Category Archives: Government Regulations

Summer 2014 COPPA Update: Cleaner Language & Safe Harbor Programs

Summer 2014 COPPA Update Summer 2014 COPPA Update: Cleaner Language & Safe Harbor Programs
There are more Children’s Online Privacy Protection Act Updates. Do you know them?

The FTC has been busy this summer! In addition to releasing a few online marketing and privacy reports, the nation’s consumer watchdog also issued several updates to the current mac-daddy  of U.S. online privacy laws – the Children’s Online Privacy Protection Act (COPPA). The changes are mostly cosmetic and language-oriented – out with “legalese,” in with “plain English” type of adjustments.

Nevertheless, there are a few items worth reviewing.

Bolstered Liability Language Regarding Site & App Functionality

Requested, Promoted and Encouraged

The previous version of the Children’s Online Privacy Protection Act said the law applied to website operators and app developers who “requested” identifiable information from minors. In the latest version, “requested” has been expanded to “requested, promoted or encouraged.”

Everything Digital Falls Under COPPA Now

The last COPPA version specifically mentioned chat rooms and message boards as Internet-based platforms on which children could share personal information. Now, specific mentions of various types of online websites has been replaced with the broader “in identifiable form.”

Other Small COPPA Language Changes

  1. Changed e-mail to email;
  2. Included “instant messaging user identifiers, VOIP identifiers and video chat identifiers as “an identification that permits direct contact”;
  3. Added geolocation as a “persistent” identifier;
  4. Added the word transfer to section that addresses the exchange of PII between parties, used to be only sharing, selling and renting.

Clarified The Value of Hyperlinks In Determining Which Websites Fall Under COPPA and Which Do Not

The new COPPA documents states:

A website or online service shall not be deemed directed to children solely because it refers or links to a commercial website or online service directed to children by using information location tools, including a directory, index, reference, pointer, or hypertext link.

In other words, just because you link to a website that may fall under COPPA regulations doesn’t mean you ARE a site that falls under COPPA regulations.

Clarified That Websites That Deleting Children’s Info Lowers Liability

One of the main confusions about the Children’s Online Privacy Protection Act is whether or not sites that don’t use, share or sell collected data have to comply with it. The new version of the rule clarifies:

“An operator shall not be considered to have collected personal information under this paragraph if it takes reasonable measures to delete all or virtually all personal information from a child’s postings before they are made public, and also to delete such information from its records.”

Passive Tracking Illegal According To COPPA

The new Children’s Online Privacy Protection Act rules document clearly states that passive tracking of a child online – without following COPPA protocol – is illegal.

Cleared Up What Constitutes Website Functionality

COPPA rules have always allowed for the inconsequential collection of children’s’ data related to website maintenance and functionality mechanisms, like updates and certain types of security backups. The latest version of the rules expounds on allowable “administrative and functionality” collection circumstances. Perhaps most notably, the word “analyze” was added to this section – thereby allowing for more flexibility in terms of traffic aggregator plugins and apps used for business marketing and SEO.

Plainly Stated What Factors The Commission Looks For When Deciding If A Website Must Comply With COPPA Regulations

Previously, the FTC’s explanation of the factors considered when determining a website’s COPPA status was a confusing. The new document is much clearer.

The FTC looks at the following factors when deciding if a site is “directed towards children”:

  1. Subject matter;
  2. Visual content;
  3. Use of animated characters or child-oriented activities and incentives;
  4. Music and other audio content;
  5. Age of models;
  6. Presence of child celebrities or celebrities who appeal to children;
  7. Language; and
  8. “Competent and reliable empirical evidence regarding audience.”

Actual Knowledge Is The New COPPA Standard

Also, the new Children’s Online Privacy Protection Act states that a website, plugin or app will be deemed “directed to children” when the operator has “actual knowledge” that it is collecting personally identifiable information.

Slight Change of Rules Concerning Credit Card Parental Consent Authorization

If it wasn’t clear before, the FTC has now made it so: it is not sufficient to just gather credit card information without charging it as an acceptable parental consent mechanism. However, credit card information coupled with other identifying information may be sufficient.

App Store Account Coverage & Liability

The latest version of the COPPA rules says that developers can “rely” on any disclosures a given app store has if said app store includes legal coverage in their deal / contract with developers. Moreover, software companies can develop multi-platform COPPA parental consent mechanisms without assuming liability. (#score)

Data Retention Clarification

The latest version of the Children’s Online Privacy Protection Act states that any personally identifiable data collected from people aged 13 and younger can only be used “for only as long as is reasonable necessary to fulfill the purpose for which the information was collected.”

Safe Harbor Programs

The original COPPA rules allowed for legislators to develop a “safe harbor parental consent” program in which designated products could earn a “COPPA safe harbor” designation and using any of them would ensure compliance with the law.

Welp, the FTC has developed the program and ratified several products and services. So, new language was added to the COPPA rules to reflect the new “safe harbor” program and outline the “self-regulator” standards.

Speak With A COPPA Lawyer

If you need to learn more about the Children’s Online Privacy Protection Act, check out the related blog posts (in the right sidebar if you’re at a computer; below if you’re on a mobile device).

If you need a COPPA lawyer to review your website for compliance, get in touch with Kelly / Warner Internet law attorneys here. It’s a quick, inexpensive process that could save your business from a multi-million dollar FTC fine.

Nine Things Every Online Business Should Know About The FTC

FTC Seal Nine Things Every Online Business Should Know About The FTC#1: What Is The FTC, Exactly? A Government Agency or An Independent Commission That Works Closely With The Government?

The Federal Trade Commission is an independent agency of the United States government. Independent agencies operate separately from the other branches of government and aren’t headed by a Cabinet secretary. They’re also independent of Presidential control, though the incumbent selects members and must pick a near-equal amount of Democrats and Republicans. And yes, the commission does wield the “power of federal law” via the Federal Trade Commission Act.

