Marketing And Advertising U S A Regulation

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Marketing and Advertising Regulation UNITED STATES The content on this presentation is provided for general information purposes only and does not constitute legal…
Marketing and Advertising Regulation UNITED STATES The content on this presentation is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of are advised to seek specific legal advice regarding any specific legal issues. Focus Jurídico does not warrant or guarantee the quality, accuracy or completeness of any information on presentation. SUMMARY 1. State Law Regulation. 2. Federal Law Regulation. 3. Self Regulation. 4. Web/Platforms terms of service. 1. STATE LAW REGULATION . 1. STATE LAW REGULATION ❑The United States is formed by 50 states. ❑ Each state has its own rules for advertising and marketing. ❑ Inside each territory, local authorities have also unique regulations. For example, related to visual advertising and signs. ❑ You don’t need to know all states regulation. ❑ Think of those states where your company or organization is located. ❑ Think of those states where your target audience is located. 1. STATE LAW REGULATION ❑ State laws often do not provide for a private right of action, as compared to federal advertising and marketing laws. ❑Many of the major federal advertising laws permit state laws to coexist with them, so long as the state law is at least as stringent as the corresponding federal law. ❑To keep updated go to the websites of those authorities in charged of enforcing advertisement laws which try to issue online press releases and similar materials for the public. ❑For example, state attorney generals are usually very interested in widely broadcasting the outcome of any enforcement action. 2. FEDERAL LAW REGULATION . 2. FEDERAL LAW REGULATION Advertising ❑ General false, deceptive, or unfair advertising (FTC regulation is Non- Act and Lanham Act); based on misleading ❑ Food; general advertising principles. ❑ Drugs; ❑ Medical devices; ❑ Cosmetics; ❑ Advertising and marketing in radio, television (broadcast and cable), satellite, wireless, and wire/cable communications (including broadband Truthful Internet); advertising. ❑ Telemarketing and text message advertising; ❑ Consumer credit services falling within the Truth in Lending Act; ❑ Children’s products/services; ❑ Alcohol; and ❑ General antitrust issues in advertising and marketing. The Federal Trade Commission Act • Independent agency of the • 15 USCS §§ 41-58 Federal Trade Commisison United States government. • Regulation of the FTC (1914) Powers. • Mission: To promote • Definition of deceptive and consumer protection and to false advertisement. eliminate and prevent anticompetitive business practices, such as coercive monopoly. Definition of deceptive advertising and marketing. According to the Federal 1. Trade Commission Act 2. (FTCA) advertising There is a representation, omission or practice that is The representation, content or an likely to mislead the omission, or practice is advertising method is consumer; and “material” meaning that it considered deceptive if is likely to affect the consumer’s decision- it contains the following making with respect to the elements: advertised product or service. …So.. How does the FTC determines whether an advertisement is likely to mislead or influence consumers’ desicion-making? ❑Omission of material information may also qualify as false or deceiving advertising. ❑The reasonable takeaways from an advertisement must be substantiated, or supported, by a “reasonable basis,” which varies based on the type of claim and the target audience. ❑Health, safety, and performance claims must be supported by “competent and reliable scientific evidence,” which often means specific, controlled testing. Deceptive advertising. Summary Likely to mislead. Definition Likely to influence consumer’s decision making Deceptive advertising Reasonable consumer. FTCA Key concepts Net impression. Do not omit material information. Final tips. Support you advertising information with complete and reliable evidence. Definition of unfair advertising and marketing Advertising materials or methods are considered unfair if they contain the following elements: (i) It causes or is (iii) Consumers (ii) It does not likely to cause cannot provide offsetting substantial injury reasonably avoid benefits; to the consumer; the injury. “Likely” to cause substantial injury ❑The FTC does not need to show a consumer has actually been injured. ❑The FTC only needs to show that the advertiser has created a situation where a consumer could likely have been injured. It does not provide offsetting benefits… ❑The FTC typically looks at whether the advertising material or method also carries any benefits, and if so, whether those benefits outweigh the consumer injury. Consumers cannot reasonably avoid the injury.… ❑The FTC seeks "to halt some form of seller behavior that unreasonably creates or takes advantage of an obstacle to the free exercise of consumer decision- making." ❑On the other hand, if consumers could have made a different choice, but did not, the FTC generally will respect that choice. Deceptive advertising. Summary (i) It causes or is likely to cause substantial injury to the consumer; Unfair advertising FTCA Definition (ii) It does not provide offsetting benefits; (iii) Consumers cannot reasonably avoid the injury. Now... Who is liable before the FTC? Liability for deceptive or unfair advertising and marketing ❑An advertiser can be liable for any acts of its employees, representatives, or agents that violate the FTCA. ❑Advertiser may also be liability for any act of those considered nontraditional agents, such as individuals who participate in social media viral marketing. FTC Consumer