Global Advertising Lawyers Alliance (GALA) Webinar – “Hot Topics in Advertising Law in North America”

I always enjoy these and recommend the free GALA webinars to those interested in advertising law; I joined in progress due to some technical difficulties on my end.

Joseph Lewczak: FTC v. Teami ($15 million settlement, all but $1 million suspended), where there were other bad things like fighting cancer claims and also nondisclosure by influencers like Cardi B. FTC does not want disclosure below the “more” expansion link, if any; it has to be above so anyone will see it even if they don’t seek out more info.

Kelly Harris: In Canada, Competition Bureau brought enforcement action against FB for misleading privacy representations even though it’s a free service. New bill: regulating online programmers like Netflix, though UGC will be excluded (but might be included if commissioned for or developed by the service). Regulator will impose “conditions of service,” though not quite traditional broadcaster licensing.

Jose Antonio Arochi: Mexico doesn’t have specific regulations. Twitter reviews for Sephora where consumers were demanding money for allegedly expired products and saying they couldn’t get refunds from Sephora. Apparently Consumer protection agency called Sephora to clarify the situation—there was no litigation.

Melissa Steinman: Shop Safe Act introduced trying to stop fakes in ecommerce; didn’t go through (attempt to create contributory liability for platforms) but will be reintroduced, so keep an eye out. Theme for this year: platform liability.

Reviews: Vitamins Online v. Heartwise: Manipulation of reviews actionable under Lanham Act, including manipulating “helpful” votes and giving people free stuff for positive reviews.

Maryland: First ever digital advertising tax, on gross receipts. Vetoed by governor but overridden; lawsuit brought by platforms like FB and Google—wait and see. NY, DC, WA are considering similar taxes so it’s a trend to watch.

Harris: In Canada, the provinces regulate consumer agreements online. Certain procedural requirements: must be able to see & save a copy of the disclosures/contract w/in 15 days, via email receipt for example. Certain practices are limited: unilateral changes of material elements like price. Failure to comply: right to rescind; damages, including on class basis and class actions in Canada are rising, especially Quebec and B.C. Competition Bureau is very interested in digital economy. Drip pricing (adding fees after initial disclosure) is an area of significant interest: StubHub, TicketMaster, car rental companies that charge “environmental” fees. Substantiation of “regular” price claims is also a big issue.

Arochi: Again, Mexico has nothing specific to online shopping, just consumer protection and COFEPRIS (Mexican FDA), which does regulate advertising. Suspended 34,000 webpages during pandemic of people trying to publicize products that are health-related or make health claims. Permits for certain products are required in advance: health related, supplements, food/beverage, pesticides, alcohol/tobacco. Also new disclosures for high-fat etc. foods with big labels on the front of the package.

Jeff Greenbaum: Don’t assume that online disclosures are clear and conspicuous, even if “everyone is using them.”

Harris: Canada: disclosures can clarify but can’t correct a misleading main claim or contradict the main claim. One click away is likely low risk of regulatory enforcement, but ensure disclosures travel across platforms and ensure consistency in disclosures in multiple places and/or media: that was at issue in recent self-regulatory competitor challenges. This is an issue of coordinating teams that might be in charge of different media.

Arochi: Mexico enforcement is more likely to target different products that become a problem. There aren’t as many cases day by day and that lack of emphasis from the authorities affects behavior.

Lewczak: consider that disclosures need to be fit to medium and consumer’s consumption thereof: disclosure in YT video description may not be enough. Not a lot of US action on sweepstakes. Covid concerns: don’t be tone deaf; giving away cruises, event tickets, and other in person prizes can be risky and generate bad PR. Don’t require physical presence for entry or award of prizes. Do your rules have a force majeure type limit that allows covid-related flexibility? Avoid unintended sweepstakes with attempted charitable giveaways to doctors, restaurant workers, etc.; may require disclosures and charitable registration: Draper James teachers giveaway. Loot boxes are on the horizon.

Harris: Winner of contest must complete test of skill; cases vary on what’s enough, but 4-part, multi function math question with a time limit. You can do it on entry or just for the winner; depends on structure of promotion. Also: no forcing purchase to enter, but can say, “submit an original essay.” Quebec: registration requirements (doesn’t apply below a certain monetary threshold, and to non-advertising promotions like a contest for employees) + French language availability. A minimum disclosure is required in all advertising, adequate and fair disclosure: number and value of prizes and other material facts—entry dates, eligibility requirements, geog. distribution of prizes if any. Can be difficult depending on how contest structured.

Arochi: Interior Ministry and Consumer Protection Agency require permits for some sweepstakes/contests. TV contest for example requires a specific agency permit. Chance-based contests may not need a permit. Division of authority may not be clear so may have to ask both agencies and then pick one to apply to.

