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.

Kanye Tweet

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.

Laura Brett became the director of the National Advertising Division in August 2017. Law360 published a Q&A session with special counsel Jennifer Fried and Laura Brett that provides insight into the NAD, what we can expect in the upcoming years, Laura’s approach as the NAD director, recent noteworthy cases, the NAD’s deliberative process, and much more. To read the interview, please click here.

Florida attorney general Pam Bondi filed a complaint last week against Icebox Cafe, L.C. alleging that the restaurant violated Florida’s Deceptive and Unfair Trade Practices Act by making misleading claims that its food products were “locally-sourced” and “sustainable.”  The defendant operates a self-proclaimed “farm-to-table” restaurant in Miami Beach, along with select locations at airports.

According to the complaint, Icebox sought to capitalize on the market for locally sourced and sustainable food products by making false and misleading claims.  For example, the Icebox Miami airport location claimed that its menu items were “farm-to-terminal” and “local,” but the company’s invoices indicate that almost none of the products were sourced from local farms and distributors, according to the action.  The complaint also alleges that defendant’s menus contained representations that its products were from specific local farms and distributors, but its invoices again belied this assertion.

The complaint additionally identifies allegedly misleading claims about “wild” salmon and other fish that had been purportedly caught the same day it was sold to consumers.  While the complaint doesn’t address the substantiation that the advertiser would have needed to support these claims, general advertising law principles require advertisers to have a reasonable basis to support such claims.  The Florida AG points to Icebox’s invoices as evidence that the defendant lacked such a basis and could not support the claims.

The action is an important reminder that advertisers must consider how consumers are likely to interpret “locally sourced” and “sustainable” claims and ensure that they have substantiation to support those takeaways before making the claims.  Unlike many claims for food products that are expressly defined by federal and/or state law, claims about local sourcing and sustainability are not generally defined.  The action here, therefore, reinforces the need to consider substantiation both for claims subject to explicit standards and claims related to undefined terms that may be subject to varying interpretations by different consumers.

In this case, the complaint suggests that the defendant’s invoices demonstrate that the claims were outright false, but one could imagine an instance where some consumers might consider the food sufficiently “local” and others might view the claim as deceptive.  For example, is fish sold in Miami but harvested in north Florida “local”?  What makes a product “sustainable”?  Consumer perception evidence could be useful in these closer calls.  It will be interesting to see whether the terms of any settlement effectively set a new standard for these terms in Florida.  Until then, the lesson for advertisers everywhere is to be precise when using such undefined but attractive language.

 

Earlier this week, the FTC settled its case with BLU Products, Inc., a cell phone company the FTC claimed misled consumers about its privacy and data security practices. According to the agency, the company represented that it did not collect unnecessary personal information and that it imposed specific data security procedures to protect consumers’ personal information. But the FTC claimed not so fast, alleging that BLU allowed one of its partners, an advertising software company, to collect sensitive consumer information such as text message contents and call logs with full telephone numbers. The FTC also alleged that BLU failed to implement the security features it represented to consumers, allowing the company’s devices to be subject to security vulnerabilities that could allow third parties to gain full access to the devices.

In settling the case, BLU agreed not to misrepresent its data collection or data security practices. The order also requires BLU to clearly and conspicuously disclose: (1) all of the “covered information” that the company collects, uses, or shares; (2) any third parties that will receive this “covered information”; and (3) all purposes for collecting, using, or sharing such information. This disclosure must be separate from the company’s privacy policy or terms of use and the company must obtain the consumer’s affirmative express consent to the collection, use, and sharing of such information. “Covered Information” is defined as geolocation information, text message content, audio conversations, photographs, or video communications from or about a consumer or their device. Continue Reading Why So BLU?: FTC Settles Privacy and Data Security Claims with Mobile Company; Fencing-In Relief Requires Consumer Opt-In to Data Sharing

As consumers get ready to watch the 2018 Winter Olympic Games, some companies are getting ready to capitalize on the public enthusiasm. Many marketers want to incorporate Olympics-related themes – ranging from overt mentions of the Olympics to more subtle sports references – in their ads in order to associate their brands with the attention that is being paid to the games.  Although this makes sense from a marketing perspective, it can also pose some legal risks.

The Ted Stevens Olympic & Amateur Sports Act gives the United States Olympic Committee (or “USOC”) exclusive rights to use certain words, like “Olympic,” and symbols, like the interlocking rings. The Act also prohibits use of any word, symbol, or combination thereof that “tending to cause confusion or mistake, to deceive, or to falsely suggest a connection with” the user of the marks and the Olympics. Other countries – including South Korea – have similar laws.

Some companies pay a lot of money for the right to use these marks, so if you use them without permission, you could get a letter (or worse) from an official sponsor or a group like the USOC. The USOC has even tried stop companies from using marks in hashtags. For example, in 2016, the USOC’s chief marketing officer wrote that companies could not use hashtags such as #Rio2016 or #TeamUSA.” According to some press reports, the USOC sent letters to various companies reiterating this position.

Feel free to cheer Team USA on from your personal social media accounts this summer. But remember that what may be called “patriotic” when done from your personal account could be called “infringement” when done from a business account.

 

Those of us who spend our days at the intersection of law and advertising of health products generally accept that the prescription drug world is a universe unto itself, overseen by the FDA pursuant to the Prescription Drug Marketing Act. As prescription drug companies have increased their direct-to-consumer outreach through social media, native advertising, and health information platforms, questions have arisen as to the role that the NAD might play in regulating these advertisements.  For those who are unfamiliar, the NAD is the National Advertising Division of the Better Business Bureau.  It is an industry self-regulatory body that is charged with hearing and rendering decisions in advertising disputes, typically among competitors.  It is commonly used amongst advertisers of consumer-directed products and services.  It is not commonly used amongst prescription drug advertisers and, until recently, many likely assumed that NAD did not have jurisdiction to hear prescription drug advertising challenges.

