DIGITAL ADVERTISING

and MARKETING

Reaching Consumers

in a Digital World

PLI TechLaw 2017

Marc Roth

Tsan Abrahamson

What We’ll Cover

• What’s New? Updates and Changes in Law

• Does This Look Blurry? The line between Ambassadors and Influencers

• Those Aren’t Our Politics! Native Advertising Meets Programmatic

• Guerillas in the Midst. Exploiting trends in real time

• Can I Call You Again? Texting after “the change.”

• 6:45pm, 2099, in your sleep: Future predictions

2017: IT’S ALL ABOUT

SHADES OF GRAY

WHAT’S YOUR RISK TOLERANCE?

What’s OLD?

GOOD OR BAD, WORD TRAVELS FAST IN THE DIGITAL ENVIRONMENT

CONSUMER REVIEWs could be

false advertising

I mean “Alternative Facts”

WHAT’S BEEN BREWING?

THE ASTROTURF

CRACKDOWN

(but it wasn’t enough)

COMPANIES STILL DON’T WANT BAD REVIEWS

AND ARE GOING TO GREAT LENGTHS TO SUPPRESS THEM

What’s New?

2016 – 2017 didn’t see many changes in the law, but media

technology advanced, so the stakes got much higher.

CONSUMER REVIEW FAIRNESS ACT of 2016

CONSUMER REVIEW FAIRNESS ACT of 2016

Prohibits companies from muzzling consumer reviews of the company and its products/services. •Prohibits and declares void a provision in a contract that “prohibits or restricts an individual who is a party to such a contract from engaging in written, oral, or pictorial reviews, or other similar performance assessments or analyses of, including by electronic means, the goods, services, or conduct of a person that is also a party to the contract.”

•Declares void a provision that seeks to “transfer or requires an individual . . . to transfer . . any intellectual property rights in review of feedback content, with the exception of a non-exclusive license to use the content.” (emphasis added).

• The law only declares that a “transfer of ownership” provision is void, thus making it unenforceable. Its does not declare it illegal (though may violate other state/federal UDAAP laws).

• The law distinguishes between transfer of ownership and a license to a user’s communication. This is an important distinction that further supports the positon that the law does not prohibit or require a seller to obtain a user’s permission to use her content. Most sites, including your sites, merely seek a license to use user submitted content, not own it.

2017 CONSIDERATIONS

• Avoid strong arm review tactics.

• Do not condition pricing on providing a review.

– In Re AmeriFreight, Inc.(2015) extends pricing condition proscription to B2B.

• Law still allows false review to be removed, so continue to police results.

• Law does not apply to employee-representatives of a company.

• FTC warns companies to review terms of use and contracts to remove offensive provisions

– Possible enforcement action, even if not used?

FTC: INFLUENCERS ARE

(STILL) NOT CELEBRITIES

Disclosure is REQUIRED when the connection between the person and the brand is not obvious or clear.

General Advertising Principles

Ads must be: truthful, accurate, and not deceptive or misleading Context: Look to entire ad for the net impression, the “mosaic of tiles.” Deception: Is information contained in (or omitted from) an ad “material” (causes to consumers to act one way or another) Identifiable: Is the ad easily understood to be an ad or something else? A marketing practice may be unfair if it results in substantial consumer injury, can not be reasonably avoided by consumers and is not outweighed by any countervailing consumer benefits.

FTC Endorsement and Testimonial Guides

Key Principles

• The endorsement must reflect the honest opinions, findings, beliefs or

experiences of the endorser

• The endorsement cannot contain any claims that the advertiser could not

substantiate on its own

• Any material connection between the endorser and the advertiser must be

disclosed unless the connection is obvious to the consumer

• The advertiser is liable for any false statements made by the endorser and

for failure to disclose material connections

FTC Endorsement and Testimonial Guides - What is an endorsement?

• Any advertising message that consumers are likely to believe that reflects

the personal opinions, beliefs, findings, or experiences of a person or

organization other than the sponsoring advertiser.

• Endorsements include:

–verbal statements,

–demonstrations,

–depictions of the name, signature, likeness or other identifying personal

characteristics of an individual, or

– the name or seal of an organization.

