FTC’s Proposed New Rules for Businesses Selling Subscriptions Heighten Compliance Obligations, published in The New York Law Journal
The National Advertising Division’s (“NAD”) streamlined Fast-Track SWIFT (Single Well-Defined Issue Fast Track) process is an expedited process by which single-issue truth in advertising claims in national advertising may be reviewed and assessed. The popularity of SWIFT challenges, which are structured to resolve designated challenges expeditiously, has been continuing to grow as competitors take advantage of the streamlined process.
In a quintessential Covid-era case, following part of its routine monitoring program, the National Advertising Division of the Better Business Bureau (“NAD”) requested substantiation for claims made by Ontel Products Corporation in respect of its “Safe & Healthy” branded portable UV-C sanitizing light.
Olshan Advertising partners Andrew Lustigman and Scott Shaffer, along with Olshan Intellectual Property partner Mary Grieco—all of whom are members of Olshan’s Brand Management & Protection Practice Group—will present a webinar entitled “Marketing in the COVID-19 Era” for the Bronx Third Avenue Business Improvement District on December 16 at 9am. Areas to be covered include ecommerce marketing, advertising claims, social media marketing, and data privacy, followed by a Q&A.
Olshan’s Advertising, Marketing & Promotions Practice is providing pro bono legal support on a sweepstakes run by In Good Taste, a fundraising initiative whose goal is to help ease the suffering caused by COVID-19 and racial inequality.
Our fast-moving webinar discussed key issues involving marketing and business practices in the current environment.
As we have previously reported, like other regulators, the FTC has been quick to take action against companies that it believes are seeking to take advantage of the coronavirus pandemic. The FTC has sent warning letters to approximately 300 companies that it has alleged were making unsubstantiated or potentially misleading claims about products related to the coronavirus. Recently, the FTC has taken decisive action against a company to which it has previously sent a warning letter, alleging that such company has continued to make deceptive and misleading advertising claims in spite of the FTC’s warning.
The importance of timely delivery remains a top priority, particularly when making enhanced delivery promises. In light of the impact of the COVID-19 pandemic, the FTC has filed complaints against three online merchandisers it believes have failed to deliver on quick shipping promises in contravention of the FTC’s Mail, Internet and Telephone Order Rule, commonly known as the Mail Order Sales Rule.
In the context of the coronavirus pandemic, many companies have turned to online sweepstakes and promotions as a means of both promoting their brand and showing support to coronavirus relief efforts. Certainly, sweepstakes and promotions can be an effective way to achieve these dual purposes. As we previously reported, brands that have hastily run promotions without thinking through the consequences of various events have run into a firestorm of negative publicity as well as potential class actions. Making sure that the promotion incorporates the items below can help ensure that a promotion is legal, properly structured, and contains appropriate protections for the brand.
Andrew Lustigman, head of Olshan’s Advertising, Marketing & Promotions Practice Group, was featured in a Companies Digest article comprising assessments by leading business law attorneys.
Andrew Lustigman, head of Olshan’s Advertising, Marketing & Promotions Practice Group, was quoted in AdAge (subscription required) regarding the impending ban that may happen to TikTok and how it would affect the brands that use the platform to publish its advertisements.
The U.S. Securities and Exchange Commission (the “SEC”) filed enforcement actions on May 14, 2020, against two unrelated companies, Turbo Global Partners, Inc. (“Turbo”) and Applied BioSciences Corp. (“APPB”). The SEC charged both companies with securities fraud based on alleged materially misleading statements that the companies were offering and shipping products to combat the coronavirus (COVID-19). These actions taken by the SEC are consistent with approaches taken by other regulators, including the Federal Trade Commission and Food and Drug Administration (the “FDA”), with regard to misleading statements made in connection with coronavirus-related products. On the whole, regulators appear to be particularly cognizant of businesses and individuals seeking to take improper advantage of the circumstances created by the global pandemic, and as such are taking action against such companies and individuals.
Andrew Lustigman, head of Olshan’s Advertising, Marketing & Promotions Practice Group, was quoted in a Bloomberg Law article on the coordinated attack on coronavirus scams led by The Justice Department (“DOJ”), the Federal Trade Commission (“FTC”), and the Food and Drug Administration (“FDA”). All three agencies have filed charges against and have sent warning letters to people and companies for advertising unapproved COVID-19 treatments or preventatives. Given the import that these efforts have to public health during the pandemic, the agencies’ attention is intensely focused on preventing coronavirus fraud, so while the DOJ is investigating a wide range of fraudulent activity, the FTC and the FDA are evaluating false claims about treatments and cures. “That intensity is shown by how quickly the agencies are taking cases to court and asking for orders to stop the fraudsters,” said Mr. Lustigman. Wasting no time, the DOJ has filed at least four civil lawsuits against people allegedly selling fraudulent cures/treatments, obtaining temporary restraining orders against three of the defendants. The FTC and FDA, meanwhile, have sent warning letters both to sellers of unapproved treatments and to multi-level marketing companies for unsubstantiated claims made by their independent distributors.
In 2017, California-based clothing company, Sunny Co. Clothing, posted a photo to its Instagram account displaying a model wearing Sunny Co. Clothing’s “Pamela” red, full-piece bathing suit. The caption stated that every person who reposts the image tagging Sunny Co. Clothing “will receive a FREE Pamela Sunny Suit.” Sunny Co. Clothing failed to set a maximum on the number of swimsuits available for the promotion. The post quickly went viral and Sunny Co. Clothing found itself in the undesirable position of not being able to fulfil its promotional obligations as it simply did not have enough swimsuits to meet the demand. Sunny Co. Clothing publicly learned the importance of having complete and conspicuously disclosed contest rules for social media giveaways. Reese Witherspoon’s fashion label, Draper James, is now learning the same lesson several years later.
The FDA and FTC have issued joint warning letters to companies selling products that they claim are able to treat or prevent coronavirus. The regulators sent the first set of such warning letters to several companies on March 6, 2020 and have continued to send such warning letters since.
Almost all intellectual property offices throughout the world have used an online filing system for some time, which allows IP owners and attorneys the ability to file the required prosecution and maintenance documents online. In addition, many government intellectual property offices, including the United States Patent and Trademark Office (“USPTO”) have been set up to allow employees to work remotely. Therefore, while the physical offices of intellectual property government agencies are likely closed or are operating with minimal on-site staff, we do not foresee any major disruptions.
FTC Chairman Joe Simons has released a statement addressing the FTC’s ongoing efforts to enforce consumer protections laws during the coronavirus pandemic.