Advertising Law Blog

In the current fight over the enforcement authority of the Federal Trade Commission (“FTC”) – see previous Olshan blog posts here for background – Complete Merchant Solutions, LLC (“CMS”), an independent sales organization (“ISO”) that serves as an intermediary between merchants interested in processing credit card transactions and credit card payment networks, is the latest challenger.

Andrew Lustigman, head of Olshan’s Advertising, Marketing & Promotions Practice Group, was quoted in a LegalTech News article on the use of social media by attorneys and the ethical implications that accompany it. 

Happy holidays! As we enter a new year, Olshan’s Advertising & Branding groups share their list of current hot topics in advertising law. In no particular order (drum roll please), here is our top 10 list:

New York has just passed legislation that has the capacity to be one of the most onerous telemarketing compliance laws. The legislation may potentially impact telemarketers’ outbound calling and data sharing practices.

Olshan Advertising & Marketing attorneys have authored an extensive Q&A, published by The In-House Lawyer which can be used as a general key to the legal framework and issues that surround the pharmaceutical advertising law in the United States.

The Federal Trade Commission (“FTC”) announced that it is seeking public comment on ways to improve its existing regulations for negative option marketing, namely, the need for amendments to its Rule Concerning the Use of Prenotification Negative Option Plans (the “Negative Option Rule” or “Rule”).

The National Advertising Division of the Council of Better Business Bureaus (“NAD”) recently recommended that Bayer Healthcare LLC (“Bayer” or the “advertiser”) discontinue particular comparative superiority claims for Aleve, including “Proven Better on Pain than Tylenol,” following a challenge by Johnson & Johnson Consumer Inc., maker of Tylenol products.  The decision shows the scrutiny NAD will give to broad and unqualified superior efficacy claims.

Focusing on its use of warning letters to crack down on impermissible health claims, the FTC recently sent warning letters to three companies that sell a variety of CBD products, including those taking the form of “oils, tinctures, capsules, gummies, and creams.”  In its Press Release announcing the issuance of the warning letters, the FTC noted that it had cautioned the companies against advertising that products, including those containing CBD, can “prevent, treat, or cure human disease” in the absence of “competent and reliable scientific evidence to support such claims.”

On September 4, 2019, the Federal Trade Commission (“FTC”) announced that YouTube and its parent company, Google, agreed to pay a record-breaking $170 million fine to settle claims by the FTC and New York Attorney General (“NYAG”) that YouTube violated children’s privacy laws.

As we have discussed previously, the Federal Trade Commission (“FTC”) has consistently relied on Section 13(b) of the FTC Act (15 U.S.C. §53(b)) for authority to initiate and maintain federal court challenges against defendants it believes have violated the FTC Act. Section 13(b) states that when the FTC has “reason to believe” that an individual or corporate entity “is violating, or is about to violate” a law enforced by the FTC, it may bring suit in federal court “to enjoin such acts or practices.” Moreover, the statute states that “in proper cases, the Commission may seek, and after proper proof, the court may issue, a permanent injunction.”

Andrew Lustigman, head of Olshan’s Advertising, Marketing & Promotions Practice Group, was quoted in a Law360 (subscription required) article titled "Kids' Data Again In spotlight as FTC Revisits Privacy Rule"

Marketers frequently tout “limited time” bonus offers that appear to continue for an inordinate amount of time.   A recent decision of the National Advertising Division ("NAD") of the Council of Better Business Bureaus relating to such an offer makes clear that a “limited time” offer must indeed be so.

In the wake of several state-enacted regulations and restrictions on automatic renewal provisions in consumer contracts, on May 10, 2019, Rep. Mark Takano (D-Calif.) introduced the federal Unsubscribe Act of 2019, H.R. 2683, to increase consumer protection with respect to online negative option agreements.  Negative option agreements include by definition automatic renewal contracts, continuity plan contracts and free-to-pay conversion contracts.

An advertising agency that promoted sales events on behalf of numerous Indiana motor vehicle dealerships is the subject of an Indiana Attorney General lawsuit focusing on allegedly false sweepstakes promotions.   The lawsuit highlights the governments’ continued focus on direct mail sweepstakes promotions. 