What is the FTC’s main responsibility? Keeping an eye out for “unfair and deceptive” business activity — including marketing. Essentially, they’re the nation’s “consumer watchdog” agency.  For more details about the FTC, mosey on over here.

#2: The  2009 “Self-Regulatory Principles For online Behavioral Advertising”

In 2009, the FTC released a set of guidelines concerning “proper” advertising tactics. “Self-Regulatory Principles for Online Behavioral Advertising,” is a 55 page report that covers the four principles of acceptable online marketing:

  • Transparency & Consumer Control: Businesses are expected to let consumers know when and how they’re participating in target marketing and provide an opt-out mechanism.
  • Reasonable Security and Limited Data Retention: Companies that choose to collect personal data should only keep data for as long as necessary and only as it pertains to a specific transaction. Also, the FTC advises that “reasonable measures” should be taken to ensure data security. (Yeah, no; the FTC is not known for being precise. That’s why it’s a good idea to get a lawyer if you’re in trouble with the FTC, for he or she will know the exact case law to pull to challenge vague rules.)
  • Material Changes to Privacy Policies: Without consumers’ express consent, behavioral data cannot be used in a substantially different way than what is stated in the privacy policy.
  • Sensitive Data: Companies can’t use sensitive information about a consumer’s financial status, health status, or information pertaining to children for target marketing purposes.

# 3: Cookies & Consumer Privacy Controls

Cookies help online advertisers track consumer behavior in ways far beyond the capability of traditional advertising. A few morsels of text can tell you thousands of different things about a user’s web habits.

Personal data related to the online activity of children, financial data, or health status are subject to federal online privacy laws.

Not long after the unveiling of the FTC privacy guidelines in 2009, Yahoo! and Google created a method for users to opt out of having behavioral advertising appear on their web browser. In 2014, however, Yahoo! announced that they would no longer honor “browser do not track” signals. The future of online privacy is very much up in the air.

#4: Disclaimers Are A Must

To limit liability, it isn’t enough to throw a general disclaimer on your website. The product or service being advertised must be marketed in a way to demonstrate use under ordinary circumstances. Moreover, if you have an e-commerce site, payment and refund details  must be laid out in full.

#5: Material Compensation = Paid Endorser = Mandatory Disclosure

Anyone materially compensated to blog, tweet, or endorse a product must disclose the fact that he or she is paid. The disclosure statement must be put in a prominent place on the website. Read more here.

#6: Special Rules For Online Jewelry Sales

Online Jewelry Sellers must adhere to the 2008 FTC Guides for the Jewelry, Precious Metals, and Pewter Industries. If you sell gems online — fake or real — make sure you “polish up” on the rules.

#7: Multi-Level Marketing (MLM) Lowdown

Even though the guidelines the FTC issued in 2009 do not expressly address affiliate marketing, the FTC is against matrix or multi-level marketing schemes. These kinds of schemes also sell products and services through website networks. Matrix or multi-level marketing schemes are treated by the FTC like pyramid schemes — i.e., they’re illegal.

#8: Dot Com Disclosures

The Bible of all things online marketing is the Federal Trade Commission’s Dot Com Disclosures. Grab a coffee and cozy up with the DCD here (we tried to make our Dot Com Disclosure summary a bit less boring than the FTC’s).

#9: Internet Businesses Need Internet Attorneys

An experienced online marketing lawyer can help keep the FTC at bay. Get in touch today to get on track.

FTC Compliance Guidelines For Bloggers and Affiliate Marketers

FTC Seal FTC Compliance Guidelines For Bloggers and Affiliate Marketers

FTC Guidelines and Internet Marketing 101

Here at Kelly / Warner Law, we field a lot of questions about Federal Trade Commission Guidelines pertaining to blogging and Internet marketing. The two most common queries:

Are bloggers and marketers required to disclose certain types of information on their websites?

AND

If so, how must the disclaimers be presented?

In this article, we’ll discuss the latest FTC guidelines and disclosure requirements.

The FTC Acai Berry Scandal: A Lesson On Weight Loss False Advertising

A couple of years back, the FTC came down hard on Acai Berry advertisers. In online ads, many weight loss marketers used headlines like: “New Diet Pill Helps you Lose 50 pounds in 4 weeks” to describe the supposed miracle product. This alluring diddy also caught the FTC’s eye:

WARNING! AcaiPure Is Fast Weight Loss That Works. It Was Not Created For Those People Who Only Want To Lose A Few Measly Pounds. AcaiPure was created to help you achieve the incredible body you have always wanted …USE WITH CAUTION! Major weight loss in short periods of time may occur.

These headlines and blurbs caught the attention of the FTC because they make bold claims — claims that sound too good to be true. And when asked for evidence to support these claims, the marketers couldn’t hand-over satisfactory studies. (No, not all white papers and studies are created equal.) The commission deemed the headlines “false advertising” and a hulk-sized fine was levied.

False advertising isn’t the only thing at issue here. though. The FTC is also concerned about “re-bills.” In the Acai crackdown, the commission reasoned that not only did the advertisement lead customers to believe they would experience dramatic weight loss, but the advertisement also indicated that there was no financial risk. Yet, Acai Berry clients were billed for the product without their knowledge – sometimes thousands of dollars – for something they were led to believe was “Risk Free.”

The FTC has and will continue to clamp down on false advertising claims as a way to curb unfair and deceptive marketing. And remember, they have to keep busting people in order to keep existing. So, watch your back and make sure you have the proper disclosures. If you do, the FTC can’t come after you.

Blogging FTC Guidelines

The FTC isn’t only concerned with false advertising (blatant or otherwise). They’re also concerned with persons who endorse products and fail to disclose that he or she is a compensated endorser.

