Back to School Edition
August Advertising Law Headlines
Summer came and went and with it, an August full of headlines to make one’s head spin and a September that looks to be running at the same pace. Here are the best and the brightest in the Back to School Edition of The Ad Matter.
Google Fined $170 Million
Google and subsidiary YouTube reached a settlement with the Federal Trade Commission and the NY State Attorney General for $170 Million amidst allegations that the tech giants collected personal information from children in violation of the Children’s Online Privacy Protection Act (COPPA). The penalty is almost 30 times larger than the largest civil penalty ever obtained by FTC for COPPA violations. You can Google it.
YouTube claimed to be a “general audience site” however, many channels are directed to kids and feature child friendly content. According to the FTC, YouTube allegedly violated COPPA by using technology to track viewers of child related content and serve them behaviorally targeted ads without permission from parents, ads that resulted in YouTube earning millions. Further, FTC alleged that YouTube had actual knowledge that this was happening and even created content classifications specifically for children, such as “Made for Kids.” In addition to the list of infractions, the complaint also asserts that YouTube even lied to one advertising company – stating that it did not have users under the age of 13 on the platform and therefore, did not need to comply with COPPA.
The proposed settlement imposes several obligations on Google (in addition to writing that hefty check):
Have a system whereby channel owners can designate whether their content is directed to children, which will then allow YouTube to ensure that it complies with COPPA with respect to those channels;
Notify channel owners that their child-directed content may be subject to COPPA’s obligations;
Train employees who deal with channel owners on the requirements of COPPA;
Provide notice to parents about data collection practices and obtain verifiable parental consent before collecting, using or disclosing personal information from children; and
Comply with the recordkeeping requirements to verify COPPA compliance.
Timing is everything. This settlement was announced just a few weeks before the FTC’s public workshop on COPPA, where one topic will be whether the law should be updated or modified. Also, note that the settlement was more than just a payment as the FTC also used injunctive relief to shift the behaviors of these online platforms. For more information on the workshop see: https://www.ftc.gov/news-events/events-calendar/future-coppa-rule-ftc-workshop.
Why This Matters:
COPPA requires that third parties who host and serve ads on content directed to kids, but do not actually create the content, aren’t required to comply with COPPA unless they have actual knowledge that such content is child directed. It’s hard to argue that YouTube had no such actual knowledge. This settlement is a clear, strong and very pointed reminder to advertisers, content creators, app developers and website operators and hosts that regulators are serious about enforcing COPPA.
Weighted Blankets Lighten Up Their Claims
As if Google’s bad behavior isn’t enough to keep us up at night, now we have to worry that our weighted blankets are lying to us. The National Advertising Division, one of the advertising industry’s self- regulation agencies, requested that Weighting Comforts, a maker of weighted blankets, substantiate or modify express claims regarding the health benefits of their products.
Specifically, the NAD pointed out that statements such as “Our weighted blankets help you sleep better and reduce anxiety” and “In a recent study, 63% reported lower anxiety after use” were potentially health claims, that must be backed up with data and substantiation.
Weighting Comforts told the NAD that such claims were only made to address general wellness and were not health claims. NAD disagreed. The decision stated in part, “Reducing anxiety is a health-related efficacy claim requiring support in the form of competent and reliable scientific evidence such as human clinical trials that are methodologically sound and statistically significant to the 95 percent confidence level with results that translate into meaningful benefits for consumers that relate directly to the advertised performance benefits.”
Weighting Comforts listed several studies that they conducted outside the United States, some supporting the fact that weighted blankets may help improve sleep. They also cited positive consumer reviews as part of their supporting data. While the NAD agreed that their studies were reliable, they did not actually support the challenged claims. Further, positive customer reviews, while helpful, are not tools for claim substantiation if such claims cannot otherwise be made directly by the advertisers. The NAD recommended that Weighting Comforts modify their claims to state that their blankets “may improve sleep quality” but that any mention of the effect on anxiety be removed.
Why It Matters:
This decision provides some clarity on issues such as what evidence is deemed sufficient to support health claims and also reinforces the important role of the self regulatory framework.
Automatic Renewal Contracts Get [More] Attention
Federal lawmakers are paying attention to automatic renewal contracts after several states have enacted regulations addressing the problem. The latest bill was introduced by Rep. Mark Takano of California - the Unsubscribe Act of 2019. The act would apply to automatic renewal contracts, continuity plan contracts and free-to-pay conversion contracts.
An auto-renewal contract is defined as a paid subscription or purchasing agreement which is automatically renewed at the end of a definite term for a subsequent term; a continuity plan agreement (or negative option agreement) occurs when consumers agree in advance to receive periodic shipments of goods or provision of services, which they continue to receive until they cancel the agreement; and a free-to-pay conversion agreement looks a lot like “trial offer” where the consumer gets goods or services for free, until the trial period ends.
The act would require certain kinds of consent or affirmative actions by consumers, and specific notice periods for each kind of agreement. For example, in a free-to-pay conversion contract, sellers must obtain informed consent before charging consumers and in auto renewal agreements consumers must get notice no later than 30 days before the end of an initial fixed period. Perhaps one of the most stringent requirements is for continuity plan contracts, where the seller must provide a copy of the notification of the terms on a quarterly basis during the life of the contract, among other requirements. The FTC along with state attorneys general would enforce the regulation with the same penalties as the FTC Act.
Why It Matters:
This is another in a long line of state regulations. Federal lawmakers are now putting this on their radar which means there could be more oversight in the pipeline.
Does Your Website Make the Grade?
There has been a rise in website accessibility lawsuits lately which is causing many businesses to explore whether their websites comply with the Americans with Disabilities Act. Under Title III of the ADA, a website may in fact be considered a “place of accommodation”, a service or privilege of, or a benefit of the place of accommodation. As such, it may be covered under Title III which includes 12 categories of public accommodation including sales and services businesses that offer goods or services to the public. To make it more confusing, the law varies from jurisdiction to jurisdiction. A retailer with a website may be covered by itself in one jurisdiction but be required to have actual storefront in another.
Some websites are also subject to state accessibility laws in addition to the ADA. Often states laws mirror federal law and the ADA is no different but many states also have more stringent requirements than the ADA.
It’s always best practice to review your website policies periodically but now companies should also add accessibility to the list. Since there are no federal regulations addressing acessibility standards per se, a good resource is the Web Content Accessibility Guidelines (WCAG), a widely accepted industry standard for website accessibility.