A relatively recent NAD decision makes clear that that body believes that it has jurisdiction over prescription product advertising, however. Late last year, the NAD evaluated advertising by Synergy Pharmaceuticals for its Trulance product, which is prescribed for chronic idiopathic constipation.  Allergan, maker of a competing product, challenged the advertising on the basis that it included false implied superiority claims, expressly false superiority claims, and undisclosed native advertising in the form of a waiting room pamphlet that allegedly was positioned as independent and impartial patient education material.  Continue Reading Think Your Prescription Drug Advertising is Beyond NAD’s Purview? NAD Disagrees.

Last week, eHarmony agreed to pay up to $2.2 million to resolve allegations brought by four California counties and the city of Santa Monica over the company’s billing practices. That includes a payment of $1.2 million in penalties and up to $1 million in restitution to customers whose subscriptions were automatically renewed, but were denied refunds.

eHarmony also agreed to make various changes to its automatic renewal practices. Specifically, the company agreed to:

  • Clearly and conspicuously disclose the renewal terms to consumers upfront;
  • Get consumers’ consent through “a separate check-box, signature, or other substantially similar mechanism” that relates solely to the automatic renewal terms and no other part of the transaction;
  • Send an e-mail confirmation of the transaction immediately after the contract is made; and
  • Provide a tollfree number, e-mail address, or other easy cancelation mechanism.

While California law already imposes some of these requirements in connection with automatic renewal or continuous service offers, the injunction is more prescriptive in certain respects, such as by expressly requiring a standalone check-box and an e-mail confirmation immediately after the transaction.

The settlement also resolves allegations related to California’s Dating Services Contract Law, which requires specific language informing a consumer of his or her right to cancel within three business days of the contract, and the Uniform Electronic Transactions Act, which requires contracts formed by electronic signature to allow for electronic cancellation.  The settlement further prohibits eHarmony from attempting to collect past due membership fees from customers incurred prior to the effective date of the settlement.

In a press release announcing the settlement, a Santa Monica Chief Deputy City Attorney said that “automatic renewal is one of the critical areas in consumer protection today.” Indeed, in the past few weeks, we’ve noted that California was set to tighten its restrictions on automatic renewals and that the FTC had announced a $1.3 million settlement in a case involving similar issues.

Companies that sell products or services through subscription models need to keep in mind that various federal and state laws could impact how these models are structured and advertised. Failure to comply with these laws could result in significant penalties, especially as states, the FTC, and class action attorneys increase their scrutiny.​

Most Popular Ad Law Access Posts of 2017

As reported in our Ad Law News and Views newsletter, Kelley Drye’s Advertising Law practice posted 106 updates on consumer protection trends, issues, and developments to this blog in 2017. Here are some of the most popular:

Ad Law News and Views is produced every two weeks to help you stay current on advertising law and privacy matters. You can subscribe to it and other Kelley Drye Publications here and the Ad Law Access blog by email or RSS feed.

2018 Advertising and Privacy Law Webinar Series 

Please join Kelley Drye in 2018 as we continue our well attended Advertising and Privacy Law Webinar Series. Like our in-person events, this series gives key updates and provides practical tips to address issues faced by counsel as well as CLE credit. This webinar series will start again in February 2018. Please revisit the 2017 webinars here.

The decision in Kwan v. Sanmedica International, 854 F.3d 1088 (9th Cir. 2017) in April, has occasioned a lot of discussion about the apparent demise of the establishment claim “standard” in California.  What the Kwan decision should have done, but did not, is provoke some hard thinking about what this “standard” is and how we use it.  From the Kwan decision, it is apparent that the Ninth Circuit does not understand where the establishment claim principle came from and what it means.  But its error is understandable, because attorneys and judges have been careless with the principle and arguably have made much more of it than it should be.                                                                                                                                             

Kwan has been accepted as standing for two propositions.  The first, which should be non-controversial and unsurprising, is that in private suits brought under California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA), a plaintiff must allege and ultimately prove that the offending advertising claim is false, not merely unsubstantiated.  There has been no serious dispute about this since the California Court of Appeal (Second District) decision in National Council Against Health Fraud, Inc. v. King Bio Pharmaceuticals, Inc., 107 Cal. App. 4th 1336, 133 Cal. Rptr. 2d 207 (2003).  What made Kwan news was that the court also rejected plaintiff’s allegations that defendant’s dietary supplements were “clinically tested to boost [human growth hormone] by a mean of 682%,” is provably false, and in so doing refused to “incorporate Lanham Act provisions into California’s unfair competition and consumer protection law by distinguishing between ‘establishment’ and ‘non-establishment’ claims.”  854 F.3d at 1097.    Continue Reading Is It Time to Rethink Establishment Claims?

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Last week, the Federal Communications Commission (FCC), in a 3-2 vote, approved an order allowing “television broadcasters to use the ‘Next Generation’ broadcast television (Next Gen TV) transmission standard, also called ‘ATSC 3.0.’”  Described in the Order “as the world’s first Internet Protocol (IP)-based broadcast transmission platform,” the Next Gen TV standard is expected to allow broadcasters to provide more targeted advertisements to individual viewers.  Some had expressed concerns over the collection of the demographic and consumer data necessary for Next Gen TV targeted advertising, and applicable privacy safeguards for the new standard.  At this stage though, the FCC majority took a wait and see approach to privacy concerns.

Continue Reading Will Your TV Watch You? FCC Green Lights Targeted Advertising in Next Gen TV Broadcasting Standard