Randi W. Singer, moderator
Barbara S. Chong, Team Leader, Division of Drug Marketing, Advertising, and Communications (DDMAC), U.S. Food and Drug Administration
FDA’s hearing on the internet/social media: an overview of what we talked about. Our mission: communication of truthful, balanced, and accurate drug information. Surveillance, enforcement, and education to foster better communication for both healthcare professionals and consumers. Promotion needs to balance efficacy and risk information, consistent with the approved product labeling or package insert, and must be supported by substantial evidence, which generally means two adequate well-controlled clinical trials.
Increase in promotional pieces submitted to the FDA; the trend is true for internet-related promotions too. In terms of enforcement action, 2009 actions 44% of the enforcement letters were internet-related; 1/3rd of 2010 letters are internet-related. 14 letters issued over sponsored link issues in 2009, making a spike v. other years.
For what online communications are manufacturers etc. accountable? How can they fulfill regulatory requirements like fair balance/risk disclosure in social media, especially when there are space limitations or realtime communications? How do we deal with corrective information websites controlled by third parties? What are appropriate uses of links? What about internet adverse event reporting, which isn’t formally within DDMAC’s ambit? CDER will deal with this last question on a policy level, but we see the issues as related.
Guidance process here is not legally binding. FDA will be working on social media through 2010. Plan is to find long-term applicability rather than focusing on specific tools like Twitter.
Julie Saulnier, Deputy Chief, Consumer Policy Division, Consumer & Governmental Affairs Bureau, Federal Communications Commission
The FCC has authority over common carriers. Past ad regulation was based on a joint statement with the FTC in 2000, directed at advertising of dialaround and other long-distance services, from the days of extensive price competition on rates (which has fallen away with the rise of all-you-can-eat). But what we said there may still be relevant to things like litigation around dish and DirecTV, where the competition is hot.
FCC also covers things like fax advertising, telephone solicitation—tries to have its rules track the FTC’s actions. Commercial messages to wireless devices: FCC rules bar sending, by use of an internet address, of commercial messages t owireless devices without express prior authorization from recipient. Texts/messages sent using phone numbers are covered by telemarketing rules. Tracking FTC rules, there’s a transactional/relationship exemption, though opt-out is always allowed.
Newer things: grant of authority over common carriers as well as ancillary authority over Title I—if we have subject matter jurisdiction over the service and the jurisdiction is reasonably ancillary to the effective performance of the commission’s responsibilities. One big consumer initiative: notice of inquiry on consumer information and disclosure for all stages of the purchasing process: choosing a provider, choosing a service plan, managing use of the service, deciding whether and when to switch to a new provider or plan. Should there be things like the EU requirement of sending messages when you’re close to your monthly cap, at your monthly cap, and over, to avoid “bill shock” when the customer gets a higher than expected bill?
Notice of Proposed Rulemaking scheduled for third quarter of 2010 to determine performance disclosure requirements for broadband. Advertising the “up to” speed is not satisfactory, according to our extensive consumer surveys—consumers have no idea what speed they’re actually getting. Comment is also being sought on measurement of mobile broadband network performance and coverage.
Another NPRM from October proposes transparency on internet network management: must disclose, subject to reasonable network management, information about network management and other practices as reasonably required for users, content, application, and service providers to enjoy protections (sending or receiving lawful content of the user’s choice, running lawful applications and using lawful services, connecting to and using user’s choice of lawful devices, and maintaining competition among network, application, service, and content providers)—internet user’s bill of rights. Enforcement action against Comcast was struck down by the DC Circuit as beyond our ancillary jurisdiction. As a result, we’ve opened a Notice of Inquiry on a framework for broadband internet.
Joy Feigenbaum, Bureau Chief, Bureau of Consumer Frauds & Protection, NY State AG’s Office
We are very interested in post-transaction marketing: well-known retailers, merchands and banks partner with companies that sell “membership programs.” The solicitations are provided to customers during or immediately after the customer’s online transaction with the retailer; also occurs with “live check” solicitations that appear to be rebate checks, but by endorsing the check you are agreeing to join a fee-based membership for which you’ll be charged on your credit card.