Following other states that have recently enacted regulations and additional restrictions on automatic renewal provisions in consumer contracts, on April 9, 2019, North Dakota House Bill 1195, which enacts a new chapter of the North Dakota Century Code relating to certain marketing practices involving automatic renewal, was signed by Governor Doug Burgum and filed with the Secretary of State.

Olshan’s Advertising, Marketing & Promotions Practice Group chair Andrew Lustigman and associate Morgan Spina authored an article for the ABA’s Spring 2019 What’s In Store newsletter titled “Are FTC Enforcement Powers Being Reined In?”

Andrew Lustigman, head of Olshan’s Advertising, Marketing & Promotions Practice Group, was quoted in a Legaltech News article titled "Fake Accounts Mean Litigation Could Be a Key Part of Facebook's Future"

The Food and Drug Administration (“FDA”) and Federal Trade Commission (“FTC”) have issued joint warning letters focusing on disease claims being made by dietary supplement marketers. In addition, the FDA announced new steps it is undertaking with a goal toward protecting the public from potentially harmful products and unapproved claims.  

As we have previously reported, California’s Consumer Privacy Act (the “CCPA”) was passed in 2018 and goes into effect in January 2020, which provides broad protections for consumers in their ability to control the use of their personal data.  You can see our prior article here.  On February 25, 2019, California Attorney General Xavier Becerra and Senator Hannah-Beth Jackson introduced SB 561, legislation intended to strengthen and clarify the CCPA. The Attorney General’s press release can be viewed here.  Senator Jackson has stated that the bill is designed to ensure that “the most significant privacy protections in the nation are robustly enforced”. 

As we have discussed in previous blog posts, subscription-based business models and the automatic renewal techniques they popularly employ have garnered attention from regulators in recent years. The District of Columbia has now passed its own law regulating automatic renewals. With the passage of this law, D.C. joins many other states in requiring specific disclosures from advertisers who utilize automatic renewals as an integral part of their business model.  The law has provisions similar to those in certain states, but also has important timing requirements.

The repurposing of social media images has its risks and should only be undertaken in accordance with the platform’s terms of use and applicable law. PopSugar has been unable to shake a copyright infringement class action brought by social media Influencer and law school graduate, Nita Batra.

Reflecting California’s continuing challenge to automatic renewal programs, direct marketing firm, Guthy-Renker, agreed to settle claims brought by multiple California city and district attorneys (CART) alleging that the direct marketing firm engaged in improper automatic renewal practices with respect to its sale of ProActiv skin products and Wen hair products.

Businesses with websites have been besieged by plaintiffs seeking to assert ADA claims that e-commerce websites fail to comply with accessibility requirements. A recent Ninth Circuit decision finding that the ADA applies to websites and mobile apps strengthens these plaintiffs’ positions in what is at best a grey area for businesses to address compliance.

The Supreme Court has unanimously vacated a Fifth Circuit decision concerning arbitrability. The court held that courts my not override a contract that tasks arbitrators with determining whether a claim should be arbitrated or litigated, even in the case that the quest for arbitration is “wholly groundless.”

The recently enacted Farm Bill amends the Controlled Substances Act so that  hemp and CBD products containing trace amount of THC are not classified as Schedule 1 controlled substances.    While many are excited about this amendment, the law does not change FDA’s regulatory requirements for CBD-containing products under its regulatory jurisdiction.

Many online ecommerce companies operate on a subscription model.  Such companies need to be cognizant of federal and state laws governing advertising and enrollment in continuous service plans.   The failure to consider particular state requirements can have significant consequences given the aggressive plaintiffs’ bar.  A recent federal-court approved settlement between Yahoo Inc. and users of Rivals.com highlights this exposure.  

The FTC heavily relies upon its statutory authority to seek injunctive relief in federal court.  The FTC has broadly interpreted these powers to seek not just injunctive relief enjoining a particular practice, but monetary relief in the form of disgorgement.  Moreover, the FTC has taken the position that defendants in such actions are not entitled to a jury trial, because the relief being sought is merely equitable. 

