On August 10, the CFPB issued an interpretive rule stating that digital marketing providers that are involved in the identification or selection of prospective customers or the selection or placement of content to affect consumer engagement including purchase or adoption behavior, are subject to the CFPB’s jurisdiction. The rule ostensibly clarifies the scope of companies that are “service providers” under the Consumer Financial Protection Act (“CFPA”) to include digital marketing providers, and thereby subjecting them to the CFPB’s authority to prohibit unfair, deceptive, abusive acts or practices (UDAAPs).
On January 25, 2021, President Joe Biden issued an Executive Order entitled “Ensuring the Future is Made in America by All of America’s Workers,” which directs a broad review and strengthening of governmental procurement and financial assistance policies and regulations which require or provide a preference for goods, products or materials produced in the United States. While US content must be disclosed on automobiles, textile, wool and fur products sold in the US and there is no law which requires a company to disclose the amount of US content or that a product is manufactured in the US, manufacturers and retailers who make claims about the amount of US content in their products must comply with the “MADE IN USA” Enforcement Policy Statement issued by the Federal Trade Commission (“FTC”). The Enforcement Policy Statement applies to all products advertised or sold in the US, except those specifically subject to country-of-origin labeling requirements and “MADE IN USA” claims, express and implied, that appear on products and labelling, advertising and promotional materials and other forms of marketing including digital marketing and social media. In order to make an unqualified claim that a product is “MADE IN USA”, a manufacturer or marketer should have competent and reliable evidence (“a reasonable basis”) to support a claim that the product is “all or virtually all” made in the US.…
Continue Reading Seeking to Stop Deceptive ‘MADE IN USA’ Claims, the FTC Takes Action Against Brandnex
This was first published in the Beverly Hills Bar Association’s Global Fashion Lawyer.
Appearance is arguably the most important aspect of modeling. Whether a model is practicing poses in the mirror, or sitting in the makeup chair and being prepped for a photoshoot, the essence of a model’s job is to be a canvas, painted and altered to fit the role of the job she books. Even if a model is not altering her appearance for herself, but at the direction of the project’s creative director, presumably the model signed up for the specific gig at her own volition.
Continue Reading Some Press is Bad Press: False Light in the Modeling Industry
In April 2018, the Federal Trade Commission (“FTC”) wrote to Florida-based Teami LLC (“Teami”), a Florida-based producer of Teami tea and skincare products, reminding it of the requirement set forth in the FTC’s Endorsement Guides, that any material connections, including compensation, between advertisers and internet end-users need to be disclosed “clearly and conspicuously” to consumers. The letter noted that endorsers should use unambiguous language and consumers should be able to notice the disclosure easily without having to look for it; and that because consumers viewing posts in their Instagram feeds typically see only the first few lines of a larger post unless they click “more,” endorsers should decide any material connection above the name look. …
Continue Reading FTC Cracks Down On Deceptive Social Media Campaign By Teami LLC
Enter for a chance to win! Advertising lawyers are forever reminding their clients to be clear that when a promotion is a sweepstakes, messaging needs to be clear that it is a random drawing and not a giveaway. Recently, fashion brand Draper James reminded us all why that distinction is so important. …
Continue Reading Sweepstakes or Giveaway? Make Sure Your Advertising Is Clear!
On February 12, 2020, the Federal Trade Commission (“FTC”) announced that it had voted 5‑0 to approve a proposed Federal Register Notice, seeking comment on whether to make changes to its Guides Concerning the Use of Endorsements and Testimonials in Advertising (“the Endorsement Guides”), which were enacted in 1980 and amended in 2009, as part of a systematic review of all current FTC rules and practices. The FTC’s Endorsement Guides have evolved over the past forty years from regulating celebrity endorsements and testimonial advertisements to policing social media advertising, including influencer endorsements and native advertising. The Endorsement Guides have steadfastly required transparency in advertising and that, if there is a connection between an endorser and the maker of a product being advertised or promoted which, if disclosed, might affect the weight or credibility of the endorsement, such connection must be disclosed clearly and conspicuously. In the proposed notice, the FTC requested comment on a variety of questions, including the following:…
Continue Reading After Four Decades, FTC Announces Regulatory Review of The Endorsement Guides: What Does This Portend for Digital Advertisers and Social Media Platforms?
*This article originally appeared in Law360 in December 12.
A recent 2018 report disclosed that almost three-quarters of U.S. millennials and their Gen Z successors follow social media influencers, and the majority say they trust influencers more than their favorite celebrities when it comes to advice about products or brands.
