California recently passed the California Consumer Privacy Act (CCPA), providing new rights for California consumers (broadly defined as California residents) regarding their personal data. The CCPA is modeled after the EU’s General Data Protection Regulation (GDPR), which provides EU citizens with a number of rights related to data processing and imposes specific requirements on companies that process EU citizen data. The new California law provides similar requirements for businesses that collect data from California consumers. The following are some key points of comparison. Continue Reading
Last week, a California court granted a temporary restraining order against Triangle Media, a company that sells various types of products using “risk free” trials. According to the FTC, though, the trials were very risky, involved hidden charges, and violated various laws.
When consumers clicked on ads for Triangle’s products, they landed on websites promoting “risk free” trials. The order flow and payment screens suggested that consumers just had to pay the cost of shipping, which was typically $4.95 or less. Although the shipping costs were presented in bold, black text that was highlighted in yellow, a small gray-on-white disclosure at the bottom of the page mentioned other costs: “By placing an order you will be enrolled in our membership program. This program will charge $4.95 today and $84.71 for your trial full-size product on the 15th day if you do not call to cancel the membership. You will receive a full-size bottle of the product for $84.71 (S&H included) every 30 days thereafter until you cancel.” Consumers who ordered on their phones had to click on another link to see that disclosure.
The FTC alleges that defendants who clicked to start their trials would be directed to a second page which claimed that the order was not complete and suggested that consumers take advantage of another “free trial” of a product that could be paired with the first one. Like the original order page, the only mention of the additional costs appeared in a small gray-on-white disclosure at the bottom of the page. To make matters worse, the FTC alleges that the company made it difficult for consumers who were surprised by the charges to cancel their memberships and obtain refunds.
The FTC filed a complaint against Triangle in California federal court, alleging that the company violated the FTC Act, the Restore Online Shopper’s Confidence Act, the Electronic Fund Transfer Act, and Regulation E. The court temporarily halted the operation, froze the company’s assets, and appointed a temporary receiver over the business.
We’ve covered this type of issue before, so if you read this blog, odds are that you don’t engage in these types of practices. But don’t ignore this case just because your order flows don’t look like Triangle’s. Laws governing free trials can be complicated, and many reputable companies have been hit with lawsuits or regulatory investigations over how they disclose offer terms. If you haven’t looked at your practices recently, now may be a good time to do that, especially given that California’s new rules on automatic renewals have come into effect.
The Advertising Standards Authority of Ireland – similar to the NAD in the US – recently issued a decision regarding a social media influencer that companies on this side of the Atlantic should note.
The case involves social media posts by Rosie Connolly, a fashion, beauty, and lifestyle blogger. Connolly posted pictures with flawless makeup, and mentioned that she was wearing Rimmel Foundation. The trouble is, Connolly’s face had been filtered and photo-shopped. A consumer complained to the ASA that people “may purchase the Rimmel Foundation thinking they would achieve the same results if they used the product,” when those results may not be likely.
Connolly said that Rimmel had approved the images and, therefore, that the complaint should be addressed to them. Rimmel, in turn, acknowledged that the image had been filtered using a built-in camera feature. The image was not intended to mislead people, but the company removed it because it did not reflect their values as a brand. Moreover, Rimmel said it had taken various steps to avoid future issues with heavily filtered images. For example, the company updated its policy to more explicitly require flagging an influencer’s use of filters/photo-shopping, and promised to monitor posts more strictly.
The ASA “considered that the use of post-production techniques which exaggerated the effects of an advertised product could mislead and they welcomed the steps the advertisers had taken in removing the posts.”
Although cases involving influencers in the US have focused mostly on whether the influencers have property disclosed their relationship to the brands whose products they touted, the FTC has made clear that both influencers and brands can be held liable for any misleading content in influencer posts. Moreover, outside of the influencer context, there are plenty of cases here regarding the use of mockups or enhancements. Accordingly, companies should take steps to ensure that influencer posts are not misleading, not only in their descriptions, but in the photos themselves.