The FDA and FTC together have recently issued 13 warning letters to manufacturers, distributors, and retailers, cautioning against the sale of e-liquids for use in e-cigarettes using labeling and/or advertising that is similar to that which is found on children’s food products, like juice boxes, candies, or cookies.  The warning letters were sent in furtherance of the FDA and FTC’s efforts to protect young people from the dangers of nicotine and tobacco products. 

Andrew Lustigman was quoted in a PacerMonitor article about the recent federal crackdown on false advertising by various brands.

Andrew Lustigman, head of Olshan’s Advertising, Marketing & Promotions Practice Group, was quoted in a Law360 article about the Federal Trade Commission’s suit against A&O Enterprises Inc. for making false claims about their intravenous therapy products.

The New York Law Journal (subscription required) published an article authored by Andrew Lustigman and Morgan Spina titled "Deceptive Pricing: Unlawful Trickery or Skillful Selling?"

Olshan partners Steve Wolosky, Andrew B. Lustigman, Thomas D. Kearns, Eric L. Goldberg, Stephen L. Ferszt and of counsel Samuel P. Ross have been selected by their peers for inclusion in The Best Lawyers in America© 2019.

Following up on other states recently enacting additional restrictions on automatic renewal provisions, on May 28, 2018, Vermont House Bill 593, an omnibus consumer protection bill, was allowed to go into effect without the signature of Governor Phil Scott, making Vermont the first state to require a “double opt-in” with respect to automatic renewal provisions.

Olshan’s Advertising, Marketing & Promotions Practice Group chair Andrew Lustigman will present a live webinar for Lawline.com, an online CLE platform, on June 26^th. Topics that Mr. Lustigman will explore include an examination of recent developments in social media marketing (with a particular focus on brands and influencers who utilize social media to promote goods and services), a review of the various regulations that govern social media marketing, and how to develop the best practices for compliance in light of the latest legal developments. CLE credits will be awarded for participation in the presentation.

You can register for this webinar here.

One of the early guilty pleas in the government’s crack-down on allegedly fraudulent sweepstakes and astrology direct marketing campaigns has received a 36-month prison sentence. This sentence against a supplier reflects the serious nature of the government’s investigation into these matters.

Olshan Advertising attorneys Andrew Lustigman, Safia Anand, Claudia Dubón, Katelyn Patton, and Morgan Spina will give a telephonic presentation for the Consumer Protection Monthly Update on June 18, 2018, hosted by the American Bar Association. This monthly update, which will be moderated by Andrew Lustigman, will summarize the significant developments in consumer protection law that occurred during May 2018. The presentation will include cases, settlements, and other initiatives at the federal and state levels, as well as consumer class actions, Lanham Act litigation, and National Advertising Division case decisions.

On April 26, 2018, the Senate unanimously confirmed all its nominees to the Federal Trade Commission (“FTC”), allowing the FTC to regain full strength for the first time since President Trump took office. In the months since President Trump’s inauguration, the FTC has been operating with just two Commissioners.

A panel of the National Advertising Review Board (“NARB”) has recommended that Too Faced Cosmetics, LLC (“Too Faced”) discontinue both a claim that its mascara provides for “1,944% more volume” and “before” and “after” photographs displayed on product packaging and online videos advertising their “Better Than Sex” mascaras.

Wright, et al v. Publishers Clearing House, Incorporated and Publishers Clearing House, LLC (EDNY April 23, 2018)

Andrew Lustigman and Morgan Spina published an article in Leading Internet Case Law entitled “Court Rules Embedded Photos on Websites May Constitute Infringement.”

Andrew Lustigman and Morgan Spina published an article in BNA Big Law Business entitled “Understanding Advertising Disclosure Obligations Within Virtual Reality.”

Companies that communicate with consumers through autodialed telephone calls or mass text messages should be aware that a federal appeals court has just struck down two key, pro-plaintiff Federal Communications Commission (“FCC”) interpretations of the Telephone Consumer Protection Act (“TCPA”). Although the ruling did not provide clear limits to what marketers can and cannot do, it certainly provides marketers and debt collectors with important tools that should make life more difficult for class-action plaintiffs.