Protection Investigations and Enforcement The FTC is empowered to: ❑Monitor advertisers for false, unfair, or deceptive acts; ❑Conduct investigations into individual advertisers or into industries and/or advertising methods; ❑Punish violators with measures such as fines, injunctive orders, consent orders (a form of settlement agreement), and lawsuits in federal court; and ❑Provide recommendations and reports to Congress in connection with broader legislative scrutiny of advertising and marketing. The FTC is split into three Bureaus and several Offices: Oversees FTC policy and Bureau of Consumer investigations regarding consumer Protection. protection issues (including false, deceptive, or unfair advertising). Oversees FTC policy and FTC Bureau of Competition. investigations regarding antitrust and other anti-competition issues. Works closely with the other two Bureau of Economics. Bureaus to provide economics analysis and related support. Individual consumers Website FTC Investigations FTC General news and publicity, blogs and investigations Investigations of its own accord. social media. Congress; Investigations in response to an outside complaint or inquiry. Competitors of the advertiser targeted; Advocacy groups; and Nonprofit and/or industry regulatory groups. The FTC works very closely with several nonprofits and industry regulatory groups. For example: - The Council of Better Business Bureaus (BBB). - The National Advertising Division (NAD) Responses to an FTC inquiry or investigation require significant resources and attention. ❑All communications with the FTC may eventually become part of an investigative record, and may be used against the target. ❑The best practice is to have any communications with the FTC routed through legal counsel. ❑FTC informal and formal requests can be overly broad in scope. Regarding the FTC’s request of information: Your lawyer can negotiate with the FTC staff attorney for a narrower response based on: ❑Availability of information, materials, and/or witnesses; ❑Relevance to the claims or practice of concern; ❑Confidential treatment of privileged information and/or materials; and ❑Time frame of production, especially how realistic proposed time frames are in light of the volume of information, materials, and/or witnesses to be produced. Regarding the FTC’s request of information: ❑The goal: To manage the burden of production in such a way as to benefit both the client and the FTC investigation. ❑It is common to agree to a production schedule, so information and/or materials can be produced as they are located. ❑It is also an option to provide the FTC with more information and/or materials than the FTC originally requested. ❑ Do not delete or discard any information relating to the investigation. You could be subject to sanctions for spoliation and further penalties if caught destroying evidence. Those who are investigated are permitted to request an in-person meeting with the relevant Bureau Director ❑Almost everyone will be granted at least one meeting, to ensure fairness and an opportunity to be heard. ❑Requesting such a meeting can be very useful for clarifying any perceived miscommunications or interpretations. ❑ Any meeting with a Bureau Director will become part of the investigative record and may also be used against you. ❑Do not conduct any such meetings without the presence of legal counsel. False, Unfair, or Deceptive Advertising under the Lanham Act False, Unfair, or Deceptive Advertising under the Lanham Act ❑The Lanham Act is known as the primary federal statute governing trademarks. ❑Section 43(a) of the Lanham Act, 15 USCS § 1125(a), addresses practices such as false, deceptive, or unfair advertising. ❑ In contrast to the FTCA,the Lanham Act allows private individuals and entities to file civil lawsuits based on unfair, deceptive or false advertising. False, Unfair, or Deceptive Advertising under the Lanham Act The statute applies only to advertising that This statute uses concerns the “nature, a narrower characteristics, definition. qualities, or geographic origin” of a product/service. How to build a claim under the Lanham Act A plaintiff must show the following elements: 1. A statement or omission about the “nature, characteristics, qualities, or geographic origin” of a product/service. 2. That the statement or omission was false or misleading. 3. That the statement or omission was material to a consumer’s decision to purchase. 4. That the statement or omission was made in commercial advertising. 5. That the advertised product or service was used in commerce. 6. That the statement or omission caused or is likely to cause harm to the plaintiff. How to build a claim under the Lanham Act… Case law shows that a plaintiff must allege that it has suffered or is likely to suffer an injury to a commercial interest, such as lost sales or damage to business reputation. Section 43(a) also allows for false endorsement claims + Consumers are likely to associate the defendant’s product/service with the When an advertiser falsely plaintiff . claims that another individual or entity has The plaintiff must show not endorsed its only that the claim is false. product/service. 