Ad Law Insights - Legal and Regulatory Updates
Latest FTC and state attorneys general compliance, investigation and enforcement developments of concern to advertisers and marketers
Looking for advice on substantiating your company’s advertising claims? FTC staff just issued a new Health Products Compliance Guidance publication that merits careful attention. You may be wondering if the publication reflects major changes to the FTC’s 1998 guidance.
Yes.
And, no.
Say you have routinely consulted the FTC’s 1998 brochure. Dietary Supplements: An Advertising Guide for Industry, the new publication, is designed to take its place. For the most part, the legal fundamentals remain unchanged, but there are key revisions.
The new publication’s substantiation compliance guidance is not just for companies that sell dietary supplements.
One major change is the title, which is meant to make it clear that the guidance applies across the board to all health-related claims.
The new publication draws upon key compliance points conveyed by FTC actions brought since 1998.
When it comes to advertising claim substantiation, a lot has happened since 1998 – including more than 200 FTC law enforcement actions challenging false or deceptive health claims.
The new guides incorporate the lessons of those cases in numerous new examples – revisions designed to add a practical gloss on long-standing compliance fundamentals. In addition, the new publication reflects updates from other FTC guidance documents – for example, guidelines on endorsements and testimonials and the enforcement policy statement on homeopathic drugs.
The new publication aims to correct misunderstandings and “urban myths” that have circulated about FTC substantiation standards.
FTC staff has always encouraged open lines of communication with businesses that have questions about substantiating health claims.
The Federal Trade Commission has recently announced that it is seeking public comment on potential updates and changes to the Green Guides for the Use of Environmental Claims. The Commission’s Green Guides help marketers avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act. The Commission seeks to update the guides based on increasing consumer interest in buying environmentally friendly products.
“Consumers are increasingly conscious of how the products they buy affect the environment, and depend on marketers’ environmental claims to be truthful,” said FTC attorney and Bureau of Consumer Protection Director Samuel Levine. “We look forward to this review process, and will make any updates necessary to ensure the Green Guides provide current, accurate information about consumer perception of environmental benefit claims. This will both help marketers make truthful claims and consumers find the products they seek.”
The Green Guides were first issued in 1992 and were revised in 1996, 1998, and 2012. They provide guidance on environmental marketing claims, including how consumers are likely to interpret particular claims and how marketers can substantiate these claims to avoid deceiving consumers.
The FTC is requesting general comments on the continuing need for the guides, their economic impact, their effect on the accuracy of various environmental claims, and their interaction with other environmental marketing regulations. The Commission also seeks information on consumer perception evidence of environmental claims, including those not in the guides currently.
On December 6, 2022, New York Governor Kathy Hochul signed legislation intended to crack down on unwanted telemarketing calls.
Legislation (S.8450-B/A.8319-C) requires telemarketers to give customers the option to automatically be added to the company’s do-not-call list at the beginning of certain telemarketing calls, right after the telemarketer’s name and solicitor’s name are provided, and before addressing the purpose of the call, etc.
Caveat, telemarketers that utilize pre-recorded messages must ensure that an automated means exists for consumers to have their telephone numbers suppressed. Consult with a state attorney general (AG) defense lawyer about the applicability of the new legislation, adjustment of scripts, and the implementation of appropriate disclosures and suppression protocols.
We are dialing up our efforts to give New Yorkers a break from unsolicited telemarketing calls,” Governor Hochul said. “For too long, New Yorkers have dealt with these nuisance calls, not knowing they can avoid these interactions by being added to a telemarketer’s do-not-call list. This new legislation will protect New Yorkers from receiving frustrating, unwanted calls by better providing information on do-not-call lists.”
Under existing law (Section 399-Z), telemarketers are required to inform individuals that they may request to be added to their company’s do-not-call list. However, not at the beginning. According to the NY Attornehy General’s office, consumers usually hang up before a telemarketer or recording has mentioned the do-not-call list, allowing telemarketers to continue calling them again and again.
The FTC continues to issue Notices of Penalty Offenses concerning FTC Endorsement Guide violations to digital advertisers and marketers, both alone and in conjunction with the issuance of FTC Civil Investigative Demands.
A Notice of Penalty Offenses is a document listing certain types of conduct that the FTC has determined, in one or more litigated administrative cases (not consent orders), to be unfair or deceptive in violation of the FTC Act. Civil penalties can help the Commission deter conduct that harms consumers. Because they can exceed what a wrongdoer earned through their misconduct, penalties are intended to send a message that preying on consumers will not be profitable.
Penalty Offense Authority is found in Section 5(m)(1)(B) of the FTC Act, 15 U.S.C. §45(m)(1)(B). Under this authority, the FTC can seek civil penalties if it proves that (i) the company knew the conduct was unfair or deceptive in violation of the FTC Act, and (ii) the FTC had already issued a written decision that such conduct is unfair or deceptive.
Companies that receive such Notice and nevertheless engage in prohibited practices can face civil penalties of more than $46,000 per violation.
Recent Notices concern, without limitation, endorsements. The FTC has issued and continues to issue Notices where it has determined that certain acts or practices in the use of endorsements and testimonials are deceptive or unfair and violate the FTC Act.
Per the FTC’s Notice of Penalty Offenses, “[i]t is an unfair or deceptive trade practice to fail to disclose a connection between an endorser and the seller of an advertised product or service,
According to the Telephone Consumer Protection Act, only “residential telephone subscribers” possess a right of action for violations of the Do-Not-Call registry.
Specifically, 47 U.S.C. § 227(c)(1) directs the FCC to promulgate DNC regulations to “protect residential telephone subscribers’ privacy rights to avoid receiving telephone solicitations to which they object.” 47 C.F.R. § 64.1200(c)(2) prohibits telephone solicitation calls to “[a] residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry.”
But what about numbers that are used for both residential and business purposes?
In Chennette v. Porch.com, Inc. (50 F.4th 1217 (9th Cir. 2022)), the Ninth Circuit recently held that a fact-specific inquiry into each separate telephone number is required in order to determine whether a mixed-use telephone line is “residential.”
Here, the plaintiffs were home improvement contractors that allegedly received unsolicited text messages from Porch.com and its subsidiary, GoSmith that offered leads. Numerous plaintiffs purportedly registered their telephone numbers on the national DNC registry but allegedly received over 2,000 text messages. As a result, the plaintiffs filed suit in federal court alleging violations of the TCPA based upon use of an automated telephone dialing system to send automated text messages and violations of the DNC registry prohibitions.
The defendants filed a motion dismiss. They argued that the plaintiffs lacked standing to sue under the TCPA because their telephone numbers are used for personal and business purposes.
The Ninth Circuit reversed the lower federal court ruling.
In doing so,
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About This Blog and Hinch Newman’s Advertising + Marketing Practice
Hinch Newman LLP’s advertising and marketing practice includes successfully resolving some of the highest-profile Federal Trade Commission (FTC) and state attorneys general digital advertising and telemarketing investigations and enforcement actions. The firm possesses superior knowledge and deep legal experience in the areas of advertising, marketing, lead generation, promotions, e-commerce, privacy and intellectual property law. Through these advertising and marketing law updates, Hinch Newman provides commentary, news and analysis on issues and trends concerning developments of interest to digital marketers, including FTC and state attorneys general advertising compliance, civil investigative demands (CIDs), and administrative/judicial process. This blog is sponsored by Hinch Newman LLP.