Olshan will host an INTA Roundtable on March 6, 2018

Andrew Lustigman published an article in Leading Internet Case Law entitled “eHarmony Settlement Illustrates Changes Required in E-Commerce Subscriptions Programs.”

4th Annual Entertainment & Sports Law Symposium at Syracuse University College of Law.

An online lingerie marketer has agreed to settle charges brought by the Federal Trade Commission (“FTC”), claiming that the company engaged in deceptive conduct when it enrolled consumers in a negative-option membership program without fully disclosing how the ongoing charges may be applied, in addition to making it difficult for those consumers to opt out of the program.  The FTC charged the company’s subscription model and cancellation procedures violated Section 5 of the FTC Act and the Restore Online Shopper’s Confidence Act (“ROSCA”).

A recent decision highlights the risk in relying on confidential support, as well the difficulty in substantiating extraordinary cosmetic benefit claims. Benefit Cosmetics recently challenged Too Faced Cosmetics’ advertising before NAD. The challenge was focused on Too Faced’s mascara advertising claims relating to clinic studies, the degree to which the product increased eyelash volume, and the representations made in the advertiser’s use of “before” and “after” comparative photographic demonstrations.  

Online review websites typically offer reviewers the ability to post their views anonymously.  Given the lack of transparency, many times the subject business is unable to meaningfully address the allegations levied against it because it may not know the details of the reviewer’s experience.  A recent Ninth Circuit decision, may portend a change in the ability to hide a reviewer’s identity.  

Many marketers rely on advance consent auto-renewal programs, particularly for online subscription sign-ups.   In the wake of the booming subscription-based business model and a rise in class action filings under state automatic renewal laws, many states are enacting or updating their laws to strengthen consumer protection.  California’s recently enacted Senate Bill 313 enhances what was already one of the most stringent auto-renewal laws in the nation.

President Trump will nominate Washington lawyer Joseph Simon to chair the Federal Trade Commission, replacing acting chair Maureen Ohlhausen.

Andrew Lustigman Is the featured legal source of the Racked article "Brands Want Students to Sell to Each Other"

Digital Business Lawyer Publishes Article by Andy Lustigman on the FTC’s COPPA Compliance Update

The New York Law Journal (subscription required) published an article authored by Andrew Lustigman titled "Everyone's a Critic: Fake E-Commerce Reviews Undercut the Marketplace"

Laura Brett just announced as the new Director of the National Advertising Division (NAD)

The Federal Communications Commission (FCC) is seeking comments on proposed rules regarding carrier phone changes and charges for additional services.

The FTC has increasingly relied on equitable monetary remedies (such as disgorgement based on gross revenues less returns) to avoid the applicability of an analogous statute of limitations defense.  The Supreme Court’s recent decision in Kokesh v. SEC  may change that practice.

In April, the Federal Trade Commission (FTC) sent out 90+ letters to brands and influencers, notifying the parties of their obligations to disclose material connections in sponsored social media posts.

On June 29, 2017, the ABA Section of Antitrust Law, Economics Committee hosted a Fireside Chat with FTC Acting Bureau of Consumer Protection Director, Tom Pahl.  The program offered an insightful behind the scenes view of the Bureau’s priorities now and in the future.  

The Federal Trade Commission (FTC) has recently updated its compliance plan for businesses regarding the Children’s Online Privacy Protection Act (COPPA).

Andrew Lustigman will speak at American Conference Institute's 29th National Conference on July 24 in Chicago

With consumers ever more ingredient-conscious, brands must be careful of how they describe them, particularly when the product may be positioned as a “healthy” version.

Brands need to carefully plan all promotions and to expect the unexpected with social media.

The FTC considers review sites to be advertising and will hold marketers responsible for their content

The FTC is increasing its scrutiny of brands' use of social media influencers who fail to disclose to a material connection between the brand and the influencer.

Any designation made in the paper-based registration system will expire after December 31, 2017

Andrew Lustigman, head of Olshan’s Advertising, Marketing & Promotions Practice Group, was quoted in the New York Post.