15 USCS § + Consumers are likely to 1125(a)(1)(A). believe that the plaintiff has endorsed or otherwise approves of the defendant’s product/service. …An advertiser falsely claims that another individual or entity has endorsed its product/service. Example JHON DOE FOOTBALL PLAYER LOVES Light T- Shirts!! FALSE! False, Unfair, or Deceptive Advertising under the Lanham Act Possible remedies For the plaintiff Corrective Injunctive Attorney’s Damages Measures relief fees False, Unfair, or Deceptive Advertising under the Lanham Act LANHAM FTC ACT ACT 3. SELF- REGULATION . (INDUSTRY, TRADE ASSOCIATION, NONPROFIT) In the advertising and marketing field, a major source of regulation comes from the advertisers themselves… ❑To comply and promote compliance, many advertisers, either across or within industries, have adopted codes of conduct Examples and similar rules or guidelines for National Advertising Division (NAD) advertising and marketing activities. Children’s Advertising Review Unit (CARU) The Direct Marketing Association ❑These codes, guidelines, or rules may be enforced by an industry or trade association, or may be enforced by a separate, independent body. National Advertising Division (NAD) ❑It is a nonprofit, nongovernmental body which reviews national advertising Advertising Self-Regulatory Council (ASRC) campaigns for compliance with the policies of the Establishes the policies and Advertising Self-Regulatory procedures for advertising industry self-regulation. Council (ASRC), an advertising industry association. National Advertising May initiate Division (NAD) investigations for noncompliance According to its criteria. From individual consumers. After a complaint is submitted to it. From competitors of the company whose advertising is at issue. Like: • Primary focuses on issues • The NAD may refer any involving advertising companies who refuse to claims, such claims • Changing the claim at comply to the Federal substantiation. issue. Trade Commission (FTC), • It may issue who can then institute its • Discontinuing an own investigation under the recommendations for advertising campaign. corrective measures. applicable federal law. • Distributing corrective information and materials. Compliance with the The NDA NAD’s recommendations is voluntary. BUT Children’s Advertising Review Unit (CARU) ❑ It is a U.S. self-regulatory organization ❑CARU has issued specific guidelines in that was established in 1974 by the several areas of advertising, such as: National Advertising Review Council (NARC). ❑Sweepstakes and loyalty programs. ❑It is focused on national advertising ❑Online advertising practices and to data regarding children’s products/services, collection, tracking. and/or targeting children under the age ❑Analytics in light of the Children’s Online of 12. Privacy Protection Act of 1998 (COPPA) . Children’s Advertising May initiate investigations for Review Unit (CARU) noncompliance According to its criteria. After a complaint is submitted to it. CARU may refer any companies who refuse to comply to the Federal Trade Compliance with the CARU’s Commission (FTC), who can then recommendations is voluntary. BUT institute its own investigation under the applicable federal law Children’s Advertising Review Unit (CARU) The FTC has approved CARU’s Children’s Online Privacy Protection Act guidelines as a “safe harbor” program, which means that any program which complies with CARU’s guidelines will be deemed by the FTC to have complied with COPPA. The FTC has also frequently treated CARU as an expert authority regarding other children’s advertising activities. 4. WEBSITE/PLATFORM TERMS OF SERVICE . 4. Website/platform terms of service ❑This form of regulation applies only to online advertising. ❑This is a form of private regulation, and not governmental regulation. However, the terms of service sometimes constitute the only, and the final, regulatory authority on online advertising, particularly for major platforms such as social media. 4. Website/platform terms of service The terms of service or Almost all major online user code conduct cover advertising all user activity, including channels/platforms have commercial user activity, a terms of service. which is conducted on that channel/platform. The terms of service generally will state that users must comply with the terms in order to have access to the channel/platform. Noncompliance… Users may be subject to various punitive measures up to and including having all access to the channel/platform revoked. 4. Website/platform terms of service ❑Many major channels or platforms have specific rules that govern advertising and marketing activities. ❑These rules may simply mirror federal and state law. ❑ Sometimes the terms of service of a platform may go beyond the requirements of federal and state law, and may regulate user activity for any reason that the website or platform deems important. 4. Website/platform terms of service ❑Online terms of service are generally set up as adhesion contracts, i.e., a contract where one party shows acceptance by performing. For example using the website. ❑Courts have allowed the operators of online channels/platforms a wide autonomy in determining what user activity is and is not allowed, and in determining the proper response to forbidden user activity. Finally ❑Keep in mind that the ability to use an online channel/platform generally is not a right, but is a privilege. ❑Online websites and platforms are not legally required to permit commercial messaging. You also should always consult the relevant terms of service for any online channel/platform where your client is advertising or conducting marketing activities, and should frequently check the terms for changes. Advertising and marketing is a highly-regulated area, with many different sources of overlapping regulation. You should familiarize yourself with the various potential sources that are relevant to your particular industry, and you should try to stay as up- to-date as possible, since many of these sources, such as online terms of service, change their regulations frequently. GISELLE AYALA MATEUS THANK YOU GISELLE AYALA MATEUS Giselle Ayala Mateus is a Colombian lawyer from the Pontificia Universidad Javeriana, with an LL.M. Specialized in Business Law from Brooklyn Law School. She is the creator of Focus Jurídico. If you want to contact her you can write to or
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