A federal jury in Illinois recently awarded Dyson, Inc. over $16 million in damages after finding that SharkNinja falsely advertised that its Rotator Powered Lift-Away vacuum was better than Dyson’s best-performing vacuum, the DC65. SharkNinja ran ads that claimed that independent testing showed that the Rotator Powered Lift Away vacuum was proven to have “more suction” and “deep-cleans carpets better than Dyson’s best vacuum.”
The commercial also featured a graph that purported to measure each machine’s cleanability, but Dyson alleged that the results were not actually from referenced independent tests but rather internal tests. Dyson further alleged that the tests failed to comply with industry standards for vacuum cleaning testing in the first instance and that SharkNinja effectively rigged the third-party tests by directing the testing company on how to test the machines. The jury found that SharkNinja’s advertising of results from unsound tests was an intentional act to mislead consumers and awarded significant damages accordingly.
The case underscores the importance of conducting objective and reliable testing and carefully tailoring ad claims to accurately convey the results of tests. The decision also is striking in terms of the size of the award, particularly as the jury found it appropriate to disgorge nearly all of the $18 million in profits that SharkNinja made from its vacuum during the time the commercial aired.
Summer associate Vishwani Singh contributed to this post. Ms. Singh is not a practicing attorney and is practicing under the supervision of principals of the firm who are members of the D.C. Bar.
On June 28, 2018, Governor Brown signed into law the “California Consumer Privacy Act of 2018.” The legislation was a compromise to avoid a ballot initiative that was more closely modeled after the European Union’s General Data Protection Regulation (GDPR). This Act is scheduled to go into effect on January 1, 2020.
The Act enumerates a number of rights for consumers regarding the privacy of their personal information. Some rights, such as the right to be forgotten or the right to request information disclosure, are reminiscent of those seen in the GDPR, while others, such as the right to opt out of the sale of a consumer’s personal information, are specific to the new law.
Along with identifying consumer rights, the law also imposes requirements on businesses, including those that collect or have collected consumers’ personal information, to make specific disclosures about their personal information practices and to respond to consumer requests. Importantly, the definition of “personal information” is broadly defined to include common information, such as a name or email address, as well as more specific information, such as biometric information and geolocation data, although publicly available information is not included. Continue Reading
On Thursday, June 21, 2018, the U.S. Supreme Court paved the way for states to collect sales or use taxes from sellers with no physical presence in the taxing state by declaring constitutional a South Dakota law requiring out-of-state sellers to remit sales taxes on sales to South Dakota residents if the sellers exceed certain revenue or transaction thresholds. In South Dakota v. Wayfair, Inc., 585 U.S. (2018), the Supreme Court overturned its 1967 decision in National Bellas Hess, Incorporated v. Illinois, 386 U.S. 753 (1967) and its 1992 decision in Quill Corporation v. North Dakota, 504 U.S. 298 (1992), which had generally prohibited states from collecting sales or use taxes on sales of tangible personal property from sellers with no physical presence within the state. The elimination of the physical presence requirement does not necessarily mean that out-of-state sellers now have substantial nexus with all states, however, and sellers should re-evaluate their tax collection and payment obligations on a state-by-state basis. Continue Reading
Although we normally try to stay away from celebrity gossip, we can’t ignore the latest controversy over Kanye West’s tweet. No, not that one – the other one.
In 2016, Kanye announced that he would release his album, The Life of Pablo, exclusively on Tidal. He tweeted: “My album will never never never be on Apple. And it will never be for sale… You can only get it on Tidal.” (That’s four “nevers” in 107 characters, if you’re counting.) Fans took that seriously, and rushed to sign up. In just over a month, Tidal’s subscriber base tripled, potentially saving the service from collapse.
Six weeks after Kanye promised the album would never (x4) be available anywhere else, he released it on other services, including Apple Music. Many fans became angry that they’d signed up for Tidal based on Kanye’s promise, and one of them filed a lawsuit. The complaint alleged that the representations of exclusivity in the tweet constituted false advertising and asked the court to grant damages, disgorgement of profits, and restitution.
Last week, a New York court ruled on a motion to dismiss filed by Kanye’s legal team. Although the court dismissed some of the claims, it kept the allegations about the tweet alive. “Regardless of whether or not Mr. West’s argument will persuade a jury at a later stage in the case, the court has little difficulty concluding that the complaint plausibly pleads that Mr. West’s statement that his album would never never never be available on Apple Music or for sale was false.”
