Interactive Counsel

Arent Fox's interactive media law blog - latest news and trends in advertising, data security & privacy, and IP.

Interactive Counsel

Blog Posts by Matthew R. Mills

Advertising
alert
FTC Obtains Court Order Banning Marketer from Negative-Option Sales

The Federal Trade Commission recently reached a settlement agreement over charges against an online marketing operation accused of deceptively luring consumers into expensive subscriptions by offering “free trials” of teeth-whiteners and related products. According to FTC, the defendants obtained consumers’ billing information under the pretense of a nominal fee before unexpectedly charging them up to $200 per month. The order imposes a judgment of over $92 million on the defendants and bans them from engaging in negative option sales in the future.

Negative option marketing refers to the practice of billing a consumer on a periodic, recurring basis for a product or service until the consumer affirmatively opts out of the subscription. While negative option marketing is legal when conducted appropriately, regulators are willing to pursue companies that abuse this practice.

Continue Reading →
Product Placement & Distribution, Advertising
alert
FTC Fires Warning Shot Over Misleading Instagram Posts

What’s New?

The Federal Trade Commission recently sent more than 90 letters to celebrities, athletes, and other influencers reminding them that brand endorsements made in social media posts must comply with the FTC’s Endorsement Guides. The letters reminded social media influencers – individuals or groups recruited to promote a brand’s products or services – that social media endorsements must clearly and conspicuously disclose “material connections” between the influencer and the brand, and focused on the need to disclose such connection in Instagram posts.
 

Continue Reading →
Privacy & Security, Health Privacy & Security
webinar
Navigating the Rest of the Iceberg - Privacy and Security Compliance Beyond HIPAA

Please join Arent Fox partners Sarah Bruno and Matthew Mills on Tuesday, February 21 from 1:00-2:30 PM Eastern for a Health Care Compliance Association webinar titled Navigating the Rest of the Iceberg: Privacy and Security Compliance Beyond HIPAA

Continue Reading →
Payment Processing, Electronic Fund Transfers & Mobile Payments, Privacy & Security
alert
New Version of Payment Card Information Standards Targets Recent Breach Issues

What’s the News?

Following recent updates, merchants and retailers will soon become subject to the updated Payment Card Information Data Security Standard (PCI DSS), the security standard that organizations need to follow if they handle credit and debit cards from major card companies, such as Visa, MasterCard and American Express. This round of changes will be known as version 3.2 of PCI DSS, and include significant guidance and updates on hot topics such as encryption and strong credentials. Compliance with the changes is important because companies that are subject to PCI DSS but fail to comply face exclusion from processing credit card payments and/or hefty fines. Sometimes, noncompliance could mean leaving open the doors to your cardholder data environment, thereby allowing hackers and malicious entities to enter.
 

Continue Reading →
Advertising, Mobile Marketing, Privacy & Security
alert
Triple Threat: Chinese Ad Company’s Malware Raises Ad Fraud, Cybersecurity, and Privacy Concerns

What’s New?

Recent reports indicate that advertising fraud is not only increasing but is now being run by groups alongside otherwise legitimate advertising businesses. 
 
Cybersecurity company Check Point recently released a report finding that HummingBad—a known malware that takes over Android devices, generates fraudulent advertising revenue, and installs apps on the infected phones—was developed and is controlled by a group of cybercriminals within Yingmob, an otherwise legitimate advertising analytics business based in Beijing. 
 

Continue Reading →
Advertising, Media & Entertainment, Promotions, Sweepstakes & Contests, User-Generated Content
alert
Proclaiming Your (Lack of) Independence: FTC Issues Final Order Against Company for Failing to Disclose Financial Relationship with Reviewers

What’s the News?

The Federal Trade Commission’s final order against a video game marketing company for not disclosing that online reviews for games were posted by paid reviewers shows that companies (i) should monitor their paid reviewers and influencers for proper disclosures and (ii) have a compliance system in place to deal with those who do not follow a company’s guidelines.

Continue Reading →
Advertising, Promotions, Sweepstakes & Contests
alert
These Prices are Healthy?!: GNC Sued for Alleged Fake Pricing

What’s the News?

A recent lawsuit filed against GNC serves as a reminder that companies need to ensure that prices listed as “regular prices” are substantiated.

Background on the Case

The complaint in a class action recently filed against the nutrition and supplements retailer alleges that GNC deceptively lists items on its website as having a deceptive “regular price” and a substantially lower “sales price.” The regular price is either marked down or grayed out in a manner that makes customers believe the sales price is a substantial discount over the price that the items were formerly sold for (see below for an example of the markdowns contained in the complaint). 
 
