Advertising Law

NAD Recommends Goop Lifestyle Blog Clean up Its Claims

Gwyneth Paltrow's agreement to discontinue her lifestyle blog Goop for a line of dietary supplements following an inquiry by the National Advertising Division provided an important reminder about endorsements.

Her decision follows NAD's recommendation that Moon Juice discontinue certain claims for its drinks such as "Action Dust" and "Brain Dust," which were touted as "Designed to support peak performance, stamina, and longevity," "All Organic or Wild," and "Medicinal Grade" Moon Juice complied.

The same claims also appeared in the Goop blog where Paltrow was featured prominently throughout the site. Earlier this year, she also recommended that Moon Juice products be included in "GP's Morning Smoothie." According to the site, "Gwyneth drinks one of these every morning, whether or not she's detoxing. Choose your Moon Juice dust depending on what the day ahead holds … brain before a long day at the office, sex dust before a date, etc."

Each of the Moon Juice products listed in the recipe included a hyperlink to a separate page on the Goop website where consumers could purchase the product. The purchasing page featured the same claims challenged by the NAD in the Moon Juice action.

"The product efficacy claims on the Goop website and Ms. Paltrow's endorsement of the products impose an obligation on Goop as a marketer to verify that the products provide the benefits it claims," the self-regulatory body wrote. "When marketing products for sale, an advertiser has an obligation to insure that the claims it makes for the product are truthful, accurate, and not misleading. The obligation to insure that advertising claims are truthful extends beyond the manufacturer of the product to affiliates who market the product."

Goop's claims about the Moon Juice dietary supplements "amplified" the target audience for the products, the NAD said. "The advertising marketplace is changing and advertisers are increasingly using third parties, including endorsers, influencers, and affiliate marketers, to reach consumers. It is equally important that such third-party marketing claims be truthful, accurate, and not misleading."

Goop represented that the Moon Juice advertising had been voluntarily and permanently discontinued and the NAD closed its inquiry.

To read the NAD's press release about the case, click here.

Why it matters: Its concern regarding dietary supplements and Paltrow's apparent endorsement of the products prompted the NAD to remind advertisers that the obligation to ensure that advertising claims are truthful extends beyond the manufacturer to affiliates who market the product. As the role of influencers in social media increases, advertisers must remain cognizant that their advertising must be "truthful, accurate, and not misleading" and compliant with the Federal Trade Commission's Guides Concerning the Use of Endorsements and Testimonials in Advertising.

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Pin This: New Contest, Sweepstakes Rules for Pinterest

Pinterest updated its Acceptable Use Policy recently to include changes as to how companies can conduct contests and sweepstakes on the social media site.

Before the update, brands were prohibited from requiring entrants to Pin from a selection of options or requiring a minimum number of Pins to enter a promotion. Companies were also not allowed to conduct a promotion where each Pin, like, or board constituted an entry.

In its August 2016 update to the Acceptable Use Policy, Pinterest removed the prohibitions and instead added a new general recommendation to advertisers: "If you run a contest or other type of promotion on Pinterest, please encourage authentic behavior, keep Pinterest spam-free and be sure to comply with all relevant laws and regulations."

In addition, the policy established three rules that broadened the options for brands. Going forward, companies should not require participants to Pin a specific image. "Successful contests encourage creative and authentic behavior," the platform explained. "Give Pinners the ability to choose Pins based on their tastes and preferences, even if it's from a selection or a given website."

Next, Pinterest advised that participants should not be allowed more than one entry each. "Contests that incentivize users to submit multiple entries per person feel less authentic and can negatively impact other Pinners."

Finally, brands should not suggest that Pinterest is a sponsor or an endorser of their contests, they should not use the Pinterest wordmark, and they should keep the badge smaller in scale than the brand's own logo to avoid an implied endorsement.

To read Pinterest's Acceptable Use Policy, click here.

Why it matters: Pinterest's new Acceptable Use Policy updates its guidelines for running contests and sweepstakes on the platform. While the platform no longer expressly prohibits sponsors from requiring participants to choose from a selection of Pins, the new Acceptable Use Policy underscores that promotions should be legally compliant and that they should encourage authentic and spam-free behavior.

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Kardashians Accused of Failing to Keep up With FTC Regulations

The Kardashians are making headlines again, this time for allegedly violating the Federal Trade Commission guidelines on endorsements and testimonials in advertising.

After reviewing the Instagram accounts of the Kardashian daughters, Truth in Advertising sent a letter to matriarch Kris Jenner and the family's lawyer stating: "We have found that members of the Kardashian/Jenner family are engaged in deceptive marketing campaigns for various companies by routinely creating and publishing sponsored social media posts for such companies without clearly and conspicuously disclosing that they are paid representatives of those companies or that the posts are advertisements."

After checking out the accounts for Kim, Khloe, and Kourtney Kardashian as well as Kylie and Kendall Jenner, the group found "a plethora of posts that do not clearly or conspicuously disclose their relationships with the companies being promoted in the posts as is required by federal law."

For example, Kylie Jenner posted a picture of her holding a Fit Tea product with the caption "using @fittea before my shoots is my favorite." Her Instagram post does not indicate that it is an advertisement, although the same picture is featured on Fit Tea's Instagram account.

In addition to Fit Tea, Truth in Advertising included a list of 27 companies—such as Estee Lauder and Puma—that were featured in similarly questionable posts by the Kardashian/Jenner sisters. The group requested that the posts be corrected to disclose material connections between the family and the companies.

When the Kardashian's failed to satisfactorily respond, Truth in Advertising made a formal complaint to the FTC based on the allegedly deceptive native advertising by the family. At the same time, the Kardashian's corrected 21 transgressions to include "#ad" at the beginning of the caption, they edited 6 to include an ad hashtag at the end of the caption, and they removed 4 from publication.