It’s too early to tell how this case will turn out, but the case raises at least two important points. The first is that claims made in social media are still subject to advertising laws. Even something as seemingly innocent as a short tweet can lead to liability, if what you say isn’t accurate. The second is that you should be careful about far-reaching promises. Many companies want to advertise that things will always be a certain way. Think carefully about making these promises because some consumers will take you at your word. If the market changes and you want to go back on your promises, those consumers may not be forgiving.
Under the GDPR, processors must have a lawful basis for processing any data of an EU data subject. Consent is one of six lawful bases under the GDPR, and in this installment of GDPR SIDEBAR, we’ll cover best practices that can help achieve an acceptable level of compliance with GDPR consent requirements.
Valid consent under the GDPR must be: (1) freely given; (2) specific; and (3) informed. And a consumer must make a clear, affirmative action to consent. This means pre-populated check boxes aren’t going to count as valid consent for GDPR purposes. Here are a few tips for meeting GDPR’s consent requirements:
- Make sure consent is specific. Identify what type of processing the data subject is consenting to, so that the data subject understands exactly what data is collected and how it is used. Example 1 provides a consent mechanism for each specific type of communication (text message, email, etc.). This makes it clear to the data subject what she is signing up for when she consents to processing.
On June 21, the Senate Committee on Commerce, Science, and Transportation held a hearing on Peter Feldman’s nomination for Commissioner of the Consumer Product Safety Commission (CPSC). Mr. Feldman was initially nominated on June 4th only to finish Commissioner Mohorovic’s term, which ends in October 2019, but was re-nominated on June 7th for a separate term to end in 2026. At the hearing, Mr. Feldman stated his intent to focus on “modernizing the agency and increasing its transparency.” He specifically addressed the need to modernize CPSC’s data capabilities, especially in regards to identifying emerging hazards, determining the CPSC’s role in evolving e-commerce distribution models, and improving outreach and transparency to stakeholders.
If he is confirmed, the Republicans will return to the majority after almost 12 years. Senator Jerry Moran (R-Kan.), Chairman of the Subcommittee on Consumer Protection, Product Safety, Insurance and Data Security, has stated that he hopes the Committee will move “expeditiously” with Feldman’s confirmation and that his “expertise in regards to the issues before the Commission and extensive qualifications will be an asset as the Commission gets back on track in advancing product safety policies that reflect the principles of sound regulation.” Similarly, Congressman Bob Latta (R-OH), Chairman of the Digital Commerce and Consumer Protection Subcommittee, has urged the Commerce Committee to move forward with not only Feldman’s confirmation, but also Acting Chair Ann Marie Buerkle’s confirmation. Buerkle’s (R) nomination to become Chairman has been pending for 10 months with no indication of when a vote will be scheduled. Continue Reading
Kelley Drye introduces a new Full Spectrum series, “Inside the TCPA,” which will offer a deeper focus on TCPA issues and petitions pending before the FCC. Each episode will tackle a single TCPA topic or petition that is in the news or affecting cases around the country. In this inaugural episode, partner Steve Augustino and associate Jenny Wainwright discuss the definition of an autodialer or ATDS. This episode addresses the 2018 D.C. Circuit decision in ACA International and the FCC’s new proceeding to examine the definition. With initial comments filed on June 13th, Steve and Jenny analyze the principal arguments made by commenters and discuss whether Congress will weigh in on the matter. To listen to this episode, please click here.*
Future episodes of “Inside the TCPA” will tackle reassigned numbers, consent, and other topics raised before the FCC. This is a companion to Kelley Drye’s comprehensive list of petitions before the Commission available in our monthly TCPA Tracker newsletter. Please contact us if we can assist you with any of the FCC proceedings.
Kelley Drye’s Full Spectrum is available on iTunes. To subscribe, and keep up to date on the latest trends and topics in communications, simply find the built-in and undeletable podcast app, search “Kelley Drye Full Spectrum,” look for our logo, and hit “subscribe.”
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