Advertising Law

In This Issue

 

Manatt Attorneys Join Faculty of American Advertising Federation's National Conference -- June 10-12

"Let's Get Digital" -- Trends in online marketing and communications, notably social media, digital advertising and convergence of media, will be the focus of this upcoming AAF panel discussion featuring Linda Goldstein, Chair of Manatt's Advertising Division; Shane Santiago, President & Chief Creative Officer, SBS Studios; Brian Terkelsen, President & Managing Director, Liquid Thread-Starcom MediaVest Group; and Denise Warren, SVP & Chief Advertising Officer, The New York Times Media Group/GM, NYTimes.com.

"Truth in Advertising: Can You Handle It?" -- Manatt partner Jeff Edelstein will join Mary Engle, the chief advertising regulator at the Federal Trade Commission, and some of today’s top practicing advertising lawyers as they discuss what companies need to know to ensure their advertising gets the stamp of approval from consumers and regulators alike.

Santa Clara Bans Toys in Unhealthy Children’s Meals

In an effort to enforce nutritional standards, Santa Clara County has banned restaurants from including toys in children’s meals that fail to meet the municipality’s requirements.

The ban is believed to be the first of its kind in the nation. It includes both single food items and meals that contain excessive calories (more than 200 calories for a single food item and 485 calories for a meal); excessive sodium (480 mg for a single food item or more than 600 mg for a meal); excessive fat (more than 35 percent of total calories from fat, with exceptions for nuts, seeds, peanut butter, cheese, and individually served eggs); excessive saturated fat (more than 10 percent of total calories from saturated fats, again with similar exceptions for nuts, cheese, and eggs); excessive sugars (more than 10 percent of calories from added caloric sweeteners); or more than 0.5 g of trans-fat.

Beverages are also included – a drink with more than 120 calories, more than 35 percent of total calories from fat, greater than 10 percent of its calories from added caloric sweeteners, or that contains added non-nutritive sweeteners or caffeine cannot be linked with a toy.

President of the Santa Clara County Board of Supervisors Ken Yeager, who proposed the ban, said the toys in kids’ meals are contributing to the country’s obesity epidemic by encouraging children to eat unhealthful, fattening foods. “This ordinance prevents restaurants from preying on children’s love of toys” to sell food, Yeager said. “This ordinance breaks the link between unhealthy food and prizes.”

The Board voted 3 to 2 in favor of the ban. Supervisor Donald Gage voted against the measure. “If you can’t control a 3-year-old child for a toy, God save you when they get to be teenagers,” he said.

The ban won’t take effect for 90 days, a period the Board said could give the fast food industry time to come up with a voluntary program to improve the nutritional value of children’s meals. Enforcement of the ordinance would be provided by the health department, with a $250 fine for the first violation, $500 for the second violation, and up to $1,000 per violation for subsequent violations.

Why it matters: In practical terms, the ban will have limited effect – it applies to roughly a dozen fast food restaurants in the unincorporated sections of the county. But the buzz surrounding the measure could lead other cities and counties to consider similar action. Santa Clara was one of the first municipalities that required restaurants to post nutritional information on menus, and the Board has indicated it hopes this ban will have a similar ripple effect across the country.

back to top

FTC Launches Ad Program Geared Toward Tweens

To educate tweens about advertising, the Federal Trade Commission has launched a new program that includes online games, sample ads, and in-school curricula.

AdMongo, geared toward children aged 8 to 12, is intended to teach kids to think critically about advertising messaging, said FTC Bureau of Consumer Protection Director David Vladeck. The program includes an online game found at www.admongo.gov, where tweens can review ads for fake products, like Double Dunk sporting goods or Cleanology acne medication.

Kids can create an avatar and then participate in various tasks where they think critically about advertising, by identifying advertisements, evaluating the claims, and figuring out how they persuade consumers. They can also create their own ads and target a specific audience. The program encourages kids to ask three questions whenever they view an ad: “Who is responsible for the ad? What is the ad actually saying? What does the ad want me to do?”

The FTC also partnered with Scholastic to create in-school curricula that have been distributed to middle and elementary school teachers across the country.

Vladeck said the campaign tried to strike a balance between promoting commercialism by teaching kids advertising techniques, on the one hand, and inviting children to believe that ads have an inherent nefarious purpose, with marketers trying to trick consumers into buying things they do not want or need.

Why it matters: With billions of dollars spent by advertisers trying to attract the tween market, companies should be aware of the FTC’s program and the attempt to teach younger consumers to think critically about advertisements.

back to top

MMA Releases Guidelines for Messaging, Mobile Web

The Mobile Marketing Association released the latest version of its U.S. Consumer Best Practice Guidelines for Cross-Carrier Mobile Content Services, which can be used for mobile content services like text messaging, multimedia messaging, and mobile web.