Bloggers and affiliate marketers who are receiving payment from websites engaged in false advertising should also beware. According to FTC Guidelines, bloggers must post a disclaimer or make a disclosure regarding a “sponsored communication.” There is no such thing as a one-size-fits-all “sponsored communication” disclaimer, however, the FTC does provide a few guidelines:

  • Only “material connections” must be disclosed.
  • Connections are material if the reviewer received some consideration for the review (e.g., cash, merchandise, etc.).
  • Guidelines impose liability on: (1) advertisers, (2) advertising agencies, and (3) endorsers (including celebrity endorsers).
  • The “results may vary” safe harbor is gone – advertisers are responsible for the claims made by endorsers.

Must I Have a disclosure or disclaimer on my Blog?

If you’re a paid blogger, affiliate marketer, or any entity receiving pay for advertising you must use disclaimers on your site.

“What kind of disclaimer is needed on your website or blog?”

The answer isn’t clear cut. Different strokes for different apps. That said, as long as the disclaimer is “clearly and conspicuously” placed according to the FTC Guidelines, then your site should be in the clear. Having a link in small type — which just so happens to be the same color as the background color of your page — won’t do because the disclaimer must be “clearly and conspicuously” placed.

There’ isn’t a list of “FTC approved” methods for disclosing certain information. The guidelines simply say that the disclaimer must be “clear and conspicuous” when disclosing the material relationships between endorsers and sellers – especially when such relationships aren’t otherwise clear to people visiting the website.

For bloggers, it’s important for the disclaimer to follow every blog post. Why? Because if the disclaimer is only in one spot, there is no guarantee that a reader will see it. A good method is having a link in your footer than appears on every page.

The FTC Guidelines govern advertising done on Twitter and other social media platforms, too. So, make sure to disclose material connections with every Tweet.

How you can comply with FTC Guidelines

The revised FTC Guidelines dictate that advertisements for services and products must not be misleading or false. Advertisers must disclose when the advertisement showcases atypical results. Furthermore, marketers using word of mouth or electronic media must disclose any material relationships between themselves and the advertisers they represent so consumers aren’t misled.

When online marketing guidelines are violated, the FTC will consider the “totality of the circumstances.” That means the FTC will take a look at:

  1. The advertised product,
  2. The advertisement claims, and
  3. Whether or not a “reasonable consumer” would be able to determine (from the disclaimer) if there is a material connection between the advertiser and the marketer.

Be careful out there, bloggers and online affiliate marketers. Even though the truth can hurt…the truth doesn’t hurt as bad as the FTC crashing down on you.

Big False Advertising Law News: SCOTUS Changes The Rules

false ad law Big False Advertising Law News: SCOTUS Changes The RulesBluntly speaking, the U.S. Supreme Court usually picks lawsuits that dwell at the intersection of “American Morals Avenue” and “Dispassionate Law Lane,” leaving the quasi-wonkish definitional deliberations to the appellate circuit.

But not this time.

Lexmark v. Static Control: Why It Matters In The World Of False Advertising Law

Recently, the highest court in the land accepted and subsequently released an opinion on the uncharacteristically “wonky” Lexmark vs. Static Control. A case Justice Scalia described as “sprawling,” Lexmark is dense, nuanced and in its most recent ruling, the Supreme Court only addressed one aspect of the claim – the issue of “standing” in Lanham Act false advertising suits.

So, why is Lexmark such a big deal? In plain English, via the ruling, the Court created a national “test” for determining who can and cannot sue for false advertising under the Lanham Act.

False Advertising Standards Before Lexmark = Different Strokes For Different Folks

Before now, false advertising rules essentially came down to location, because different courts used different standards to determine who could and could not sue for false advertising under the Lanham Act. The Lexmark ruling, however, nullifies the appellate and district court tests, replacing them with a unified two-prong “prudential standing” test.

Zones of Interest

The court determined that legal standing must include a direct “zone of interest” relationship between litigants. Huh? In the parlance of our time (TM “the Dude”), what SCOTUS is saying is that any company or entity has the right to sue for false advertising under the Lanham Act, even if the defendant and plaintiff are not direct competitors. Additionally, the second prong of the new false advertising determining test will require a verifiable “proximately caused” commercial injury. In other words, moving forward, in Lanham false advertising cases, plaintiffs will have to prove that defendants’ actions in some way caused financial harm.

Injury To Business Reputation

In addition to false advertising, the Lanham Act allows claims for injury to reputation and commercial interests “flowing directly from the deception wrought by the defendant’s advertising.” According to the false advertising law, this condition exists when the deception causes the consumer to reject a product. The new test makes no distinction for reputation without proof of actual malice, but only addresses commercial claims by the plaintiff.

Ultimate Impact of Lexmark v. Static Control On False Advertising Law

The final impact of the ruling on the number of future lawsuits is unclear. District and appellate courts now have standard instructions when determining false advertising Lanham Act cases, but the burden of proof may be impacted at the preponderance level. Preponderance allows a case determination by one single controlling factor if the fact carries enough legal weight. There may also be several other overlapping statutes allowing established plaintiffs standing in claims that are crafted in an acceptable manner.

Contact False Advertising Attorney

Kelly / Warner handles all manners of false advertising and commercial libel cases. If you need to speak with an attorney about a trade libel or false advertising issue, please get in touch today. We’re a top-rated firm with the experience you’re looking for in terms of false advertising and commercial defamation law. We look forward to speaking with you soon.

Is Section 230 of the CDA Done? Summary Of The Sarah Jones v. Dirty World Amicus Briefs

book movers Is Section 230 of the CDA Done? Summary Of The Sarah Jones v. Dirty World Amicus Briefs
Section 230 of the Communications Decency Act may be in jeopardy of becoming obsolete.

