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privacy. security. technology. media. advertising. intellectual property.

BBB Code of Advertising Update: Examining the Changes

Benjamin Stein Posted in Advertising Law

As noted in our earlier post, the Better Business Bureau recently updated its Code of Advertising for the first time since 1985.  There are many changes throughout the Code, from major substantive additions to minor revisions to layout and formatting tweaks. In this post, we highlight some of the more significant changes. Continue Reading

Brian C. Schaller Joins InfoLawGroup As Counsel

Brian Schaller Posted in Uncategorized

InfoLawGroup is happy to announce that Brian C. Schaller has joined the firm as Counsel. Before joining InfoLawGroup, Mr. Schaller was at a Los Angeles based firm where he represented startups and interactive companies including the virtual reality company Oculus VR.  He also held positions at Oprah Winfrey Network (OWN), Disney Interactive, and NUVOtv.

Mr. Schaller brings additional depth to InfoLawGroup’s core practice areas and continues the firm’s strategic growth in order to serve clients across the full spectrum of Information Law issues.  Mr. Schaller is located in Los Angeles and his practice focuses on interactive entertainment, privacy, technology, intellectual property, and production issues.

Mr. Schaller is Chair of the Beverly Hills Bar Association IP, Internet and New Media Section and Vice-Chair of the Association of Media and Entertainment Counsel (AMEC) Emerging Leaders Advisory Board.  Brian is a frequent speaker and moderator for these organizations.  He is also an International Association of Privacy Professionals Certified Information Privacy Professional.

Does Clapper Silence Data Breach Litigation? A Two-Year Retrospective

Posted in Breach Notice, Breach Notification, Cybercrime, Damages, Motion to Dismiss, Pleadings, Privacy and Security Litigation

This February 26, 2015, marks the two-year anniversary of the U.S. Supreme Court’s decision in Clapper v. Amnesty International USA,[1] which required plaintiffs to allege that a threatened injury is “certainly impending” in order to constitute an injury-in-fact sufficient to convey Article III standing. In this time, federal district courts in at least twelve data breach cases have applied Clapper.[2] While the majority of these courts have concluded that Clapper mandates dismissal for a lack of standing, some courts have found that standing exists. This article provides an overview of these cases and highlights certain considerations that impacted the courts’ analysis in determining whether standing exists.

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Better Business Bureau Updates its BBB Code of Advertising

Benjamin Stein Posted in Advertising Law, Standards

On Thursday, the Better Business Bureau announced that it has made large-scale revisions to its self-described “cornerstone product,” the BBB Code of Advertising.  The Code imposes self-regulatory obligations on all entities who advertise in North America.  It is enforced at the local level by the BBB’s 112 local offices throughout US and Canada and, for national advertising, by the National Advertising Division, the Children’s Advertising Review Unit, and the other arms of the BBB’s Advertising Self-Regulatory Council.

The Code of Advertising was last amended in 1985 and the BBB describes the new revisions as intended to “reflect the many new ways advertisers reach consumers via websites, social media, texting and other channels.”  According to the BBB, the revisions include updates on the use of endorsements and testimonials to address current FTC guidelines, as well as changes to the requirements for “up to” claims, close-out sales, rebate promotions, and the duration of sale periods. The revised Code also includes new sections on green (i.e. environmental-benefit) claims, negative-option plans, and “Made in the USA” claims.

We are reviewing the revised guides and will have a more detailed post on the changes soon.  In the meantime, you can view the BBB’s announcement here and the revised Code here.

The Internet of Things: What All Companies Need To Know About the FTC Report

Posted in FTC, Privacy

The FTC released its Report on the Internet of Things (“IoT”) on January 27, 2015 (“Report”).  While the Report is specific to IoT, including devices such as wearable fitness trackers and internet connected cameras and televisions, there are key takeaways for all companies operating online[1].

The FTC defines IoT as “’things’ such as devices or sensors – other than computers, smartphones, or tablets – that connect, communicate or transmit information with or between each other through the Internet.”