• Endorsements do not include:

–Fictional dramatization of a real life situation, or

–Statements by an identified company spokesperson.

• Unclear –

– Facebook “Like?

FTC’s FAQ’s – June 2015

What Constitutes an Endorsement:

• A positive statement about the product is not required!

–Simply posting a picture of a product in social media such as on Pinterest

or a video of you using it could convey that you like and approve of the

product

• You don’t necessarily have to use words to convey a positive message

What Is a “Material Connection”?

• Any incentive- no matter how nominal

• Sweepstakes entries/$1 off coupons

• Nominal gifts

Even non-financial incentives

• The opportunity to have your story featured or to appear in an ad-

even if you are not being paid

Manatt, Phelps & Phillips, LLP

Endorsements

INFLUENCERS MUST

DISCLOSE CONNECTION

The threshold is not only

IS IT A CELEBRITY? It’s

IS IT DECEPTIVE?

BUT THE LINES GET

BLURRED

When Does an Influencer Become a Celebrity?

What Constitutes Adequate Disclosure?

Does the Global Economy Bring up Special Issues?

WAIT, WHAT?

THE LAWS ARE HARMONIZING

ALWAYS HAVE FACE

CREAM LYING AROUND?

THE “ACCIDENTAL” ENDORSEMENT

2017 Influencer Considerations

• When in doubt, disclose! – OK: #paid, #ad and #sponsored. – NOT OK: #spon, #promoted.

• Disclosures not limited to influencers – #sweepstakes for incentive posts – #employee for employee posts

• Platform limitations inform disclosure method. • Include a “morals” clause for everyone! • Circumstances are always important

– Devil is in the details – Assess your client’s risk tolerance first – FTC claims it’s “watching.”

NATIVE MEETS

PROGRAMMATIC

Or…. How Major Companies Just (accidentally) Got Political!

Ads where I expect to see ads

WHEN NATIVE MEETS PROGRAMMATIC,

STRANGE THINGS HAPPEN

2017 Considerations

• Check Your Contracts – Create a “do over” provision for embarrassing

posts. – Confirm your company can blacklist or whitelist

websites and social media feeds.

• Periodically Review Ads – Have you (unwittingly) supported a cause? – Check political sites like million moms or grab

your wallet

• Be Prepared with a Plan – Affirmative statement or let it go?

GUERILLAS IN THE MIDST

Taking Advantage of Real Time

Right of

Publicity

and

Trademark

Infringement

2014: A company cannot imply sponsorship or endorsement by a person or entity without authorization.

Yeah, but what if it’s just tooooo good?

Worth the Risk

CALL ME, MAYBE?

(YOU MIGHT BE CRAZY)

TCPA GROWS UP

TCPA – Overview and Purpose

• Enacted in 1991 primarily to address: – Consumer privacy

• Pre-recorded telemarketing (“robo”) calls to residences

• Calls to mobile phones

– Cost of call shifts to recipients

• Authorized the establishment of a federal Do Not Call list

• Established rules regarding the types of consent required to make certain calls

• Granted the FCC primary regulatory enforcement authority

• Established an attractive private right of action

Damages under the TCPA

• Statutory Damages:

– $500 per call or text or actual damages, whichever is greater.

– Up to $1,500 per call for willful or knowing violations.

• Potential for significant damages (treble for knowing): – 1,000 x $500 = $500,000

– 10,000 x $500 = $5 million

– 50,000 x $500 = $25 million

– 100,000 x $500 = $50 million

– 500,000 x $500 = $250 million

• No cap on statutory damages.

• Settlements in multi-million dollar range are not uncommon.

Notable TCPA Settlements and Cases

• Caribbean Cruise Lines (2016): $74 million settlement for unauthorized calls.

• Wells Fargo (2016): $32 million settlement for unauthorized calls

• Bank Of America (2016): $32 million settlement of six pending TCPA cases.

• Abercrombie/Hollister (2016). $10 million settlement involving unsolicited text messages.

• HSBC (2015): $40 million settlement involving unsolicited pre-recorded messages to cardholders.

• Capital One (2015): $75 million settlement involving unsolicited prerecorded calls.