The complaint claims that these markdowns are deceptive because the listed regular price is not:

Continue Reading →
Payment Processing, Electronic Fund Transfers & Mobile Payments
alert
Costco Looks to Knock Out FACTA Receipt Class Action

What’s the News?

Costco Wholesale Corporation recently moved to dismiss a class action lawsuit alleging that the discount retailer printed more than the last five digits of a customer’s credit card number on her receipt, in violation of the Fair and Accurate Credit Transactions Act (FACTA). Costco argued in its motion that the document upon which the credit card number was printed – a longer document provided to the plaintiff by a customer service supervisor – was not actually a “point-of-sale” receipt within the meaning of FACTA, taking it outside the scope of the law. This case presents an interesting issue for companies as they seek to avoid costly and time-consuming litigation under FACTA.
 

Continue Reading →
Advertising
alert
Is It or Isn’t It? FTC Issues Guidance to Companies on Native Advertising

The Federal Trade Commission recently issued its long-anticipated guidance on native advertising. While the policy statement and its related guidance are new, the FTC emphasized that it has been regulating native advertising under Section 5 of the FTC Act since 1967 and that this policy document and guidance is a summary of the principles that it has developed over the years. While the FTC has been regulating native advertisements for decades, the issuance of this guidance indicates that the FTC will be making regulation of native advertising a priority in 2016.
 
Native advertising – as defined by the FTC – is advertising that matches the design, style, and behavior of the digital media in which it is disseminated. The main problem with respect to native advertising arises when the content is formatted in a way that suggests or implies it is not an advertisement.

Continue Reading →
Promotions, Sweepstakes & Contests
alert
Paid to Play: FTC Cracks Down on Marketing Company for Deceptive Video Game Endorsements

The Federal Trade Commission (FTC) continues to pursue companies for failing to disclose material connections in endorsements. In a recent action, the FTC settled with Machinima, Inc. a marketing company that paid gamers to post YouTube videos endorsing Microsoft’s Xbox system and games. The gamers posted the videos without informing viewers that they had been given pre-release access to the games and paid to produce the videos.     
 
Under the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (the Guide), “material connections” between advertisers and endorsers – those that consumers would not expect – must be fully disclosed. Such connections may involve payments or free products, or any other benefit that might materially affect the weight or credibility of the endorsement.
 

Continue Reading →
Health Privacy & Security, Advertising
alert
FuelBand Advertising Claims Spark Settlement Agreement

Nike Inc. (Nike) recently agreed to pay more than $2.4 million to settle a class action lawsuit related to the Nike FuelBand activity tracker. The lawsuit, Levin v. Nike, was filed May 17, 2013, in California Superior Court in Los Angeles County. The Plaintiffs alleged violations of California unfair competition and false advertising laws, as well as breach of warranty.
 
The FuelBand Advertising Claims

The Plaintiffs’ allegations center around claims made in connection with the Nike FuelBand, which is a wristband activity tracker. Specifically, advertising for the FuelBand suggests that the product is capable of tracking every calorie burned and step taken by a FuelBand user. The complaint singles out the following claims:

Continue Reading →
Payment Processing, Electronic Fund Transfers & Mobile Payments
alert
Chips or No Chips? Retailers and Merchants Must Implement New Payment Card Standards or Face Fraud Charges

Major US credit card associations including Visa, MasterCard, American Express, and Discover have set October 1, 2015, as the deadline for merchants to implement the Europay, MasterCard, and Visa (EMV) standards. EMV standards include requirements for physical card terminals and a shift from magnetic stripe cards to chip-embedded cards. In order to comply with these standards, banks have been sending out compliant chip-embedded credit and debit cards to their customers. These chip-embedded cards are more secure than traditional magnetic swipe cards since each use of the chip-embedded card creates a unique transaction code that cannot be used to process another transaction or create a fraudulent card. Merchants and retailers also have to take action by updating their card reader terminals and technology if it is not EMV compliant already. This push for compliance will bring the U.S.

Continue Reading →
Promotions, Sweepstakes & Contests
alert
Running a Prize Promotion? Don’t Run Into Trouble
What’s the News?
 
The Federal Trade Commission (FTC) recently obtained a temporary injunction to stop a Florida-based sweepstakes operation that has taken more than $28 million from consumers in the United States and abroad. The defendants used deceptive practices to defraud consumers in connection with false prize notifications.
 
FTC & Prize Promotions
 
Continue Reading →
Promotions, Sweepstakes & Contests
alert
FTC Takes on Fraudulent Crowdfunding Campaign

What’s the News?
 
