Marketing & Media Transactions

Please join Kelley Drye in 2017 for the Advertising and Privacy Law Webinar Series. Like our annual in-person event, this series will provide engaging speakers with extensive experience and knowledge in the fields of advertising, privacy, and consumer protection. These webinars will give key updates and provide practical tips to address issues faced by counsel.

This webinar series will commence January 25 and continue the last Wednesday of each month, as outlined below.

January 25, 2017 | February 22, 2017 | March 29, 2017 | April 26, 2017 | June 28, 2017
July 26, 2017 | September 27, 2017 | October 25, 2017 | November 29, 2017

Kicking off the series will be a one-hour webinar on “Marketing in a Multi-Device World: Update on Cross Device Tracking” on January 25, 2017 at 12 PM ET. For more information and to register, please click here. CLE credit will be offered for this program.

The FTC released last week a paper summarizing and reflecting on its October 30, 2015 public workshop, “Follow the Lead,” which we previously discussed here and focused on lead generation practices and related privacy and consumer protection issues.  The paper expands upon many of the same principles addressed at the workshop, including how lead generation works and what benefits and risks arise from lead generation.  Notable takeaways include the following:

  • What is lead generation?  The paper defines lead generation broadly as “the process of identifying and cultivating individual consumers who are potentially interested in purchasing a product or service.”  A lead may consist of only the consumer’s name and contact information, or may involve more detailed and potentially sensitive information such as Social Security or consumer account numbers.
  • How does lead generation work?  LeadGenThe common thread of lead generation involves the collection of consumer information, typically on a website operated by a publisher or an affiliate.  From there, any number of things can happen.  The publisher or affiliate may sell the lead to another publisher or affiliate, to an aggregator, or to a merchant.  The FTC provided the adjacent figure to show some possible flows of leads.
  • What are the potential benefits of lead generation?  The FTC acknowledged that lead generation, when practiced ethically and consistent with consumer protection principles, can efficiently connect consumers with merchants they are interested in and promote competition.  Staff also noted that the sale of consumer leads could have positive effects on price and competition, as found in a research study discussed at the workshop in the mortgage lending context.
  • What are the potential concerns of lead generation?  The report noted that the lead generation and lead selling process is often hidden from consumers, which can lead to consumers providing information without knowing how and by whom their information will be used.  The FTC recommended that companies collecting information clearly and conspicuously disclose how the personal information will be used to facilitate informed consumer choice about when and how to share personal information.  In other cases, even where information is appropriately collected, it may be subsequently sold for nefarious purposes or purposes not authorized by the initial collection.  Staff recommended that companies involved in the lead generation process take steps to ensure that consumer information is used for legal and authorized purposes throughout the life of the lead.

Staff also highlighted recent enforcement actions against lead generators for using leads for unauthorized and illegal purposes and signaled that it could take action against entities even if they aren’t directly responsible for the problematic practice.  As noted in the report, “[i]gnoring warning signs that third parties are violating the law and pleading ignorance will not shield companies from FTC actions.”  Entities involved with lead generation should take note and ensure that they have considered the full life cycle of a lead before using or selling it.

FTC Consumer Information LogoOn June 23, the FTC updated its consumer information page to provide updated guidance on “Online Tracking.”  The updated guidance is intended to provide consumers with information on different methods of tracking, how they work, and how consumers can control such tracking.  While directed to consumers, updates to this page can also help businesses understand how these online tracking technologies work, and identify what the FTC expects businesses to do.

The previous guidance, titled “Cookies: Leaving a Trail on the Web” (last updated in November 2011), primarily addressed cookies (including first-party cookies, third-party cookies, and flash cookies), provided consumers with general information on how to control cookies, identified how consumers can opt-out of receiving targeted ads, provided a brief overview of “Do Not Track,” and identified that new technologies were constantly emerging.

The updated guidance document updates and expands upon this information to address new forms of online tracking (e.g., device fingerprinting, cross-device tracking), new tracking technologies (e.g., use of unique device identifiers or HTML 5 cookies), how tracking in mobile apps occurs, and how consumers can generally limit or block tracking online, in apps, or across devices.