• Walgreens (2014). $11 million settlement involving unauthorized prerecorded prescription reminder calls.

TCPA Consent Requirements

• Basically – You must obtain consumer consent if using an autodialer to call mobile phones or send text messages.

• Level of consent determined by type of intended call/message – Purely informational or transactional

– Commercial/telemarketing

– Wireless or landline

– Non-Profit

• Some exemptions – Emergency notices

– Carrier service messages

– Healthcare messages under HIPAA

Informational Calls Under the TCPA?

• Not defined in TCPA

• Examples of informational calls:

– Debt collection calls

– Calls for political purposes

– Airline notification calls

– Bank/credit card balance and fraud alerts

– School and university notifications

– Research or survey calls

– Wireless usage notifications

– Package delivery delays

– Out of stock merchandise (with no other marketing)

– Wrong or incomplete billing information

– Return received confirmation

Prior Express Consent

• Purely Informational or Transactional Calls/Messages

• Requires the recipient’s “prior express consent” (47 C.F.R. Part 64.1200(a)(1)) – Not defined in the TCPA or the FCC’s rules

– The FCC has said that “persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.”

• Consent may be verbal or written, but if you don’t have a record, it may be hard to prove verbal consent (consider requiring a script).

Commercial or Marketing Calls/Texts

• A call that includes or introduces an advertisement or constitutes telemarketing (47 C.F.R. Part 64.1200(a)(2))

– Broadly defined in TCPA Rules

• Advertisement 47 C.F.R. Part 64.1200(f)(1)

– “Any material advertising the commercial availability or quality of any property, goods or services.”

• Telemarketing 47 C.F.R. Part 64.1200(f)(12)

– “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental or investment in property, goods, or services, which is transmitted to any person.”

Dual-Purpose Calls/Texts

Calls/texts that contain both informational and telemarketing content are considered telemarketing.

• E.g., Customer satisfaction survey followed by “and by the way, are you interested in hearing about our latest offers today?”

– Does not matter that a transaction is not completed (or even introduced) during the call.

– EBR does not matter

– Lead generation is telemarketing

Examples addressed in FCC 2003 Report and Order: – Calls from mortgage brokers to their clients notifying them of lower

interest rates

– Calls from phone companies regarding new calling plans

– Calls from credit card companies offering overdraft protection

Telemarketing Dual Purpose Calls/Messages

Requires “prior express written consent”

– From revised FCC 2013 Rules • Harmonized with FTC revisions to TSR in 2008

• More stringent level of consent to call cell phones and send unsolicited facsimiles

– Consent agreement must be clear and conspicuous • May not be hidden in terms/conditions/privacy policies, clearly

visible font, etc.

– Contain specific disclosures

– Evidence the consumer’s agreement • E-SIGN Act facilitates electronic means of collection

Prior Express Written Consent

• Definition (47 C.F.R. Part 64.1200(f)(8)): :“an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered.”

•Written agreement (can be electronic) shall include a clear and conspicuous disclosure:

– Executing the agreement authorizes the seller to deliver telemarketing calls using an automatic telephone dialing system or an artificial prerecorded voice; and

– The person is not required to sign the agreement or enter into the agreement as a condition of purchasing any property, goods or services.

July 2015 FCC Declaratory Ruling and Order

• Addressed 21 petitions/requests filed by industry associations and companies seeking clarification of TCPA and FCC rules

• Passed by vote of 3-2 at FCC’s June 18, 2015 Open Commission Meeting

• Ruling released July 10, 2015; took effect immediately

• Issues Covered: – Autodialer

– Revocation of consent

– Reassigned Numbers

– One time response exception

But this can all change . . .

• Industry appeal of FCC July 2015 Ruling currently being considered: – Autodialer

– Revocation

– Reassigned

• Changing of the guard at the FCC – Chairman Pai (R) replaces Wheeler (D)

• Courts issuing differing decisions on July 2015 issues

6:45AM, 2099, IN YOUR

SLEEP

PREDICTIONS THAT ARE ACTUALLY HERE ALREADY

THANK YOU!

QUESTIONS?

Marc Roth Tsan Abrahamson mroth@manatt.com tsan@cobaltlaw.com

212.790.4542 510.841.9800