Out of all the Internet laws, which is the most important? Many folks may give Section 230 of the Communications Decency Act (CDA) top honors. Some people have even speculated that Section 230 of the CDA is primarily responsible for turning the Internet into a thriving bazaar of business and innovation.

What Does Section 230 of the CDA Do?

What does the powerful statute do? Section 230 of the CDA says:

“No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

Less legalese, you say? Basically, Section 230 of the CDA says you can’t blame hosting companies or website operators for defamatory statements posted by users, blog commentators or other third parties.

The Lawsuit That Could Decimate Section 230 of the CDA

At the end of 2013, a shocking district court decision had many people wondering if Section 230 of the CDA was about to be decimated – all thanks to a legal spat between an ex NFL cheerleader and a prurient gossip site.

The case was Sarah Jones v. The Dirty.com. Jones had sued the website and its owner/operator, Nik Richie, for posting false statements of fact online. Since Mr. Richie had added a comment to the posting (“Why are all high school teachers freaks in the sack? – nik.”), Jones’ lawyers argued that doing so nullified Richie’s Section 230 protections. In the end, a judge ruled that Nik Richie was liable for a defamatory post. X reasoned that Richie “encouraged” and “ratified” the original defamatory post “by reason of the very name of the site, the manner in which it is managed, and the personal comments of defendant Richie.”

When news broke of the decision, to put it bluntly, the Section 230 shit hit the fan.

Eager to voice discontent, and alarmed by the implications of the district court’s Section 230 decision, many businesses and organizations banded together to create amicus curias – friend of the court briefs – in support of Nik Richie and TheDirty.com. And on November 19, 2013, four different groups submitted four different amicus briefs to the court. Below is a summary of them.

What is An Amicus Curia?

An Amicus Curias, also known as a “Friend of the Court” briefs, are prepared by 3rd party that is not involved in a given lawsuit, but has a vested interest in its outcome. Usually, an amicus curia offers information related to the case in an effort to assist a court.

Opinion Corp. Pissedconsumer.com

Opinion Corp (a.k.a., pissedconsumer.com) filed an amicus brief in response to the Sarah Jones defamation victory over Nik Richie and TheDirty.com. Its main points are as follows:

  1. “Immunity is not forfeited unless the interactive service provider actively participates in the creation or development of the specific illegal content posted by the third party.”
  2. Since Nik Richie’s amendment was not a false statement of fact, and was added after the fact, it should not be considered defamatory.
  3. The District Court held that the mere nature and name of the website “encouraged” defamation. The Opinion Corp. friend of the court filing opines that the addition of “encouragement” as “an acceptable over rider of Section 230 of the CDA means judges will have free right to analyze websites based on” site names and subjects.
  4. Since Section 230 of the CDA specifically prohibits protection for copyright infringement, “analogizing contributory copyright infringement to ‘encouraging defamation’ is also misplaced.”
  5. The “Congressional intent” of Section 230 of the CDA is to “provide broad immunity for website operators.”
  6. “Non-defamatory responses are not part of defamatory statements and do not effect immunity.”

Online Service Providers Amicus Brief

Amazon, AVVO, Buzzfeed, Cable News Network, Curbed.com, Gawker Media, Magazine Publishers of America, The McClatchy Company, The Reporters Committee for Freedom of the Press, TripAdvisor, Yahoo and Yelp also submitted a joint friend of the court brief. Its main points are summarized below.

  1. In Jones v. Dirty World Entertainment Recordings LLC, “The court suggested that a website can be liable just because it selects posts to publish, does not verify their accuracy, and fails to remove them upon notice. But these are all ‘publisher’ functions with Section 230’s scope.”
  2. Affirming the current district court ruling would be disastrous because “if it is upheld, providers will have the perverse incentive not to review third party content at all, for fear of liability.”
  3. In the past, eight circuit courts endorsed a “broad immunity stance” that should be upheld as the standard.
  4. The district court’s ruling is dangerous because it means that “if a judge or jury finds that a website is somehow offensive and encourages users to submit content, the website provider loses immunity.”

Social Media Amicus Brief

Ebay, AOL, Facebook, Google, Linkedin, Microsoft, Tumblr, Twitter and Zynga also joined forces in an amicus curia focusing on Jones v. Dirty World Entertainment Recordings LLC. What did the social media giants have to say? Bullet points are below.

  1. “The protection afforded by Section 230 of the CDA has been and remains critical to the development and robustness of the Internet and interactive services…”
  2. The Jones court based its decision largely on Fair Housing Council v. Roomates.com LLC. The brief, however, argues that the case was misapplied in this instance because the Roommates’ opinion makes clear that unless an ISP “does not itself participate” in creating or developing content, it should be able to claim immunity under Section 230 of the CDA.
  3. Appealing to economic sensibilities, the social media-backed brief hammers home the idea that Section 230 creates an environment which allows the Internet to be “a medium for free expression and commerce.”
  4. Warns that if the Jones verdict stands as is, moving forward, free speech would be jeopardized because folks “would have little choice but to yield to a ‘heckler’s veto.’”

Amicus Briefs For Non Profits

The American Civil Liberties Union, ACLU of Kentucky, Electronic Frontier Foundation, Center for Democracy and Technology, Digital Media Law Project, Public Participation Project, Wendy Seltzer and Adam Holland also got in on the Jones v. Dirty World Entertainment Recordings LLC amicus brief action.

The associations brief reiterated much of what other concerned parties argued. They even acquiesced that “[a]ppellant TheDirty.com hosts frequently offensive – and indeed, sometimes actionable – gossip.” Notably, the watchdog groups reminded readers that “removing website from the legal line of fire when their users engage in actionable behavior was one of the primary motivations behind the enactment of Section 230.”

