Category - "Advertising & Media"

The FTC’s Updated Endorsement Guides: Do They Say More Than We Already Know?

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On June 29, the Federal Trade Commission (FTC) published its updated Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Guides”), together with an FAQ document, FTC’s Endorsement Guides:  What People Are Asking (“FAQ”).  One day later, it announced its proposal for a new Trade Regulation Rule on the Use of Consumer Reviews and Testimonials (“Trade Regulation”).  In the spirt of the FTC’s FAQ, we figured we would post a brief one of our own, highlighting some of the big changes (and non-changes).

Can you please explain what’s going on in one paragraph or less?

As background, the Guides explain the FTC’s view on the propriety of endorsements and testimonials made by third parties on behalf of advertisers under Section 5 of the FTC Act, which prohibits unfair and deceptive trade practices.  The Guides were last updated in 2009.  This update therefore brings a refresh and clarifies the FTC’s view on various scenarios that have arisen since 2009 given changes in technology and marketing practices.  The Trade Regulation, by comparison, is focused on the narrow topic of fake consumer reviews, which are singled out because (a) they have been a particular focus of the FTC of late; and (b) the regulation would clearly entitle the FTC to seek civil penalties for violations (whereas its ability to do so under Section 5 of the FTC Act is somewhat murky).

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The Ninth Circuit Just Provided a Roadmap On How to Defend California Consumer Fraud Claims

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Companies that may face consumer fraud claims in West Coast courts will want to take a close look at the Ninth Circuit’s decision this month in McGinity v. Procter & Gamble Co., __ F.4th __, 2023 WL 3911531 (9th Cir. June 9, 2023).  The Ninth Circuit provided some much-needed clarity on how lower courts within its jurisdiction should reconcile two seemingly conflicting precedents on how to apply the “reasonable consumer” test to seemingly fanciful claims brought under California’s consumer fraud laws.

Seven years ago, in the pro-defense Ebner v. Fresh, Inc., 838 F.3d 958 (9th Cir. 2016), the Ninth Circuit upheld the dismissal of claims that the weight indicator on a tube of lip balm was misleading because some of the balm sits in the tube’s screw mechanism and thus is basically unusable.  In the legalese equivalent of “give me a break,” the Ninth Circuit noted California state appellate precedent holding that consumer fraud claims must be dismissed if it is improbable “that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled” by the challenged practice or language, and called the plaintiff’s lip balm claims “not plausible.”  Id. at 965.  The Ebner decision basically counseled district judges to be on the lookout for, and be ready to dismiss, a plaintiff’s allegations that reflect, at best, the reading “an insignificant and unrepresentative segment” of purchasers might give to a challenged advertisement or language on packaging.  Id. at 966.

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Under Review: The FTC’s Focus on the Fakes

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You are thinking about buying a new laptop, or you want to try a new restaurant that’s been open a few months, so what do you do first? You check the online reviews, of course. Most consumers rely heavily on online reviews to make purchases and try new services, but how can you be sure the reviews you see are actually written by a real customer? And wouldn’t you want to know if the customer was paid or given free product in exchange for that review? The proliferation of online shopping platforms and social media have increased opportunities for consumers to find information about potential products they want to buy. However, it also makes it easier for companies to manipulate reviews or endorsements to make their products look better or their competitors look worse. Luckily, the Federal Trade Commission (FTC) is currently prioritizing this issue, through regulatory channels, enforcement actions, and litigation.

For background, when an advertiser uses an endorsement or review in connection with its products or services, there are guidelines to follow set forth by the FTC (the Guides Concerning the Use of Endorsements and Testimonials in Advertising). The FTC Endorsement Guides emphasize the basic principle of truth in advertising: that endorsements must be honest and not misleading. The Guides further state that the endorsement must reflect the true opinion of the reviewer, who must actually have experience with the product or service, and that a material connection between the reviewer and the company needs to be disclosed, if that fact would matter to the purchaser. While the Guides are not regulations, and have no civil penalties for a violation, the FTC can investigate whether the practices are deceptive or unfair under the FTC Act if an advertiser does not follow the Guides.

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Thinking About Engaging an Influencer for Your Next Promotion? Plan Ahead!

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Those running promotions such as sweepstakes or contests on social media may seek to engage influencers, or individuals with significant social media followings, to enhance their promotions’ visibility and boost engagement. But before doing so, there are a variety of rules and regulations to consider and evaluate, including Federal Trade Commission (“FTC”) rules relating to misleading, deceptive, and unfair advertising, state-specific rules relating to promotions, and social-media-platform-specific rules, among others. This post gives a high-level overview of issues to consider before engaging influencers to boost your next contest or promotion.

