Happy Summer. Welcome to the June Edition of The Ad Matter, previously known as RVAd Law. The Ad Matter, which sounds a lot like the Mad Hatter (for good reason), highlights advertising and marketing law headlines each month, pointing out upcoming regulations, enforcement actions and plain old shenanigans from brands we know and love (see second article below).
In this month’s newsletter, we take a look at the FTC’s warning letters to e-liquid providers, The North Face’s climb to Wikipedia infamy, and a Do Not Track Bill headed our way. Down the rabbit hole we go.
E-Liquids Get Burned
While the warning letters that were sent by the FTC and FDA to four sellers of e-liquids highlight the nature of the products (the nicotine liquid used in vaping), they speak more to the use of influencers and social media than the health risks of vaping. The letters specifically addressed ads for the e-liquids that appeared on other people’s Facebook, Twitter, and Instagram accounts pointing out that under the FDA’s Food, Drug and Cosmetics Act (“FDCA”) regulations, the posts on social media constitute ads or labeling on behalf of the e-liquid companies.
The FDA’s position is that the FDCA regs require such ads to include the FDA warning that the products contain nicotine, an addictive chemical. These ads did not and therefore, the FDA determined that the featured products were misbranded. Additionally, the FTC regulates unfair and deceptive advertising practices and from their standpoint, these ads failed to disclose material health and safety risks – a statement (or lack of) that could mislead and deceive consumers.
The warning letters reiterated the stance of the FTC on use of influencers in social media marketing. If there is a material connection (one that might affect the credibility consumers give to the product being sold) between the endorser and the marketer, it must be clearly and conspicuously disclosed. The most obvious example of a material connection is a cash payment but many other kinds of incentives and payments are also considered material connections. Placement matters as well – a consumer should be aware of the disclosure immediately (not click three buttons or scroll down) and there should not be multiple #s where a consumer can be confused and easily miss the more important and relevant “clear and conspicuous” disclosures.
Why This Matters. If it talks like an ad and walks like an ad, it’s an ad and subject to the FTC and other regulations. Have written policies for your social media endorsers and influencers before you engage them and before those posts go out. Monitor the endorsers and influencers to make sure they’re not misleading consumers or using unsubstantiated claims about your products. And finally, remember that FTC law applies to both marketers and influencer alike. Communicate the roles and responsibilities clearly.
The North Face Faces Backlash
The North Face found itself on a peak of controversy (and at the peak of Google image search results) when its Brazilian agency, Leo Burnett Tailor Made, replaced images of well-known mountain peaks on Wikipedia with images of athletes wearing The North Face gear. They also produced a video bragging about how it achieved (for free) optimum Google search results with its “Top of Images” campaign.
They would have had an easy climb but for an Ad Age article that highlighted the campaign, which put Wikipedia’s editors on notice. The editors not only removed the images but also added some choice verbiage to The North Face’s Wikipedia page about the company’s practices.
Why This Matters. This is a form of native advertising which is, according to Wikipedia, “a type of advertising, mostly online, that matches the form and function of the platform upon which it appears”, which may be subject to the FTC’s advertising disclosure requirements. The North Face ended its campaign, but use of Wikipedia for native advertising will definitely be on the FTC’s map.
Quit Followin’ Me….
The Do Not Track Bill is back in Congress, sponsored by Senator Josh Hawley (R-Mo). This bill would prohibit websites that users visit intentionally from collecting or sharing data for ad targeting when users click the “Do Not Track” option. Additionally, other companies, such as ad tech companies would be prohibited from collecting consumer data if the consumer activates the do not track option, with a limited exception for data analytics. Further companies would not be able to collect data “beyond what is indispensable to the companies’ online services” nor would they be able to discriminate against anyone who has chosen the “do not track” option.
Consumers can currently opt out of tracking but according to Senator Hawley, such a request lacks the “force of law” and is therefore disregarded most of the time. The Do Not Track law would be implemented and regulated by the FTC who would create a simple downloadable program available to the public on the FTC website. The bill will also set forth fines of $1,000 per person per day for willful or reckless violations, with a minimum of $100,000.
In the past, consumers have discovered that their data was shared or sold only after the fact because there was no real legal framework in place. Support waned and waxed in the regulatory world but now, with more focus on privacy, there’s a chance this may be revived successfully.
Why This Matters. This may actually be one area of law that both sides of the aisle an agree on. Even the advertising industry is pushing for privacy regulation on the federal level. Cooperation remains to be seen… but do keep track of this one.