Do you run an online business that is being sued for defamation? Or maybe you are looking to file a defamation lawsuit against an online operation? Kelly Warner Law handles both plaintiff- and defendant-side Internet libel lawsuits. Our track record is excellent. We know how to handle situations swiftly, so you can get back to business sooner. Get in touch today.

2013 Dot Com Disclosures: Explained By Lawyer

FTC Seal 2013 Dot Com Disclosures: Explained By Lawyer
The new Dot Com Disclosure rules are here! The FTC has a new set of online marketing standards.

Below is an in-depth review of the March 2013 Dot Com Disclosures update. Fair Warning: It is the opposite of short. We’ve done our best to use descriptive headlines to break the monotony and hopefully allow for easier navigation. If you need to speak with an attorney who deals with FTC and online advertising issues, get in touch. Kelly Warner is here to help any and all online marketers.

The Federal Trade Commission updated the Dot Com Disclosures. In April 2012, the nation’s consumer protection agency held workshops to discuss mobile devices and sales disclosures. Now, they’ve released a new set of guidelines. It’s supposed to act as a set of rules for how mobile and social media ads should be structured, but the 53-page Dot Com Disclosure update is actually a lengthy treatise filled with non-committal suggestions.

Regardless of the wishy-washy language, the Dot Com Disclosures are the closest thing we have to an online marketing law. Following the standards within could save you a costly legal battle with the FTC. Below is a rundown of the updated Dot Dom Disclosures. If you dabble in social media endorsements, geo-location or mobile advertising, the new FTC stance and recommendations will likely affect your current digital marketing campaign.

Part Rehash of the Original Dot Com Disclosures

The majority of the newest Dot Com Disclosures is a regurgitation of the previous document. It warns against the evils of “deceptive marketing,” and explains that good marketing is marketing which is truthful, substantiated and fair. The drafters of the document also spend time explaining why both consumers and sellers have a right to an honest marketplace.

While the latest version of the online marketing guide excessively explains the importance of proximity, repetition and prominence when it comes to advertisement disclosures, it does little in terms of presenting definitive answers as  to the exact parameters of what will and will not be tolerated by the commission. Despite an abundance of words, few definitive rules are laid out.

And believe it or not, the FTC is not shy about admitting their non-committal nature. In the new version of the Dot Com Disclosures, it clearly states that the document “is intended only to provide guidance.”

“The ultimate test is not the size of the font or the location of the disclosure, although they are important considerations,” reads the online marketing guidelines, “the ultimate test is whether the information intended to be disclosed is actually conveyed to consumers.”

Justification Against & Repeated Warnings About “Unfair & Deceptive Marketing Practices”

The charge of the Federal Trade Commission is protecting consumers from “unfair and deceptive marketing practices.” As such, they dedicate several paragraphs in the Dot Com Disclosures discussing why fraudulent online ads hurt buyers and sellers. “[Sellers]…expect and deserve the opportunity to compete in a marketplace free of deception and unfair practices” and consumers deserve to “understand what they are paying for” and that “deception can damper consumer confidence” explains the FTC.

In addition to rehashing the perils of questionable marketing tactics, the new Dot Com Disclosures also make clear that the guidelines apply to ads of all types – audio, video, digital, small, large, mobile, Internet. They didn’t bother naming all the possibilities, instead opting for the all-encompassing “not limited to any particular medium used to disseminate claims or advertising.”

General Look & Feel

The new Dot Com Disclosures address how online and mobile ads must be marked, so as to be easily distinguishable as promotional material. Similar to the older version, the new Dot Com Disclosures make clear that the “overall net impression of [an] ad” is more important than then individual aspects. The updated version also warns marketers not to “let other parts of the ad get in the way” of an advertising disclosure. Commissioners specifically mention buy now buttons and flashy shopping carts as potential distraction culprits. The Dot Com Disclosures stress that any disclosures need to be made before the “the decision to buy” is made. Disclosures should also be “displayed early in the decision-making process.”  Therefore, the guidelines seem to suggest that disclosures and other advertorial assets (i.e., a shopping cart or glossy graphic) should be of equal prominence.

The primary point the FTC hammers home: Disclosures should be obvious and unavoidable.

Proximity, Pop-Ups and White Spaces

Proximity is a big deal in the Dot Com Disclosures. The document mentions proximity more than a cookbook mentions eggs. The proximity gist is this: make darn sure any disclosures are near the ad it modifies. The guidelines urge that, when possible, the ads themselves should include relevant limitations within the ad, rather than a separate disclosure.

Pop-Ups

In this iteration of the Dot Com Disclosures, pop-up disclosures are called out by name. Specifically, the commission warns not to use “blockable pop-up disclosures.” So, if you’ve been using standard pop-ups to satisfy disclosure requirements, it may be time to change your methods.

White Space

The issue of “blank white space” is also specifically addressed in the latest version of the Dot Com Disclosures. The new guidelines make note of the deceptive nature of blank white spaces on lengthy sites; the rules urge marketers to repeat claims multiple times on a long website (see below for specifics about scrolling); the new online marketing document also directs advertisers to be mindful of the “multiple routes through a website” and urges marketers to make sure that disclosures are easily seen – no matter where or how a user happens upon an ad.

Teaser Ads

What should you do if you dabble in teaser ads? The FTC has this to offer:

“[In instances of teaser ads] when the advertised product is only sold through advertisers’ own website and the consumer must click through in order to take any action…a space-constrained ad can direct consumers to a website for more information[where the disclosure must be conspicuous].”

The FTC Thinks Hyperlinks Are Very Important

Hyperlinks to detailed disclosures are a popular method. As such, this version of the Dot Com Disclosures painstakingly addresses a myriad of issues related to hyperlinking. The FTC’s message concerning hyperlinks is this: make sure any disclosure links are noticeable, uniform and take users directly to the information they need to make an informed decision. According to the new Dot Com Disclosures, hyperlinks should be recognizable as links and not hidden by other elements on the page or device.