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State AGs Fail in Objections to Proposed Settlement in Class Action Challenging Godiva’s Labeling Practices

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The last thing the parties to a class action settlement want to see is an objection from state Attorneys General (AGs).  AG objections to class action settlements are relatively rare and courts tend to give AG objections more weight than objections from private parties.  Not all AG objections are successful, however, and in the recent consumer fraud case of Hesse v. Godiva Chocolatier, Inc., No. 1:19-cv-972-LAP (S.D.N.Y.), a six-state objection filed by the AGs of Florida, Idaho, Maryland, New Jersey, Ohio, and Utah failed to persuade Judge Loretta Preska to reject the proposed settlement.

Hesse concerned Godiva’s use of the word “Belgium” in labeling and promoting its products.  According to the complaint, this practice led consumers to believe, incorrectly, that Godiva’s chocolates are made exclusively in Belgium and to pay higher prices for these products than they otherwise would have.  The parties’ proposed settlement of those claims is fairly standard stuff.  Anyone who purchased Godiva chocolate products between 2015 and last year could file claims to recover $1.25 per purchase.  Class members with proof of purchase could recover up to $25 (for 20 purchases); those without proof were capped at $15 (for 12 purchases).  Plaintiffs claimed actual damages to be $0.46 per purchase, so they characterized this relief as more than full recovery.

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2021 Year in Review: OPDP Enforcement Actions Involving Prescription and Biological Products

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The Food and Drug Administration’s Office of Prescription Drug Promotion (OPDP) issued a total of six letters in 2021 — four Untitled Letters and two Warning Letters — to pharmaceutical or biologics companies for promotional materials that allegedly misbranded prescription drug or biologics products. The two Warning Letters issued in 2021 addressed prescription drug promotion. Two of the Untitled Letters also addressed prescription drug promotion, while the other two letters addressed biologic product promotion.

OPDP also sent six letters in 2020; however, the majority that year (four) were Warning Letters, with only two being Untitled Letters. Both Warning and Untitled letters are made public on FDA’s website. Warning Letters are issued for violations of regulatory significance that may lead to enforcement action if not promptly and adequately corrected, whereas Untitled Letters cite violations that do not rise to the threshold of regulatory significance warranting a Warning Letter. Untitled Letters serve as the initial notification that FDA has taken notice of a violation and allow the company to come into compliance without further FDA regulatory action. Historically, OPDP has relied more heavily on Untitled Letters. 2020 was an outlier year with four Warning Letters versus two Untitled Letters, but 2021 signified a return to normalcy, as the agency issued twice as many Untitled Letters as Warning Letters.

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Californiafying New Jersey’s Consumer Protection Laws

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Starting now, national advertisers and retailers may want to pay the same attention to legislative and judicial developments in New Jersey that they long have paid in California.

New Jersey’s Governor, Phil Murphy, came into office in 2018 explicitly promising to remake New Jersey into “the California of the East Coast.”  Recently reelected and holding leadership posts in both the National Governors Association and Democratic Governors Association, Governor Murphy is building a national profile.

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Launching a Sweepstakes or Contest on Social Media – What You Should Know

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As discussed on our blog previously, here and here, a promotion sponsor must finalize Official Rules before a promotion begins. But using a third-party social media platform to administer your promotion or accept entries raises additional issues that must be considered, particularly when the promotion involves the submission of user-generated content (“UGC”).

Using a social media platform to administer your promotion raises two additional issues: (1) ensuring compliance with the platform’s specific promotion requirements; and (2) ensuring that the sponsor is protected from liability if the promotion involves UGC. This blog provides a high-level overview of issues to consider before administering your promotion on a third-party social media platform, and in particular when your promotion involves submission of UGC.

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Ho, Ho, Ho … Hold On … Did Legal Approve That?

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The holidays are upon us — and so too are holiday advertising campaigns. With an unusual holiday season last year, many retailers are gearing up for what they hope to be a robust holiday season. Even with concerns over supply chain issues, retailers and brands are doubling down on holiday advertising campaigns this year and pushing out festive, eye-catching content to lure customers. To stop the Legal Grinch from stealing the gifts from these campaigns, here’s a quick refresher on a few important legal considerations:

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Antimicrobial Marketing Claims: What You Need to Know to Mitigate the Risk of EPA Enforcement

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Since the SARS-CoV-2 pandemic began, many companies have continued to develop antimicrobial products and devices to address health and safety concerns. Many of those companies are surprised to learn that the way in which they are marketing their products may subject them to regulation by EPA under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).

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