The Federal Trade Commission hosted a day-long workshop on “native advertising” on December 4th in Washington, D.C. Native advertising, in which advertisements or sponsored content imitate the form and style of the editorial content in which they are featured, has been around for decades, but is drawing increasing scrutiny as it proliferates in digital media and on social networks, and takes on new and increasingly sophisticated forms. Under Section 5 of the FTC Act, the FTC is empowered to prohibit advertisements that are deceptive or misleading, however as the workshop made clear, there is considerable disagreement about when native advertisements become deceptive and whether further FTC guidance on the subject of native advertising is necessary.
Already one of the strictest states in the country when it comes to protecting online privacy, California recently passed another law that may require website operators to change their privacy policies. The new law would essentially be an insurance policy against youthful bad judgment, allowing minors to erase those embarrassing public comments or internet posts that could make for awkward conversation with a future admissions officer or employer.
As you may have heard, we are on the verge of a vast expansion of the Internet. Currently, there are only about two dozen generic top-level domains (“gTLDs”), such as .com, .net, and .info. However, there will soon be more than 1,000 new gTLDs, many of which are relevant to companies in the fashion and luxury goods industries. For example, third parties have applied for the right to operate .clothing and .fashion as new gTLDs. Other notable applications include .beauty, .boutique, .buy, .design, .home, .life, .lifestyle, .living, .luxe, .luxury, .sale, .shoes, .shop, .shopping, .store, and .style. Finally, a handful of premier fashion brands opted to apply for the exclusive right to operate the gTLD matching their brand, including .cartier, .chanel, .gucci, .hermes, and .tiffany, and some department stores also choose to apply for their brands, such as .bloomingdales.
Recent court decisions suggest that federal law may limit businesses’ legal options to hold an internet service provider liable for harmful or damaging content posted to the Web. Under the Communications Decency Act (CDA) – a 1996 law aimed at regulating obscene and indecent internet content – an internet service provider cannot be treated as the “publisher or speaker of any information” provided by a third party content provider, even when the service provider makes the information available to the public. Increasingly, courts are interpreting this “safe harbor” provision as establishing broad federal immunity for service providers against claims relating to third party content.
If you’re a business owner thinking about running a promotion on Facebook, your life just got a little bit easier. Facebook recently revised its Promotions Guidelines and is now allowing businesses to run promotions directly on their page timelines instead of requiring them to run promotions through Facebook applications (apps). That means that if you maintain an official Facebook page for your business or brand and want to run a sweepstakes or contest to publicize your business, you can now collect entries by having users post on your page, or by asking them to like or comment on a page post.
Beginning January 1, 2014, websites and online service operators that collect consumers’ personally identifiable information will likely be forced to update their privacy policies to comply with a new law in California. Existing California law requires website and online service operators that collect personally identifiable information such as names, addresses, or social security numbers, to post privacy policies on their websites. Recently signed into law by the Governor of California, AB 370, “An Act to Amend Section 22575 of the Business and Professions Code, Relating to Consumers” will require website operators to add a section to privacy policies disclosing how they respond to “do not track” signals or other mechanisms that provide consumers a choice regarding the collection of personally identifiable information.
Companies are advised to thoroughly investigate the companies they hire to manage their online reputations and reviews to ensure that only truthful and accurate reviews and comments from actual consumers are posted online. A company that does not thoroughly investigate the companies they use could find themselves in violation of the Federal Trade Commission’s (FTC) Guides Concerning the Use of Endorsements and Testimonials in Advertising (the 'Guides'). The Guides set forth the principles that the FTC uses when evaluating testimonials and endorsements.
The FTC and other regulators recognize that consumer endorsements and testimonials are a powerful selling tool for businesses and that some companies are exploiting that by writing and posting fake online reviews. Recent studies have estimated that almost 20% of Yelp reviews are fake or suspicious and filtered by Yelp’s fraud algorithm. To combat these tactics, regulators are investigating and taking action.
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