First, the solicitation isn’t what it seems. Looks like it comes from the retailer with whom you transacted but it’s not. Second, credit card data is passed from the retailer to the membership companies. Ultimately the consumer is enrolled without their knowledge, charged for unknown benefits. Names on the credit card sound like they could be something you bought; sometimes the size of the charge keeps consumers from noticing for months. We found that the vast majority of consumers didn’t understand that they were signing up for a fee-based program or that their credit cards would be charged. Banner ads at the end of the transaction say things like “click here to get your $10 cash back reward on your next purchase”—looks like it’s from the retailer. Or create an impression that the consumer is being rewarded for taking a survey from the retailer. Fandango offered free movie tickets; audio overlays that encouraged consumers to “just click yes now and claim your free movie tickets,” discouraging consumers from understanding what was going on. She showed numerous slides that were cluttered/confusing/bare of information about what was really happening.
Some players in the industry have now ended the “data pass” of information, but only online. Other companies are trying a pre-transaction variant. Offer a choice of a lower or higher price, and if they choose the lower price then they’re enrolled in a fee-based program. High volume of consumer complaints generated.
Live check solicitations: cashing the check enrolls the consumer making them liable for monthly charges on the credit/debit card provided to the retailer/bank with which they’d earlier transacted; the retailer/bank provides the information for a fee to the program operator; the checks are often cobranded with the retailer/bank’s mark, creating the impression of customer loyalty rebate. Live checks have been banned/restricted in at least 6 states as too misleading. She also showed a number of those checks, with confusing/misleading text.
Also deceptively retaining unauthorized revenue from consumers. Train CS reps to respond to complaints by cancelling without a refund or at most providing a refund for one month; trained to withhold information about how long the program has been charging them; provide misleading information suggesting that they can’t get a refund/can only get a refund if their credit card has been lost or stolen. She played a really great, in an awful way, recording of a CSR doing this, which ends when the AG’s name is invoked.
Some settlements/redress funds. The investigations continue. Several enforcement actions/settlements should be announced in the near future. There’s also a New York Senate investigation. Enforcing GBL §349 and §350 and laws against repeated fraud or illegality.
User-Generated Content
Randi W. Singer, Weil, Gotschal & Manges (moderator)
Hypothetical scenario with a promo for “World’s Best Pizza”: New “homestyle” pizza hits stores tomorrow, and want a promo campaign to generate buzz about the house-made crust and point out that other chains use frozen crust. Invite consumers to visit the website and upload a written/video submission in which they describe or reenact their favorite pizza memory or tradition. Directions encourage folks to share what they think the best combinations of toppings are, and World’s Best may create some offer some special pies using those suggestions. Please sign off by the end of the day!
Response: most of the audience said you needed to call marketing and discuss (not email). Showed sample video where the UGC included pop music and mentions of other TMs.
Darren A. Bowie, Legal Director, Nokia Inc.
General guidelines for videos: talk to marketing clients and IT clients about your capabilitities: what size and length and format of files? Disclose those to avoid problems with consumers getting files rejected. Guidelines about obscenity, appropriate content (no harassment/hate speech). Make clear you have discretion to reject videos. Think about advertising/gambling—suppose someone contains a video with links to other sites; call it out explicitly and prohibit it. Make clear to consumers that there’s no right to have their video posted or kept up if posted. Consider some type of disclosure/link for complaints about the video.
Susan M. Shook, Associate General Counsel - Associate Director, The Procter & Gamble Company
Work closely with client to understand what will be done: just a gallery on the site? Broader plans to use in other advertising? Find out what technically can be done for monitoring and filtering. Answers will drive terms and conditions as well as format.
If only a gallery, you may have a few short & sweet provisions: you’re consenting to this; you’ve gotten the consent for everyone who appears; etc. If you’re planning to reuse/repurpose the content, you may need much more robust terms and conditions and more robust format—make sure submitters are residents of the jurisdiction; they’re of the age of majority so it’s not voidable; they’re not employees; make sure they know they need to follow the submission guidelines and don’t include third-party materials; if they use other people/third-party materials, need consent; have them make a representation that it’s original content not submitted to others (what if they submit the same thing to your competitor?); ownership v. license (some third-party social networks may dictate what you can get from the consumer in terms of license v. ownership).
Format is almost as important and often ignored. Consumers must see them. Hyperlinks at the bottom of the page are not transparent enough to the consumer.
Lisa F. Cantos, Vice President & Associate General Counsel, Starwood Hotels & Resorts Worldwide, Inc.