FDA regulations prohibit making drug claims for dietary supplement products even if such claims are supported by scientific evidence. A recent FDA enforcement action involving dietary supplement products promoted to address high cholesterol, hypertension, diabetes, depression and muscle pain claims show that the agency is prepared to take significant steps where manufacturers continue to make drug claims for dietary supplement products, particularly where the facility fails to meet CGMP requirements.

Andrew Lustigman, head of Olshan’s Advertising, Marketing & Promotions Practice Group, was quoted in Luxury Daily and Mobile Marketer on what the future of net neutrality—which protects online data from potential discrimination by Internet Service Providers (ISP’s) or by the government—could hold for digital marketers and consumers alike, especially in light of the recent appointment of Ajit Pai, an opponent of net neutrality, as the new FCC Chairman.

Lee Peeler, the President and CEO of the Advertising Self-Regulatory Council (ASRC) and Executive Vice President, National Advertising, Council of Better Business Bureaus (CBBB) recently announced that Andrea Levine, who has headed NAD for 20 years, is set to retire.

Is there a constitutional right to social media? The ongoing dialogue surrounding First Amendment concerns born out of the Internet and social media was the focus of Supreme Court oral arguments on Monday, February 27, 2017. Discussing a North Carolina law that prohibits registered sex offenders from participating in social media sites like Facebook and Twitter, the justices’ comments seemed to suggest a likelihood that they would strike down such a law on First Amendment grounds.

Many think that the Federal Trade Commission will no longer be the significant enforcement power it has been in recent decades. While time will tell how things play out with the new administration and, presumably, new FTC Commissioners, it is likely that the FTC will remain a very powerful and thoughtful consumer protection agency, focused on protecting consumers from harm. What constitutes consumer harm, however, and the appropriate remedy for noncompliance, may change under the current administration.   

NAD has been at the forefront of scrutinizing social media content for compliance with applicable advertising standards. Its recent decisions challenging Fit Tea’s social media advertising, including bringing a proceeding against three of the Kardashians, exemplifies the reality that both brands and influencers are potential liable for improper claims.

While the FTC’s Mail Order Sales Rule pre-dates the Internet by decades, the Rule remains relevant with today’s online marketing practices, particularly for pre-orders. Companies that rely on pre-orders for a concept product need to take careful note of recent action filed by the San Francisco District Attorney against Lily Robotics, Inc. for false advertising and unfair business practices. After acquiring tens of millions of dollars’ worth of capital investment and pre-order revenue for a conceptual drone, the company repeatedly delayed release of the product in 2015 and 2016, and has since failed to produce a saleable product.

Many early stage technology-based companies with promising ideas may compromise substantiating their product’s performance claims with the belief that there is time for compliance down the road.   The FTC’s recent case against the marketers of two app-supported smartphone accessories, advertised to accurately measure consumers’ blood alcohol content, and who received funding on Shark Tank, highlights the risk in waiting.

Olshan Advertising Chair Andrew Lustigman will speak at the IZEAFest 2017 which is being held in Orlando, FL.

Section 230 of the Communications Decency Act immunizes websites that merely provide an outlet for another party to provide its content.

The 2016 ANA/BAA 38th Marketing Law Conference will take place November 9-11, 2016 in Chicago and builds on the tradition as the broadest marketing and advertising law conference with deep practical legal content, fruitful networking and major CLE credits.

On September 22, 2016, various branches of the U.S. government announced unprecedented enforcement actions targeting sweepstakes, prize promoters, and astrology direct mailers, as well as their suppliers. The actions will likely dramatically impact direct marketers and their suppliers for the foreseeable future.

On July 12, 2016 the European Commission formally approved and adopted the EU-U.S. Privacy Shield.

Olshan lawyers Andrew Lustigman and Safia Anand authored an article published in the New York Law Journal’s Fashion Law Report on September 12, 2016, entitled “Legal Pitfalls for Fashion Brands in Social Media.”

The American Conference Institute’s 5th Annual Summit on Digital Advertising Compliance: Social Media, Sweepstakes & Promotions took place on October 17-18, 2016 in New York, NY.