Anchor Text

The appropriate anchor text is also discussed in detail in the new online marketing guidelines. In short, advertisers are advised not to use generic, non-descript words for disclosure hyperlinks. The document specifically says that “hyperlinking a single word or phrase in the text of an ad is not likely to be effective.” It goes on to explain: “hyperlinks that simply say ‘disclaimer,’ ‘more information,’ ‘details,’ ‘terms and conditions’ or ‘fine print’ do not convey the importance, nature and relevance of the information…” In a rare moment of clarity, the Dot Com Disclosures suggest the following as the ideal hyperlink verbiage:

“Service plan required. Get service plan.” The Dot Com Disclosures clearly state that “necessary disclosures should not be relegated to “terms of use” and similar contractual agreements. On other words: don’t try to bury stuff in a tiny TOS link at the bottom of your website and call it a day.

Scrolling Seems To Be Of the Utmost Concern

During the Dot Com Disclosure workshops, participants must have spent a considerable amount of time debating the finer points of scrolling, because the latest version of the online marketing guidelines are filled with scrolling tips and standards.

Below is a list of how the FTC feels about scrolling when it comes to online and mobile advertisements:

  1. Whenever possible, avoid ads that require scrolling in any direction.
  2. Make every attempt to ensure “that scrolling is not necessary in order to find a disclosure.”
  3. “When scrolling is necessary, use text or visual cues to encourage consumers to scroll to view the disclosure.”
  4. The presence of “scroll bars along the edges of a screen are not sufficiently effective visual cue.”

To drive home their anti-scrolling preference, the Dot Com Disclosures also warn advertisers to “keep in mind that having to scroll increases the risk that consumers will miss a disclosure.”

The FTC Essentially says that It’s Your Responsibility to Keep up with the Latest User Behavior Statistics

In addition to making sure that all advertisements and promotional material is clear and conspicuous, the new Dot Com Disclosures also suggest that digital marketers must stay current when it comes to the latest and greatest user behavior studies. Items commissioners recommend advertisers keep abreast of include:

  1. Empirical research about where consumers do and do not look on a screen;
  2. Standard size and color studies regarding readability;
  3. Studies regarding reading habits of users;

Throughout the new online marketing guide, users’ tendency to scan pages instead of reading them is mentioned several times. The point the FTC is making by reiterating our shared tendency to not “read an entire website or online screen” is that advertising disclosures should be so clear that an illiterate individual would be able to tell what it is.

Screen Size & Device Specifications

When word first surfaced that the Federal Trade Commission was considering an update to the Dot Com Disclosures, their focus seemed to be mobile device marketing and social media ads. While the agency did not address all the questions originally asked during the Dot Com Disclosure 2012 workshops, the new version of the guidelines does address issues pertaining to smaller screen sizes and the proliferation of available devices.

General statements regarding screen sizes and device diversification in the 2013 update of the Dot Com Disclosures:

  1. Document states that guidelines are “device neutral” – meaning all the guidelines contained within apply to all electronic communication devices.
  2. “If a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.”
  3. Optimizing web pages for mobile devices “is important.”

You’re Responsible for Affiliate Sales People

Not only does the FTC want you to take extra steps to ensure your ads are sized properly for all delivery devices, but they also want you to educate affiliates promoting your product or service. The new Dot Com Disclosures state:

“Advertisers should employ best practices to make it less likely that disclosures will be deleted from space-constrained ads when they are republished by others.”

In other words, monitor everyone hawking your product via electronic means – you could be held responsible for their ineptitude. (Note: This should be taken seriously. After all, these days, the FTC is even going after people’s parents to recover funds.)

What To Do In Cases Where The Disclosure Is Long, But The Screen Size Is Small?

A frequently asked question regarding online advertising disclosures deals with screen size: What do you do if your disclosure is long, but the screen size is small – like on mobile phones?

The new Dot Com Disclosures addresses this question directly – but doesn’t answer it clearly:

 “…if a product’s basic cost…is advertised on one page, but there are significant additional fees the consumer would not expect to incur in order to purchase the product or use it on an ongoing basis, the existence and nature of the those additional fees should be disclosed on the same page and immediately adjacent to the cost claim and with appropriate prominence.

However, if details about the additional fees are too complex to describe adjacent to the price claim, those details may be provided by using a hyperlink.”

In other words, you should make every effort to include limitations and disclosures within the ad itself. If, however, the limitations are too long to fit, you can direct users to a lengthy disclosure page via a hyperlink.

Language & Confirmations

As has been preferred for nearly two decades now, the new Dot Com Disclosures makes a point of praising “plain language.” Gone are the days when a good contract was one freighted with complex Latin phrases and superfluous qualifiers. These days, a contract like that could harm you instead of protecting you.

The new Dot Com Disclosures unambiguously state: “Use plain language and syntax so that consumers understand the disclosures.” The guidelines go on to assert that in order “for disclosures to be effective, consumers must be able to understand them.”

The FTC specifically mentions avoiding the following language pitfalls:

  1. Legalese
  2. Technical jargon
  3. Non-universal and little-known abbreviations (“other abbreviations or icons may or may not be adequate”)
  4. Extraneous language and material, which only serve to make things more confusing

In addition to the above four language points, the 2013 Dot Com Disclosures point blank state that advertisers should require “the consumer to take some affirmative action to proceed past the pop-up or interstitial [page].” It also lays out in black and white that disclosures must come before the “add to shopping cart” stage. More specifically, “disclosures must be effectively communicated to consumers before they make a purchase or incur a financial obligation.”

New Social Media Rules

Perhaps the most talked about aspect of the 2013 Dot Com Disclosure updates is the addition of social media-related standards. The most important new social media marketing rule is that the word “Ad:” or “Sponsor:” must be included in a tweet (or other short social media message).