The Federal Trade Commission (FTC) recently announced the settlement of a complaint alleging deceptive trade practices in relation to a crowdfunding campaign. According to the FTC, the campaign’s organizer failed to live up to various promises made during the campaign, including promises pertaining to the rewards that individuals contributing funds (commonly known as “backers”) would receive in return for their contributions and how donated funds would be used. The case—the FTC’s first involving crowdfunding—is a clear signal to those engaging in the popular fundraising strategy of the importance of making good on all promises and representations made to backers.  
 
More on Crowdfunding and the Settlement
 

Continue Reading →
Advertisers Beware: New FTC Guidance Signals Tough Stance on Endorsements

The Federal Trade Commission (FTC) recently released new guidance regarding the use of endorsements in advertising. The new guidance is a “must read” for marketers that feature endorsements from celebrities or consumers in their advertising, as well as for any companies that operate contests or sweepstakes on social media.
 
What is an Endorsement?

An “endorsement” is an advertising message (including verbal statements, demonstrations, or depictions) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser. Under the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides), endorsements must reflect the honest opinion of the endorser and can’t be used to make a claim that the product’s marketer could not legally make on their own.
 

Continue Reading →
Advertising
When Inaccurate Simulations Lead to Litigation and Settlements

What’s the News?
 
Publisher Sega of America, Inc. (Sega) and developer Gearbox Software, L.L.C. (Gearbox) are involved in a battle centered around Aliens: Colonial Marines (ACM), a videogame based upon the hit film Aliens.  The case is one involving unmet expectations – advertising and demonstrations that did not accurately reflect the final product. 
 
Factual Background
 

Continue Reading →
Advertising, Promotions, Sweepstakes & Contests
Mary Kay Takes Aim at ‘Fraudulent Couponing Scheme’

The international skin care and cosmetics company Mary Kay is hitting back against what it is calling a “fraudulent couponing scheme” operated by the online digital coupon marketplace, RetailMeNot. Earlier this month, Mary Kay filed a federal lawsuit against RetailMeNot (RMN) alleging that RMN’s online coupon business violates federal trademark and advertising laws, as well as federal and state unfair competition laws.

Background

At the heart of Mary Kay’s complaint is the company’s direct-sales business model. Since it was founded in 1963, the company has sold its products exclusively through a network of independent contractors known as Independent Beauty Consultants (IBCs), who then sell the products directly to consumers through direct sales channels such as house parties and personal websites. IBCs are not permitted to sell products through retail channels or brick and mortar establishments, and Mary Kay does not sell products directly to consumers.

Continue Reading →
Advertising, E-Commerce, Mobile Marketing, Social Media
alert
Dating App Stops Attempt at Native Advertising

What’s the News?

Tinder, a mobile dating application, recently removed an advertising campaign being conducted on the app by Gap, Inc. (Gap). Tinder claimed that the advertisements violated its terms of service, which provide that the app is for “personal use only.” This should serve as a reminder to businesses to read and ensure compliance with the relevant terms of service before engaging in advertising on social media platforms.

Background

Based on the variety of formats, different social media platforms allow for different types of advertising. Some platforms, such as Facebook, provide banner space that advertisers can purchase to engage in traditional advertising. Other platforms do not sell ad space, meaning that businesses must resort to what is known as “native advertising.” Native advertising utilizes the normal features of a social media platform to promote content. This is how Gap attempted to advertise on Tinder.

Continue Reading →
Advertising
BBB Adds Negative Option Guidance to Advertising Code

For the first time, the Better Business Bureau (BBB) has added guidance on negative option billing plans to its “Code of Advertising.” The Code governs advertising disputes for the 112 BBB chapters in the US and Canada. Although the BBB is best known for disputes through the National Advertising Division (NAD), the BBB’s local chapters last year dealt with more than 10,000 advertising disputes and the BBB reports that complaints about negative option plans alone number in the thousands annually.

Continue Reading →
Advertising
event
Arent Fox to Present on Advertising and Data Collection at ANA's Annual Conference

On April 1, 2015, Sarah Bruno and Matthew Mills of Arent Fox will present “Marketing with New Technology: The Intersection of Advertising and Data Collection” during the Association of National Advertisers’ Advertising Law & Public Policy Conference. As with past conferences, attendees will hear from important regulators on key issues that are shaping the legal and political climate for advertising and marketing.

Continue Reading →

SUBSCRIBE

Add this blog to your RSS feed reader.

Arent Fox In Your Inbox
To subscribe to Arent Fox Alerts and other news, click here.

ABOUT ARENT FOX LLP

Arent Fox LLP, founded in 1942, is internationally recognized in core practice areas where business and government intersect. With more than 350 lawyers, the firm provides strategic legal counsel and multidisciplinary solutions to clients that range from Fortune 500 corporations to trade associations. The firm has offices in Los Angeles, New York, San Francisco, and Washington, DC.