However, 75 others remained unchanged and 2 were "insufficiently edited" by adding "#spon" at the end of the post captions, Truth in Advertising told the FTC. "The willingness of the Kardashians/Jenners to alter their Instagram posts … suggests that they would also fix other similarly deceptive posts if permitted to do so by the other companies they endorse," the complaint said. "As such, it is apparent that the issue is with the companies, who continue to flagrantly ignore the law." The group also noted that an additional 20 ads were found lacking disclosures during a second review.

The letter suggested the FTC take "appropriate enforcement action against those companies and individuals found to be violating the law," with an eye toward making sure "that all future social media posts promoting companies are properly and clearly labeled as advertisements."

The family's attorney informed Truth in Advertising that the women are "working diligently" to fix the challenged posts and "will make every effort" to ensure that future posts will include clear and conspicuous disclosures where appropriate.

The letter suggested the FTC take "appropriate enforcement action against those companies and individuals found to be violating the law," with an eye toward making sure "that all future social media posts promoting companies are properly and clearly labeled as advertisements."

To read the Truth in Advertising letter to Kris Jenner, click here.

To read the Truth in Advertising complaint to the FTC, click here.

Why it matters: Whether the FTC elects to launch an investigation into the high-profile celebrity family and its social media posts remains to be seen. Truth in Advertising's challenge is not the family's first run-in with this issue. Last year, pharmaceutical company Duchesnay received a warning letter from the Food and Drug Administration after a Kim Kardashian Instagram post included a photo of the reality star holding a bottle of its morning sickness medication and a post that read in part: "OMG. Have you guys heard about this?"

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A Cold Day in Court for Plaintiff Suing Starbucks Over Iced Drinks

Starbucks won a dismissal of a putative class action over underfilled drinks when a California federal court judge poured the lawsuit out of federal court.

Alexander Forouzesh alleged that the coffee giant tricked consumers by stating that Tall size cold drinks contain 12 ounces, Grande drinks contain 16 ounces, and Venti drinks have 24. Despite listing these sizes on the menu, Starbucks employees were instructed to make the drinks according to standard practices that included filling the clear cup with the selected beverage up to a fill line and then topping it off with ice.

The result for customers: less liquid than promised, Forouzesh told the court, and that Grande had just 12 ounces of beverage and Venti had only 14. He claimed that ice is not a beverage, and alleged that Starbucks was guilty of breach of warranty, negligent misrepresentation, and violations of California's Consumer Legal Remedies Act, Unfair Competition Law and the state's False Advertising Law.

Starbucks countered with a motion to dismiss, arguing that the iced beverages it sold met the expectations of reasonable consumers.

U.S. District Court Judge Percy Anderson agreed.

Reasonable consumers would not be misled by Starbucks beverages and neither would young children, he found. "[A]s young children learn, they can increase the amount of beverage they receive if they order 'no ice,' " the court wrote. "If children have figured out that including ice in a cold beverage decreases the amount of liquid they will receive, the Court has no difficulty concluding that a reasonable consumer would not be deceived into thinking that when they order an iced tea, that the drink they receive will include both ice and tea and that for a given size cup, some portion of the drink will be ice rather than whatever liquid beverage the consumer ordered."

This conclusion was supported by the fact Starbucks uses clear cups for its cold drinks, making "it easy to see that the drink consists of a combination of liquid and ice," the court said. "Moreover, [since] neither the menu nor signage Plaintiff has reproduced and incorporated into his Complaint explicitly state that the drinks consist of the identified ounces of liquid, Starbucks has [not] made a representation about the size of its 'beverages.' "

The plaintiff's interpretation of Starbucks' menu was "strained" and "inconsistent with the understanding of a reasonable consumer," the court noted.

"When a reasonable consumer walks into a Starbucks and orders a Grande iced tea, that consumer knows the size of the cup that drink will be served in and that a portion of the drink will consist of ice," Judge Anderson concluded. "Because no reasonable consumer could be confused by this," he dismissed the plaintiff's lawsuit with prejudice.

To read the order in Forouzesh v. Starbucks Corp., click here.

Why it matters: The court had no patience with the plaintiff's interpretation of Starbucks' menu and held that no reasonable consumer would believe the size of the drink would consist solely of liquid. While the decision was a victory for the coffee chain, similar suits based on hot drinks remain pending as does another challenge to the store's use of ice in cold drinks.

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Manatt Celebrating 8th Women in Business Pavilion at ERA's D2C Conference

In 2009, a group of highly successful women in the direct response industry joined forces to create a unique micro-environment on ERA's D2C exhibit floor. The Women in Business Pavilion, founded by Linda Goldstein, head of Manatt's advertising, marketing and media practice and former ERA board chairperson, maintains calm amid the clamor and is a place where ERA's executive women can gather and share best practices with their association peers. The Pavilion continues to grow at every convention and has become a hub for building connections, exchanging ideas, closing deals and catching up with friends—old and new. And yes, men are welcome. For more registration information, click here.

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News and Views

The Boston Globe turned to Linda Goldstein, chair of the firm's advertising, marketing and media practice, about DraftKings, Inc.'s announcement that it has raised $150 million in venture investment. Goldstein said that the surge of new state regulations since Fall 2015 likely convinced investors that daily fantasy sports would be able to continue growing. "There is now a framework for what the industry is likely to look like," Goldstein said. "If you looked at the landscape a year ago, I don't think anybody could have predicted whether the industry would have survived." To read "DraftKings Gets $150m Investment," click here.

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