From the Dot Com Disclosures:

“‘Ad:’ at the beginning of a tweet or similar shirt-form messages should inform consumers that the message is an advertisement…”

plus

“the word ‘Sponsored’ likely informs consumers that the message was sponsored by an advertiser.”

and

“It is the advertiser’s responsibility to draw attention to the required disclosures.”

Miscellaneous

A few other notable points included in the newest version of the Dot Com Disclosures:

  1. Negative option trials are mentioned by name – and discouraged.
  2. The guidelines concerning the use of Endorsements and Testimonials in Advertising (“Endorsement Guidelines”) are still in effect.
  3. Disclosures must match the medium of the advertisement. So, if an ad is an online ad, the disclosure must be made online, too; if an ad is a radio ad, the disclosure must be auditory, as well.

If you need to speak with a lawyer who knows and understands the Dot Com Disclosures, get in touch today. Kelly Warner is an Internet law legal practice that has helped swarms of affiliate marketers, online businesses and startups with various FTC and online marketing issues. Hope to hear from you soon.

Mobile Marketing Alert: New Android App May Be A Thorn In Marketers Sides

mobile advertising Mobile Marketing Alert: New Android App May Be A Thorn In Marketers Sides
New Android App allows users to report advertising texts directly to the FTC

Attention Mobile Marketers: A new Android app called PrivacyStar alerts the Federal Trade Commission of questionable “text-vertising” campaigns. Yep, you read that right: the small but powerful program allows users to file a formal FTC complaint with the tap of a finger. So, if texting is one of your current mobile marketing methods, be aware that users can now easily alert officials if they think your advertising texts are unsolicited SPAM.

Bottom line: it’s a good time to review your mobile marketing process to make sure it doesn’t cross the legal line.

From CNN:

Fighting text spam got easier by leaps and bounds on Wednesday when Android app PrivacyStar added a free-to-use feature, which will help users file formal complaints with the Federal Trade Commission directly from their smartphones.

What Mobile Marketers Should Do To Evade The Federal Trade Commission’s Wrath:

  1. Read and follow all the rules outlined in the Dot Com Disclosures.
  2. Enlist an Internet law attorney to do an audit of your marketing plan to double check that you’re operating on the right side of the law.
  3. Read about recent FTC investigations to ensure you’re not engaging in the same activities that are landing others in the legal hot seat.

The Golden Rule For Mobile Marketing

These days, devices are a dime a dozen. They come in all shapes and sizes, colors and weights. The proliferation of hand-held computers and smartphones has also led to the proliferation of mobile marketing. But as we all know from personal experience, users don’t dig advertisements that pop-up, beep, shout and slow down a system; users especially dislike incessant mobile ads and SPAM. So, here’s the golden rule every mobile marketer should consider:

Try Not To Annoy, Don’t Trick People Into Signing Up and Don’t Lie!

If you follow these three simple rules, your advertising plan is probably on the right side of mobile marketing law. If you want to make sure, contact the online marketing lawyers at Kelly / Warner Law — we’ll do a comprehensive audit of your mobile marketing plan to make sure the FTC doesn’t come a-knocking.

Daily Internet Law News Brief: Patents, COPPA & Netflix

Ready for today’s Internet law news. Let’s get to it without further ado.

New Internet Law Bill Passed In House

The so-called “Netflix Bill” passed in the House of Representatives, which means the government is one step closer to changing provisions in the Video Privacy Protection Act. The proposed changes will make it easier for people – and let’s face it, social networking sites — to share video viewing histories. Like all political moves, this one has its detractors. Most notably, those who feel the e-mail privacy amendment to the Electronics Communications Privacy Act should also be changed at the same time aren’t thrilled.

Technology Intellectual Property News: Patent Talk

Interested in software patent issues? Jason Mick published a commentary on the nature of UI patents and how they could negatively affect the tech industry. Anyone who keeps abreast of intellectual property law should take the time to check it out.

In other IP-related news, Torrentfreak.com had an interesting article about a copyright troll company who is looking to patent an anti-piracy process. Basically, it’s a system that is able to sniff our illegal downloading and prompts users the ability to pay for the material on the spot. The system has other features and could significantly change the nature of anti-piracy efforts. And as TorrentFreak put it: the process may actually be a case of copyright trolls, trolling other copyright trolls.

Internet Law Update: FTC Makes COPPA Changes Official

As expected, the Federal Trade Commission announced today that the new Children’s Online Privacy Protection Act rules – which tighten online privacy rules for app developers, website operators and third-party advertisers – are in effect. Click here to catch up on the new COPPA standards.

Public Relations Plunder: Instagram

Instagram’s privacy policy snafu continued to make news today. Pundits are coming out of the digital forest to espouse their feelings about the popular social media company’s mess up.

Internet Law News Is Goin’ Fishing For Two Weeks

Well friends, the holiday season is officially upon us. News is slowing ever so slightly as many retreat to spend time with their families and friends. As such, we’ll be haulting publication of our daily news briefs until January 3, 2013! See ya then!

HR 2471: Proposed E-Mail Privacy Bill

email privacy HR 2471: Proposed E Mail Privacy BillIn a few months, it may be a little more difficult for law enforcement agents to get a hold of your e-mail and social media messages. Last week, the Senate Judiciary Committee approved a bill (HR 2471), sponsored by Sen. Patrick Leahy, which seeks to update the 1986 Electronics Communications Privacy Act. The bill will require officials to obtain a warrant if they want to read private e-mails or electronic messages.

What, exactly, is the Senate Judiciary Committee, you ask?One of the oldest government committees still in existence, the SJC was created in 1816. In addition to conducting Supreme Court nominee hearings, the judicial board also deals with federal criminal law, human rights, immigration, intellectual property, antitrust and online privacy.