Authenticity and genuinely caring about consumer interests are the most important traits when deciding whether to follow an influencer on social media. With the growth of influencers’ ability to reach and persuade significant portions of the population, their role has come under increasing scrutiny by the Federal Trade Commission.
Continue Reading FTC Disclosure Guide Signals More Influencer Scrutiny
On November 5, 2019, the United States Federal Trade Commission (“FTC”) issued a guide entitled “Disclosures 101 for Social Media Influencers” and a video “Do you endorse things on social media?” to alert influencers to the laws governing endorsement or recommendation of products or services and provide social media influencers with “tips on when and how to make good disclosures.” The FTC’s written guide states that “[a]s an influencer, it’s your responsibility to make these disclosures, to be familiar with the Endorsement Guides, and to comply with laws against deceptive ads.” The guide explains to influencers that disclosures must be made when an influencer has a “material connection,” that is “any financial, employment, personal, a family relationship with a brand” and that receiving “free or discounted products or other perks” requires a disclosure. In addition, the FTC notes that “tags, likes, pins, and similar ways of showing you like a brand or product are endorsements.” The FTC guide also instructs influencers that “[i]f posting from abroad, U.S. law applies if it’s reasonably foreseeable that the post will affect U.S. consumers. Foreign laws might also apply.” The FTC notes that disclosures must be in simple and clear language that is placed “so it’s hard to miss” and should be placed with the endorsement itself. Disclosures that “appear only on an ABOUT ME or profile page, at the end of posts or videos, or anywhere that requires a person to click MORE” will not be sufficient. The FTC gave the following guidance with regard to endorsement posts in photographs, video and live streaming:…
Continue Reading FTC’S New “Disclosures 101” Publication And Video Is A Shout Out To Influencers
Sunday Riley launched her skincare firm Sunday Riley Modern Skincare, LLC (“SRMS”) in 2009 and its skincare products, including Good Genes, Power Couple, U.F.O., C.E.O., Luna and Tidal, have enjoyed tremendous success, having been featured, promoted, and sold online through Sephora and its website, www. Sephora.com. On October 21, 2019, the Federal Trade Commission (“FTC”) announced a consent order in an action for violation of Section 5 of the FTC Act against Ms. Riley and SRMS for posting false reviews of its Sunday Riley products and falsely representing that the false reviews reflected the opinions of ordinary customers of the products. The FTC’s proposed continuing consent order provides: (1) Riley and SRMS are prohibited from misrepresenting the status of any endorser or person providing a review of a product, including misrepresenting that an endorser or reviewer is an independent or ordinary user of the product; (2) Riley and SRMS are required to clearly disclose any unexpected material connection between SRMS and anyone reviewing a product; (3) Riley and SRMS are required to instruct employees, officers and agents as to their responsibilities for disclosing their connections to SRMS and any Sunday Riley product they endorse and that SRMS obtain signed acknowledgments from any endorser; and (4) Riley and SRMS are required to submit compliance reports to the FTC within one‑year of the order and to create records for twenty years and retain them for five years.…
Continue Reading “Good Genes?”: Maybe Not. FTC Takes Action Against Sunday Riley and Sunday Riley Modern Skincare, LLC For Employees False Reviews
On November 20, 2018, the United States Federal Trade Commission (“FTC”) proposed two FTC consent orders against two Georgia-based companies, Creaxion Corporation (“Creaxion”) and Inside Publications, LLC (“Inside”) and their principals concerning the promotion and advertising of Health Pro Brands, Inc.’s new FIT Organic mosquito repellant during the 2016 Zika virus outbreak and allegations that they had misrepresented paid athletes’ endorsements as independent consumer opinions and commercial advertising as independent journalistic content. The proposed FTC consent orders prohibited Creaxion and Inside from making any false representations in the future and required that they ensure all endorsers disclose all material connections going forward and monitor compliance by any endorsers.
Continue Reading FTC Swats Public Relations Firm and Publisher for Misleading Olympic-Themed Mosquito Repellant Product Endorsements and Native Advertisements
It is no secret that the world of fashion is full of surprises. On Monday, June 4, 2018, Kim Kardashian West won the Council of Fashion Designer of America (“CFDA”) first-time Influencer Award and commented: “I’m kind of shocked I’m winning a fashion award when I’m naked most of the time.” Fashion advertising and marketing rely more and more upon social media and influencers for the ability to connect with consumers in an authentic manner. As a result, fashion models and celebrity influencers are in high demand. Now, a new group of unique model influencers are taking the fashion world by storm. Yet, it is unlikely that any of these new influencers will ever win the CFDA Influencer Award.
Continue Reading Kim Kardashian West Won the First CFDA Influencer Award: Will A CGI Supermodel Be Next?