Auld Lang Syne 2021 – Important events of the past year
Another year has passed. There is a lot to think about, but this blog is all about advertising and marketing law, so we’ll stick to that. To say it has been an eventful year would be an understatement. We therefore asked four of our partners to each select two interesting developments of the year. And because each list needs to be 10 items, and four don’t fit 10 evenly, we’ve picked two to start with that are sure to make everyone’s list.
- The Supreme Court’s AMG Decision – It is unusual for the Court to decide a case involving the Federal Trade Commission (FTC), it is unusual for the Court to decide a case unanimously and, exceptionally, the Court has overturned an FTC practice that dates back to the 1970s. For now, say goodbye to the FTC which filed its first lawsuit in federal court seeking not only an injunction, but also a remedy for consumers . What will follow is still difficult to predict as the agency, Congress and the courts grapple with many possibilities.
- Notice of Penalty Letters – Former Commissioner Rohit Chopra put the aggressive use of these letters on his wishlist, and just like that, his wish was granted. It’s giveaway season after all. A previously obscure provision in the FTC law gives the FTC the power to warn companies of behavior that has been found to be illegal in contentious administrative decisions and to subject them to civil penalties if they engage in similar behavior. Over the past few weeks, over a thousand companies have received these letters, which cover various advertising and marketing practices, including mentions, business opportunities, and for-profit education requests. Sending them was easy, but it remains to be seen how easy the application part will be.
- FTC Brain Drain – For most of my career, there has been remarkable continuity in the senior management positions of the FTC. In 2020, Mary Engle, longtime associate director of the FTC’s advertising practices division, left to join the Better Business Bureau’s national programs, and in early 2021, she hired Mamie Kresses, a longtime lawyer for the FTC Ad Practices, to lead the children’s advertising review unit. Things really picked up speed this year with the appointment of a new political leadership at the FTC. Maneesha Mithal, Associate Director, Privacy and Identity Protection Division, has resigned, as has Frank Gorman, a 23-year veteran and most recently Acting Deputy Director of the Bureau of Consumer Protection (BCP). Finally, another 23 year old veteran, recently Acting Director of PCO Daniel Kaufman, has joined us here at BakerHostetler. What does it all mean? Perhaps an FTC that is less predictable and less beholden to the way the agency has operated in the past.
- Made in USA rule – This fall, the agency transformed its Made in USA guidelines into a rule that now carries the potential for civil penalties for violation. If multiple commissioners get what they want, this is just the first in a long line of rules to come as the agency looks for other ways to get monetary relief. However, rule-making may also shed light on the ambiguities and vagaries of some of the commission’s existing guidance because, unlike an ordinary violation of section 5, the commission must meet a scientific requirement to obtain civil sanctions. for a violation of the rules. .
- Surprise presidency – Things took a somewhat surprising turn in June 2021 when it was suddenly announced that in addition to being confirmed by a bipartisan vote in the Senate to be commissioner, Lina Khan had also been elevated to the post of president. of the FTC. And so began a string of new appointments to senior positions at the agency and legions of competition and consumer protection lawyers carefully reviewing his writings. So far, the agency has spoken much more about competition priorities, but that will likely change when and if the new fifth commissioner, Alvaro Bedoya, is confirmed.
- Public Committee Meetings – Much to the surprise of many, weeks after confirmation Khan instituted or revitalized a long dormant practice of public committee meetings. At that time, there was a full commission, and FTC observers were taken aback by a series of party line votes and the significant concerns raised by minority commissioners about process faults as well as changes in policy. dramatic politics. 2022 will likely see the continuation of the FTC’s monthly town hall meetings.