How It Works Now

Issues surrounding e-privacy are largely governed by the Electronics Communications Privacy Act, which was passed in 1986. The statutes codified within the ECPA speak to a time when the World Wide Web was in its infancy and e-mail was considered a transitory form of communication. As such, the statute stipulated that law enforcement officials only needed to obtain a warrant to read emails that are less than six-months-old.

Currently, law enforcement agents are able to obtain old e-mails with less information than they would need to get a “probable cause” warrant. Additionally, four states already have laws rendering warrantless access to email unconstitutional; plus, other statutes exist which compel third parties to hand over information to officials when lives are at stake or children are at risk.

Lastly, government investigators and police officers can get “to” and “from” data from e-mails – via judicial order – in order to build a probable cause case to obtain a warrant. And believe it or not, officials can get e-mails turned over, with less than a warrant, if the message falls into the vaguely defined “electronic storage.”

The Murky Legal History Of “Electronic Storage”Since the Internet’s inception, lawmakers have been trying to lasso technology into legalese – but they haven’t had much luck wrangling a consensus on what constitutes “electronic storage.”The 9th Circuit Court of Appeals defined electronic storage as simply “anything kept in an inbox.” The Supreme Court of South Carolina, however, ruled that “read emails are not in electronic storage and can be read without a warrant.” The Department of Justice thinks that deleted, read and draft messages aren’t in storage. To top it off, in 2010, the 6th Circuit Court of Appeals ruled that warrantless e-mail reading violates the Fourth Amendment.

Who Is In Support Of The New E-mail Privacy Bill? Who Is Against It?

Support for the bill is divided, but oddly enough, not across party lines. While the sponsor of the bill is a Democrat, several co-sponsors are Republicans. Moreover, the American Civil Liberties Union, Grover Norquist’s Americans for Tax Reform, Google, Microsoft and Twitter all support the bill. However, the senate minority leader, Sen. Charles Grassley, has expressed concern that there hasn’t been sufficient debate on the topic; additionally, associate deputy attorney general, James Baker, urged officials last year not to pass the bill, suggesting it would hamper law enforcement efforts.

What’s The Next Step?

So, what’s next for HR 2471. In all likelihood, we won’t see any movement until next year. The e-mail privacy law must first be cleared by the Senate, at which point it will move on to the house.

Many legislators are also eager to add language that exempts law enforcement officers from having to obtain a warrant in instances of rape and kidnapping.

Experts estimate that cloud-computing will be a $240 billion a year industry by 2020. In other words, U.S. firms must gain the confidence of users, or they could lose out on all that juicy profit. Since the European Union has already passed strict online privacy laws, expect U.S. officials to follow suit, if not only to secure the nation’s competitive cloud-computing edge over the coming years.

Additional Source: http://www.mnn.com/green-tech/computers/stories/who-can-read-your-emails-now-online-privacy-act-explained

Biz Opp Alert: The FTC Is Watching

largeFTC Biz Opp Alert: The FTC Is Watching
Federal Trade Commission Logo

The nation’s consumer protection agency is actively enforcing their new Biz Opp rules. On October 31, 2012, the Federal Trade Commission, in conjunction with other federal task forces, the U.S. Postal Inspection Service and Attorneys General in Arizona, Colorado, California and Indiana filed 108 new legal actions against Biz Opp companies that authorities allege are unfairly scamming would-be entrepreneurs.

Operation Lost Opportunity: The FTC’s Latest Crackdown On Biz Opps

With a 3-0-2 vote, the FTC put operation lost opportunity into action. Seventy civilian actions and 38 criminal actions were filed in the District Court for the Southern District of Florida against a slew of companies offering “be your own boss” prospects. Specifically, a group of companies that offer mystery shopping, credit card processing, website operation, and government insurance refund processing opportunities are being charged with violating various consumer protection rules.

Authority Operation Lost Opportunity Involvement
Department of Justice 22 actions filed
Attorneys General IN, CA, AZ, CO Combined 20 actions filed
U.S. Postal Inspection Service 15 administrative actions filed
Working Group of the Financial Fraud Enforcement Task Force Coordination and 51 actions filed

What Are The New Biz Opp Rules, Anyway?

The companies caught up in this imbroglio are primarily being accused of misrepresenting the amount of money potential buyers can make – a clear violation of Article 5 of the FTC Act and the Telemarketing Sales Rule. Several of the defendants also engaged in negative-option billing – a big FTC no-no, especially for Biz Opps. Noncompliance with the new 7-day disclosure statement rule seems to be another issue in this FTC sweep.

Perhaps the most egregious violations of the lot, though, were the double-blind enrollment schemes. Several companies caught up in this sting enrolled customers in two programs at once; when the client canceled their subscription, they’d still be charged the following month. When they inquired as to why they were still being charged, only then did they find out they were enrolled in both programs.

All of the above violations are mentioned in the new Biz Opp rules released by the FTC earlier this year. If you have not yet reviewed the updated statutes, be sure to catch up here.

Temporary Restraining Order Issued To Companies Being Investigated

In brief, a temporary restraining order is a legal action that constrains a party to refrain from a given activity or compels them to engage in an activity. In the context of litigation, temporary restraining orders are essentially stop-gap actions used in the period before an injunction hearing. TROs are decisions made by a single judge and cannot be overturned.

On October 31, 2012 a court issued TRO was executed; it halted activity, froze assets and put the targeted companies in a temporary receivership.

Need A Biz Opp Lawyer?

The FTC gave notice that they plan to pay close attention to Payday lending websites, Internet schemes, and EDU scams in the near future. So, if you’re an affiliate or online marketer being investigated by the FTC and you need of a lawyer, contact Kelly / Warner Law. We’re not just attorneys, but also affiliate marketers. We understand the business, in addition to the nuances of Internet marketing law and compliance.