The guidelines are intended to be a compilation of accepted industry practices, wireless carrier policies, and regulatory guidance, primarily focused on consumer protection and privacy, according to the MMA.

Major changes in Version 5.0 include new guidelines for affiliate marketing for premium rate programs (with examples included), as well as new guidelines to ensure STOP and HELP keywords work in each program’s native language.

The guidelines provide the industry standard for the four largest mobile carriers in the United States.

The updated guidelines also feature a new format, which the MMA says will provide faster navigation for users.

The new guidelines take effect June 1 for digital advertising formats and September 1 for print, radio, and television media advertisements.

Why it matters: Companies conducting a mobile marketing campaign should consult the guidelines to avoid the possibility of regulatory action or a lawsuit from consumers.

back to top

Talbots Settles Over Robocalls

Talbots and its marketing company agreed to pay penalties totaling $161,000 to settle charges brought by the Federal Trade Commission that they illegally delivered prerecorded “robocalls” that failed to give consumers the proper notice of their right to opt-out of receiving such calls.  

The FTC alleged that the women’s clothing retailer and SmartReply, Inc., its telemarketer, violated the Telemarketing Sales Rule during seven advertising campaigns between February and July 2009. The 40- to 60-second messages used in the campaigns, which were drafted by SmartReply and approved by Talbots, informed consumers about special sales and offers. The estimated 3.4 million calls were made to consumers who had purchased merchandise from Talbots during 2008.

The FTC alleged that instead of giving consumers a way to opt-out of future calls immediately after the message stated the seller’s information, the Talbots robocalls required consumers to listen to almost the entire prerecorded sales pitch. Other messages failed to include the instructions altogether.

The agency further alleged that the robocalls failed to disconnect consumers when they chose the opt-out mechanism. Instead, consumers who tried to select the opt-out option were connected to a second recorded advertisement.

Finally, the messages failed to inform consumers who answered the call that they could be placed on the company’s do-not-call list at any time during the call; the instructions were not given until the end of the advertisement.

Under the terms of the settlement, both companies were subject to a $112,000 penalty, although due to its inability to pay, SmartReply’s penalty was reduced to $49,000.  In addition, both companies agreed to follow the FTC’s Telemarketing Sales Rule in the future.

Why it matters: Companies that use prerecorded telephone calls should be careful to follow all the requirements of the FTC’s Telemarketing Sales Rule. Specifically, the settlement serves as a reminder to tell consumers how to opt-out of receiving telemarketing calls from the seller before delivering the advertisement, to allow consumers to disconnect immediately when they choose to opt-out, and to promptly inform consumers that they can make a company-specific do-not-call request at any time during a call.

back to top

FTC Announces Plans to Update COPPA

The Federal Trade Commission announced that it will review the Children’s Online Privacy Protection Act rules five years early in light of the rate of technological change impacting children’s privacy. The FTC typically reviews its rules every 10 years, and it last reviewed COPPA in 2005. But instead of waiting another five years, the agency determined that technological advances required an accelerated review.

COPPA, which took effect in 2000, prohibits Web sites from collecting or disseminating personal data about children under 13 without their parents’ permission.

Deputy Director of the FTC’s Bureau of Consumer Protection Jessica Rich testified before the Subcommittee on Consumer Protection, Product Safety, and Insurance of the Senate Commerce, Science and Transportation Committee and told senators that the agency is currently seeking public comment on several issues.

Specifically, the FTC is seeking public comment on how the law should apply to new platforms, like mobile communications, interactive television, and interactive gaming, as well as the use of automated systems that filter out any personally identifiable information before posting in order to review children’s online submissions. The agency is also seeking comment on whether new technology exists to obtain verifiable parental consent that could be added to the regulations or whether the current methods should be removed. In addition, the FTC is considering expanding the definition of “personal information” to include persistent IP addresses, mobile geolocation data, or information collected in connection with behavioral advertising.

A public roundtable will be held June 2, 2010, and the 90-day comment period will end June 30, 2010.

To read the FTC’s statement to the Senate subcommittee, click here.

To read the text of the FTC’s request, or to submit a comment, click here.

Why it matters: The expansion of the definition of “personal information” could place additional burdens on advertisers who utilize commercial sites geared toward children. The FTC has expressed interest in enhancing the transparency of behavioral advertising, and companies should be aware of the potential expansion of COPPA regulations.

back to top