where existing remedies are likely to be inadequate.

Regarding President Obama’s proposed Consumer Financial Protection Agency, the testimony expressed FTC support for the goal of making consumer financial protection more effective while ensuring that the FTC’s authority and ability to protect consumers remains uneroded and clear. The FTC told Congress that it should remain active and effective in policing financial and nonfinancial products and services.  Commissioner Kovacic and Commissioner Rosch recommended, perhaps as an alternative to creating a new agency to perform the federal banking agencies’ current consumer protection functions, that the Committee consider a model by which consumer protection with respect to banks and other depository institutions would be enhanced by providing the Commission with a role in protecting consumers of depository institutions. Such expansion of the Commission’s consumer protection role would require a concomitant increase in the Commission’s resources to ensure the continuing excellence of its enforcement record.

• Email This
• Print
• Share Link

On January 28, 2010, the Federal Trade Commission (FTC) held its second consumer privacy roundtable, focusing on technology’s effect on consumer privacy and its potential to both weaken and strengthen privacy protection. Similar to the first roundtable, the FTC’s second roundtable featured discussions by industry leaders, consumer groups, academics, and government representatives. The discussion continued to focus on whether the FTC’s current privacy paradigm, particularly the notice and choice model, sufficiently protects consumers and allows them to understand and control how personal information is collected and used.

• Email This
• Print
• Share Link

As more companies engaged in mobile marketing last year, many struggled to figure out how laws written before mobile phones existed apply in the wireless world. Consequently, 2009 saw some significant legal challenges against mobile campaigns. The biggest problems had to do with failure to disclose offer terms or get consent, and two cases, in particular, will have a significant effect on campaigns in 2010.

An article written by Gonzalo Mon on page 37 of Mobile Marketer’s Mobile Outlook 2010 discusses some of the top legal issues in 2009 and provides tips to help marketers avoid those problems in 2010.
 

• Email This
• Print
• Share Link