So what is the big-picture takeaway for businesses? Consumers may not fully understand online tracking, including their options for minimizing or preventing such tracking from occurring.  Businesses can help educate consumers concerning their online tracking by providing clearly identifiable ways in which consumers can review information about the company’s collection, use, and disclosure practices, and ways to limit cookies and other tracking technology.  This may include a clearly written privacy policy or other consumer facing document, or in the device settings as suggested by the FTC.  Lessons learned from past FTC enforcement actions (including the FTC’s action announced yesterday against InMobi) also illustrate the risks associated with business practices that appear to circumvent a user’s privacy decisions or a device’s privacy settings.

downloadOn Monday, Missouri Attorney General Chris Koster filed a lawsuit against Charter Communications, Inc., alleging that the cable, internet, and telephone service provider’s third party telemarketers made thousands of telemarketing calls to consumers who had placed their numbers on the federal and Missouri do-not-call lists, or requested not to receive telemarketing calls from Charter. According to the Attorney General’s press release, the Office received 350 complaints from Charter subscribers and non-subscribers about telemarketing calls – which some had been receiving up to three times per day.

According to the complaint, Charter had entered into contracts with third-party telemarketers to place telemarketing calls on its behalf to numbers on Charter-provided lists. These third parties allegedly used autodialers, identified themselves as Charter, and received a commission based on sales to phone numbers on the lists provided by Charter. The complaint, which was filed in the U.S. District Court for the Eastern District of Missouri, alleges that these third-party telemarketers made calls to thousands of consumers whose phone numbers were on applicable Do Not Call lists and did not lawfully honor consumers’ requests to be added to DNC lists, and that such calls were made without an applicable Established Business Relationship exemption or consent to be called. The complaint states that Charter is liable for these third parties’ calls, which allegedly violate the Telephone Consumer Protection Act, Telemarketing Sales Rule, and Missouri Merchandising Practices Act’s “No-Call Law” and “Telemarketing Law.”

While we have seen an influx of consumer class action lawsuits alleging TCPA violations in recent years, state Attorneys General have the authority to investigate and seek civil penalties for violations of both federal and state telemarketing laws. Attorney General Koster is seeking, in addition to permanent injunctive relief, civil penalties of at least $500 for each violation of the TCPA, up to $16,000 for each violation of the TSR, and up to $5,000 for each violation of the Missouri Merchandising Practices Act.

Advertisers beware. Anti-corporate activists, no longer content to ask for petition signatures on a street corner, are using guerilla tactics to sabotage corporate communications and advertising campaigns. In recent months, such groups have launched various advertising hoaxes designed to challenge the advertiser’s message and its brand.

It is difficult for advertisers to combat such attacks given the myriad marketing outlets provided by the web. Advertisers should not just accept this new reality without action, though. From a legal perspective, advertisers can take some proactive steps prior to and following an advertising campaign launch to help minimize their risks.

  • Insist on confidentiality. Confidentiality provisions are common in agreements with advertising agencies, but many advertisers rely solely on their advertising agencies to handle talent and vendor agreements during a campaign. Insist that any person involved in the creation or execution of the campaign, including a participant in a casting call, is required to maintain confidentiality. 
  • Don’t forget about social media. Social media outlets are convenient, free ways for anyone to spread their message. In an agency, talent or related contractor agreement, include restrictions on sharing information via social media in confidentiality clauses. Further, include a take down provision to require anyone who breaches their confidentiality obligations to immediately remove the offending content.
  • Examine agency agreements. In any major advertising campaign, things can go wrong. The advertiser and the agency are better off knowing up front who is responsible for the costs should such events occur. This is easily addressed in the agency agreement between the parties and can help minimize disruption to both businesses and the business relationship overall should such an incident occur. 
  • Monitor and Address. Set up alerts to monitor fake or unauthorized advertising. Anyone can set up a Twitter or Facebook account that appears to be legitimate corporate content. Advertisers should monitor the web for this behavior either actively or passively through a tool such as Google alerts. In addition, have an action plan in place to address fake or unauthorized content, which should include filing complaints with service providers used by the wrongdoers.