Companies turning away from traditional advertising.

On September 26-27, 2016 the Advertising Self-Regulatory Council held their NAD Annual Conference.

On September 22-23, 2016 and October 19-20, 2016 Practising Law Institute presented “Advertising Law Institute 2016” in Chicago, IL and San Francisco, CA respectively.

On October 27, 2016, the National Business Institute will present an audio webinar entitled “Social Media, Native Advertising and Sponsored Content Law.”

Olshan listed in The Legal 500, a London-based directory of leading lawyers for Media, Technology & Telecom work (Advertising, Marketing & Promotions) in Tier 3 in its 2016 edition.

Olshan Partners Andrew Lustigman and Scott Shaffer authored an article published in the New York Law Journal’s Cybersecurity Law Report on June 3, 2016, entitled “Online Discount Pricing Policies Face Increasing Scrutiny”, illuminating the issues surrounding online pricing practices.

Andrew Lustigman, head of the firm’s Advertising, Marketing & Promotions Practice Group, was quoted in Fashion Law Blog in separate articles titled “A How-To Guide for Properly Disclosing Your Sponsored Posts” and “EXCLUSIVE: The Dirty Advertising Practices of the Industry's Biggest Brands, Bloggers” addressing native advertising and the FTC, social media influencers and bloggers not adhering to appropriate disclosure guidelines.

Andrew Lustigman and Aliza Herzberg both Heads of their respective practices, penned the article “Obama Overtime Rule Affects Advertising Agencies and Media Companies” published in Luxury Daily on June 1, 2016, following the President's announcement on the final rule updating federal overtime regulations.

Summary of the significant developments in consumer protection law during March - April 2016.

New York can serve as both the host forum and the source of law for international business disputes.

The New York Attorney General's lawsuit against Donald Trump individually and Trump Entrepreneur Initiative, LLC (f/k/n Trump University) for false advertising could proceed.

Deceptive pricing/sales practices continue to be at the forefront of state regulators and private plaintiffs. The New York Attorney General’s recent $500,000 settlement with leading drug store retailer Walgreens/Duane Read involving allegations of such practices sends a strong message to retailers to verify that their pricing and sales practices are consistent with federal and state law.

Andrew Lustigman, head of the firm’s Advertising, Marketing & Promotions Practice Group, was quoted in the article “Under the Influence” published in Contently on April 20^th, 2016, following the FTC’s Lord & Taylor settlement focusing on native advertisements and influencers.

Marketers, it's important to dust off your terms and conditions.  2016 has seen a sharp spike in consumer lawsuits alleging violations of New Jersey’s awkwardly named Truth-in-Consumer Contract, Warranty and Notice Act, N.J.S.A. 56:12-14, et seq. (the “TCCWNA”).

Magazine publishers and list managers take note.  American Media is the latest magazine publisher to be hit with a class action lawsuit accusing it of violating subscribers’ privacy rights by selling information about them without written consent.  The suit is part of a growing trend, following similar allegations in the past year against leading media companies like Conde Nast parent company Advance Magazine Publishers Inc.,  Hearst Communications Inc. and Reader’s Digest publisher Trusted Media Brands, Inc., to challenge list rental practices under a long-ignored Michigan statute enacted in the wake of the Robert Bork Supreme Court nomination proceedings.

Andrew Lustigman, head of the firm’s Advertising, Marketing & Promotions Practice Group, was quoted following the FTC’s Lord & Taylor settlement focusing on native advertisements and endorsements in the article, “FTC's Lord & Taylor Action Shows Perils Of New Ad Strategies,” published in Law360 on March 15, 2016.

Olshan Advertising Partner Andrew Lustigman was quoted by Digiday, a New York-based online publication that covers the digital marketing industry, on legalities involved in marketing junk food to kids through McDonald’s new VR Happy Goggles. 

The Federal Trade Commission issued its annual list of consumer complaints received by its Consumer Sentinel Network.  

Bloomberg BNA Electronic Commerce & Law Report published “Social Media Considerations for Real Estate Companies” authored by Olshan Partners Andrew Lustigman and Mary Grieco.