As a starting point, the FTC appears most concerned with security and privacy risks to consumers.  The Report identifies several key risks, which it recognizes exist with traditional computers as well:

  • unauthorized access and misuse of personal information and sensitive personal information, including precise geolocation, financial account numbers or health information (and the concern that this information could be used for credit, insurance, and employment decisions);
  • attacks on other systems;
  • safety risks, including where someone is able to break in and control a device such as an automobile or a pacemaker.

The FTC also raises the concern that collection of certain information (e.g. personal information, habits, locations, and physical conditions) may allow an entity to infer sensitive information that the consumer has not provided directly.

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It’s Not Just For Kids – FTC Takes Issue with Search Terms and Testimonials

Posted in Advertising Law

The FTC started 2015 by showing its continued attention to advertising concerning kids and testimonial issues, as well as an advertiser’s purchase of search terms. In a recent case brought against a manufacturer of children’s supplements, the FTC had concerns about its advertising claims, use of testimonials, and lack of disclosures, as well as its marketing practices outside of the advertising itself.  The FTC challenged the lofty product claims about the supplements’ effect on child development (for example, that they are proven to support normal and healthy speech development). The FTC also took issue with the advertiser’s reliance on testimonials to substantiate efficacy claims and its failure to disclose that some parents received free supplements from the advertiser. But the FTC’s scrutiny didn’t end with the claims and disclosures in the advertising itself. The FTC alleged that the advertiser’s purchase of search terms related to childhood disorder treatments was problematic. The advertiser had purchased the terms so that its ads would appear if a parent searched for solutions to their child’s issues.

If your company is giving away product or services and then soliciting feedback, relying on testimonials as substantiation, or purchasing search terms that may imply a claim about its product or service, be sure to think carefully through the issues involved and consult with legal counsel.

Litigation, Litigation, Go Away, Come Again Another Day: TCPA Lawsuit Stayed Pending FCC’s Resolution of Issues

Posted in TCPA

Last week, a Seattle federal court granted the ridesharing company Lyft’s motion to stay a TCPA class action lawsuit brought against it pending resolution of two recent petitions for declaratory rulings currently before the FCC. The court noted that a ruling in the FCC petitions may resolve the issues in the case and ordered the parties to report back in six months or after the FCC issues a pertinent order. In the suit, the plaintiff alleged that Lyft sent messages to the contacts of its users without those contacts’ prior express consent.

The stay was based on the doctrine of primary jurisdiction – a doctrine whereby a court may exercise its discretion to pause judicial proceedings pending the resolution “of an issue within the special competence of an administrative agency” such as “technical and policy questions that should be addressed in the first instance by the agency with regulatory authority over the relevant industry.” (Slip Op. at 3) (quoting Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008)). Continue Reading

HIPAA as a Standard of Care for Common Law Negligence Claims

Posted in Cybersecurity, Data Security, HIPAA

Because the Health Insurance Portability and Accountability Act (“HIPAA”) does not provide a private right of action, plaintiff’s attorneys have sought a means to link HIPAA violations to other state or federal legal frameworks which do provide direct recourse for private individuals.  A recent ruling by the Connecticut Supreme Court may open new avenues of this type.  In Byrne v. Avery Center for Obstetrics and Gynecology, PC, the Court reached two key conclusions:

  • HIPAA does not preempt state common law causes of action for negligence and
  • the HIPAA regulations may be used to establish a standard of care for common law negligence causes of action.

The case arose when the plaintiff asked her physician not to share her medical records with a former significant other.  Contrary to the plaintiff’s request, the physician provided her medical records to the former significant other in response to a subpoena without notifying the plaintiff or contesting the subpoena, in violation of the HIPAA Privacy Rule.

It remains to be seen whether the Connecticut courts conclude that the alleged unauthorized disclosures of health information resulted in cognizable harm.  However, the ruling takes a significant step toward creating a method for individuals to hold health care providers, insurers, and other organizations that handle health information liable for uses or disclosures that occur in violation of HIPAA. 