- New Leads / New Tips at the National Advertising Division (NAD) – In an effort to provide more options for national advertisers for competing ads, NAD has opened up a whole new area for businesses to contend with and introduced new strategic considerations for lawyers when launching a self-regulation challenge. In an effort to speed things up, NAD last year launched a faster SWIFT Fast-Track to render a decision within one month for cases filed with a single, well-defined problem. This year, the National BBB Programs launched a new low-fee ‘path’ in Fast-Track SWIFT to focus on misleading disclosures, especially for influencer and consumer review posts and the use of dark role models. . BBB National Programs recently announced its first rulings of its more expensive, complex pathway for science-heavy cases which has three NAD staff attorneys reviewing a case rather than one. These different vehicles gave competitors and their advocates more food for thought as to whether to streamline and go faster or if a longer and longer fight made more sense. It’s more common than not for an advertiser to challenge the lead the challenger has selected, and we’re already seeing more calls and more referrals from these new leads. It is certain that in the future HOW you produce will be almost as important as IF you produce.
- The new green – is it sustainable? In 2021, it’s not enough to claim carbon neutrality – now consumers are looking for “climate” corporate commitments and timelines. And it is no longer enough to be recycled; “Made with ocean plastic” now improves the game. Class actions against “herbal” versus “herbal” versus “organic” claims have proliferated. The same is true of legal proceedings concerning more general allegations concerning a company’s commitment to sustainable development. Fast fashion is out; renting clothes or buying recycled products is all the rage. In 2022, the FTC will launch its review of environmental marketing guides. Associations are wasting no time coordinating the FTC’s lobbying efforts for what the revised guides should cover. It seems like ages ago when the FTC said in 2012 that consumers considered “sustainable” to mean “sustainable.” California expanded its law, which came into effect the first of the year, on claims that consumer products are biodegradable or compostable, adding to the patchwork of laws and regulations between the federal and state . Transparency and specificity remain essential for making ecological claims.
- Negative Options Marketing – As the trend towards a subscription-based economy continues to intensify, with industries everywhere adopting subscription-based business models, the FTC has released a new policy statement for negative options marketing that puts these business models at substantial risk. The new policy statement covers all forms of negative option marketing, including automatic renewals, continuous service, continuity programs, and any other arrangement where the consumer is billed on a recurring basis, unless they cancel. While negative options programs sold online have been subject for years to the Restoring the Confidence of Online Buyers Act (ROSCA), this new policy statement goes far beyond what ROSCA requires and s ‘applies to negative options offered on all media channels. For example, the policy statement requires that the terms of the negative option be disclosed in close proximity to the consent mechanism in a stand-alone paragraph without any superfluous language, which consumers be allowed to cancel by the same means used to register and that consumers must be able to cancel without unreasonable delay (i.e. registering an offer to sell). The new policy statement also requires that in some cases consent to the negative option be separate from consent to the whole transaction. Perhaps most alarmingly, the new policy statement confirms the FTC’s position that at least for online transactions, ROSCA is not limited to presenting the negative option offer but can be invoked if the advertisement makes a false or misleading statement about the products or services being offered. This means that any ad containing a negative option may be subject to civil penalties if it contains a false or misleading statement. The publication of this statement is a clear signal that stricter enforcement is on the horizon. Marketers offering such plans should carefully review their current disclosure, consent, and cancellation mechanisms and ensure that all claims in the ad are true and justified.
- Dark Patterns – The FTC has a new name for some very old tricks and other marketing techniques commonly used in direct-to-consumer marketing: Dark Patterns. Dark patterns are generally defined as techniques designed to manipulate consumers into taking certain action, such as making a purchase or sharing personal data. The FTC’s new focus on dark models is important because, unlike standard principles of deception, this analysis focuses on the user interface and consumer behavior rather than the consumer’s understanding or perception of the advertisement. Examples of dark patterns include “shameful confirmation” (that is, are you sure you don’t want to save money?), Depictions of urgency or shortage (that is, (say there are only two rooms left at this price or a website clock) and all negative options. This new direction is also dangerous because, based on the research presented at the FTC’s Dark Patterns Workshop, increased conversion rates can be considered evidence of the presence of a dark pattern. This raises the important question of how to draw the line between deceptive dark models and effective marketing. Dark Schemes have already made their way into some of the enforcement measures we currently advocate, and we will likely see more attention to Dark Schemes in the future, which will hopefully provide further insight into how which the FTC will make this important distinction.