Steinman: Lots of US action on country of origin. NPRM, July 2020 on Made in USA claims, codifying current enforcement policy and adding ability to seek civil penalties: need all or virtually all of manufacture, or component parts/ingredients, to make Made in USA and related claims. This can include use of flags, eagles. But can use qualifiers like “made in USA of domestic and foreign components.” “Designed in US” can also work. California has a 5% foreign content requirement. FTC also challenged “Danish cookies” that weren’t made in Denmark.

FTC v. Williams-Sonoma: $1 million penalty and prohibition on unqualified US origin claims without being able to substantiate them. FTC v. Chemence, Feb. 2021: $1.2 million for violation of existing order, highest monetary judgment ever for Made in USA case. Made in US: final assembly/processing and all significant processing in the US, and all or virtually all ingredients/components are made/sourced in the US. Assembled in US: product is last substantially transformed in the US, its principal assembly takes place in the US, and US assembly operations are substantial.

Harris: Made in Canada standards are similar: last substantial transformation in Canada; at least 51% of total direct costs of producing/manufacturing occurred in Canada, and accompanied with appropriate qualifying statement (e.g. made in Canada with imported parts). Moose Knuckles parka, 2016, lacked qualifying statement (made with Canadian and imported components); settled for $750,000 donation. Product of Canada: like made in Canada, but all or virtually all of the total direct costs (98%) must be Canadian.

Arochi: Mexico has one of the highest numbers of Appellations of Origin; more than 8 processes for obtaining certification for GIs. Hecho in Mexico is a certification; must be (majority) produced in Mexico, not precisely corresponding to AOs or GIs, but permit coming from Mexican government.

Greenbaum: Environmental marketing: Little FTC enforcement but some states have enacted more stringent requirements or made Green Guides into enforceable rules. Mattero v. Costco: class action over Costco’s “environmentally responsible” claims for detergent: were claims sufficiently qualified/were other benefits communicated: court denied motion to dismiss. New administration and revision of Green Guides may be an opportunity for FTC to change its approach.

Harris: Canada is similar; no specific green marketing laws, just Competition Act/provincial statutes. Federal guidance on green claims like recyclable exists, and self-regulatory code/guidance specific to environmental claims. Ongoing consumer class actions regarding pesticide in supposedly “organic” medical cannabis. All 2020 self-regulatory consumer complaints were upheld, including against a joke about benefits of saving water, because water scarcity is a serious issue and implication that product could help was found misleading—humor, puffery defenses rejected. Also home fragrance claimed to have “natural” ingredients—some ingredients were natural, but no evidence that all scent components were. Exaggeration of environmental benefits also were challenged. Grain Farmers of Ontario: depicted farms and farmers under stress, food supply shortages, empty grocery stores: condemned as inappropriate fearmongering.

Arochi: Also enforced by consumer protection agency (PROFECO) and COFEPRIS. CONAR is the self-regulatory body.

Taste and cultural concerns:

Lewczak: BLM and #MeToo—but not clear that any regulator or self-regulator will do anything. Major TV networks have their own guidelines against violence, antisocial behavior, oversexualization, stereotyping. Third party organizations also complain: PETA for animals, MADD for alcohol, other rights groups. Frida Mom’s ads showing reality of postpartum recovery rejected from 2020 Oscars for being too graphic—at least get some PR benefit from that.

Harris: significant Canadian regional differences. Claims likely understood more literally by regulators. Supreme Court of Canada uses the “credulous, hurried and inexperienced” standard. Can’t demean, denigrate, disparage: one complaint can bring you before Ad Standards. Canadianisms to watch out for: mostly metric except for height and weight of people; Celsius for weather. French exists outside Quebec. Spelling is different: colour, behaviour, honour, centre, etc.

Arochi: Spanish is the official language. Regional differences are significant; a federation with 31 states and Mexico City. 10^th most populated country in world, most Spanish speakers. Measurements are always metric/Celsius for weather. Can start claims before consumer protection agency without disclosing identity, which allows competitors to bring claims strategically.

Covid enforcement

Steinman: FTC recorded more than 130,000 complaints in first half of 2020; issued more than 300 warning letters with 95% compliance rate; has brought some cases against covid treatments. Even Purell received a warning letter. Also price gouging cases. Quality King raised prices for Clorox etc several times and was forced to disgorge profits + penalty; 3M has also been active against mask resellers (or counterfeiters). Privacy is also a hot topic: CCPA in California is now effective [or as Eric Goldman might say, it’s in effect]. First class action under this has been filed, against Ring (plaintiffs include people who were hacked which they found out when someone talked to their daughter).

Harris: Canada is seeing new rights, Consumer Privacy Protection Act—against automated decisionmaking, deidentified data; data portability/erasure; Quebec is also updating his regime.

Arochi: New food labeling law in Mexico, against use of cartoons on foods with excess fat etc. Black stamps on products that qualify; also new guidelines on medical marijuana.