Lots of IP issues—TMed products appearing; music appearing. No matter what you tell users, there will be third-party content in the video—a Polo shirt, a picture of a car in the background. So provide that it’s the user who is obligated to get the consent; also have the ability to review content before it’s posted; also have the ability to take it down—the coolest stuff will often be what you need to pull down. Let the business people know what the videos have to be reviewed for—very few legal departments have enough staff to review and probably shouldn’t be doing it anyway; you can have great terms and conditions but the people doing the review have to know what they mean.
On ownership v. licensing: be aware of why you’re running the contest. If you’re looking for new independent filmmakers, then asking for ownership will cause an outcry.
Shook: remind people that the people on the other end of the transaction are unlikely to have read the contract, and may well be a 13-year-old with $12. If you want to reuse the content, indemnification from the user is unlikely to be any good for you. You’ll need real releases. Also, once you cherry-pick certain videos, all the old rules about ads apply, including substantiation.
Bowie: think of COPPA, which prevents collection of information from kids under 13. Can prescreen videos; can use age gating, which can involve some tricky tech; ask the user to confirm age. If they give an age under 13, don’t let them submit. Still may have issues if people under 13 are disclosing personally identifiable information in a video.
Singer: What do you want to know about your ad agency before you launch a new campaign?
Bowie: talk to your in-house marketing client about how they know/came to work with the agency and speak with the agency yourself, getting a sense of whether they understand the issues.
Shook: remember that not every firm has the same risk profile. And younger people may have a right-click-and-its-mine mentality. Just because someone else has done it does not mean you can do it.
Singer: call v. email?
Cantos: first, consider whether your client is the type to ignore a message. Sometimes you don’t create a written record if you think your client is going to do it anyway. She wouldn’t just do it by phone; she’d send an email saying: we need to talk more about this.
Bowie: We can put privileged/do not forward on the email, but know that this will be ignored. Short message followed by oral discussion is best.
Singer: add in lawyer’s question: how will consumers know to go to the website to submit content? Are we advertising? Response: mass email/text message blast to everyone in our database.
Bowie: this creates huge privacy policy issues—think generally about your privacy policy.
Shook: not every company is situated in the same way with regards to privacy. P&G is an opt-in company—consumers must check a box to allow further email communications. The client wants to use all the lists, but if the consumer didn’t affirmatively opt in, you can’t do a “blast out.” Nonlegally, think about what your consumers thought when they got notice. Did they think they were going to get coupons? May be a customer relations issue.
Bowie: special rules about text messaging. Most would consider the necessary tech to be autodialer technology, which would implicate the TCPA. There is a private right of action under the TCPA, though not under Do Not Call. Courts have adopted the FTC’s position that text message marketing without prior consent is prohibited under the TCPA; pretty significant settlements with companies such as Timberland. Don’t do it without explicit prior opt-in consent; not buried in privacy policy/terms that you reserve the right to send out SMS. Need a tick box.
Cantos: Simon & Schuster promotion for Stephen King’s Cell—“the next call you get may be your last”—received by a young boy. This is a problem.
Singer: one more piece of the issue. We’ll interview consumers trying the homestyle and asking them if it’s better than the frozen dough at the other place. We want camera crews filming. More or less problematic than the website user submission? (The audience was relatively split, with 56% thinking it was more problematic.)
Shook: worried about the way the question was planned to be asked. Figure out what your client wants from the interviews (and online). If the client suddenly changes the promotion to be more comparative, that could get you into trouble—Quiznos v. Subway case. Submission requirements asked for a comparison, and the sample videos were arguably disparaging/suggested laughable amounts of meat in the Subway sandwiches. Court held that it was a fact for the jury whether Quiznos was the publisher or the source of content. So ask about the directions to the consumers—do they ask for comparisons to competitors that might lead to disparaging content? What examples do you provide to consumers? Make sure your sample videos are not infringing IP or encouraging the submission of disparaging content. Another factor: how vigorously are you going to police submissions? If 80% of videos are disparaging, probably have to pull some of that content.
Bowie: also recall the FTC’s new endorsement guidelines: user should certify that claims reflect honest beliefs/experiences; say they can’t make deceptive claims about your product or your competitor’s. Then think about typicality. Separately, think about whether you will lose 230 protection if you make any changes to consumer submissions.
Q: Would take exception to suggestion that you should only seek out ad agencies with big agencies with huge legal firms—smaller agencies can do some of the best work; imaginative marketing comes from people with fewer resources/experience.
Bowie: There’s a need for due diligence/getting a sense of what legal review an agency can do. Small agencies may not be able to do full review. Just something to be factored in when doing risk analysis.
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