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Numerous Warning Letters Serve as a Reminder that the FTC is Always Watching

Shannon Harell Posted in Advertising Law, Enforcement, FTC

The Federal Trade Commission (“FTC”) has been very active in its enforcement efforts in the past couple of months. In addition to other actions which we have blogged about, the FTC recently sent dozens of warning letters to advertisers in two separate efforts. In September, the FTC sent letters admonishing companies for their failure to make adequate disclosures in an effort dubbed “Operation Full Disclosure.” Then, in October, the FTC sent letters to companies for their potentially misleading “oxo degradable” claims in violation of the FTC’s Guides for the Use of Environmental Marketing Claims (or “Green Guides”).

 Operation Full Disclosure Warning Letters

First, in Operation Full Disclosure, the FTC sent warning letters to more than sixty undisclosed companies—including twenty of the largest advertisers in the US—for their failure to make clear and conspicuous disclosures in television and print advertisements. In its press release, the FTC noted that Operation Full Disclosure’s attention to providing truthful disclosures in print and television is in line with the FTC’s recent efforts to address online disclosures via the 2013 release of the revised .com Disclosures.

The ads subject to the warning letters came from a wide cross section of advertisers (including ads from the food, drug, household item, consumer electronics, personal care, and weight loss industries) and involved fine print, easy to miss, and hard to read disclosures that contained material information. Specific issues included:

  • Advertising a product price where the conditions for obtaining that price were not adequately disclosed.
  • Advertising a product capability or inclusion of an accessory where it was not adequately disclosed that consumers must first own or buy an additional product or service to obtain that capability or accessory.
  • Advertising that a product was superior in a product category where the basis of comparison or the class of products at issue was not adequately disclosed.
  • Advertising a “risk-free” trial period where the requirement to pay for initial and/or return shipping was not adequately disclosed.
  • Advertising outlier results via a testimonial where it was not adequately disclosed that the results were not typical.
  • Advertising involving false claims where the advertiser attempted to cure the falsity with contradictory disclosures.

In the warning letters the FTC advised that all disclosures must be clear, conspicuous, and in close proximity to the modified claims. In a blog post about Operation Full Disclosure, the FTC elaborated on what it means to be “clear and conspicuous” by reminding advertisers to focus on the “The 4Ps”:

  • Prominence: The disclosure must be big enough, have enough contrast and, for TV, on the screen long enough for the consumer to easily read and understand it. There is no “one size fits all” font, color, or time period. Rather, whether the disclosure is readable and understandable will depend on the circumstances.
  • Presentation: Apart from appearance, the disclosure must be set forth in an understandable manner, e.g., it should not be in legalese, should not be buried a block of text, etc.
  • Placement: The disclosure should be positioned in manner that the consumer is likely to actually notice and read it, e.g., it should not be buried in a footnote, off to the extreme side of the page, etc.
  • Proximity: The disclosure must be in close proximity to the claim it is modifying. This demonstrates, once again, the problem with footnotes. The FTC specifically stated that an asterisk does not solve the footnote problem.

The FTC went on to ask advertisers to make this simple query before posting an advertisement:

 If you find yourself struggling with how to craft an effective disclosure, why not take a step back and consider what the need for a disclosure might be telling you. Perhaps it’s pointing to a potential for underlying deception in your ad claim.

Nothing about Operation Full Disclosure should come as news to advertisers, but the effort does serve as a reminder that that the “clear and conspicuous” maxim is still an important one and that crafting helpful, honest, and readable disclosures is necessary to prevent an ad from becoming deceptive and drawing the ire of the FTC.

Green Guides Warning Letters

Then in late October, the FTC sent warning letters to fifteen marketers of “oxo degradable” plastic waste bags explaining that their oxo degradable, oxo bio degradable and biodegradable claims may be deceptive.

As background, “oxo degradable” plastic is made with an additive intended to cause it to degrade in the presence of oxygen. However, since waste bags generally are not exposed to enough oxygen when in the landfill environment, it is possible that oxo degradable bags will not completely degrade in the time frame expected by consumers. Making an unqualified oxo/bio/oxo bio degradable claim is not permissible under the Green Guides unless the advertiser can prove that the entire product or package will completely break down within one year. The October letters to advertisers questioned whether the advertisers have reliable scientific evidence to support their oxo/oxo bio/bio degradable claims and, if not, recommended that the claims be discontinued.[1]

Since the Green Guides were revised in 2012, the FTC has made significant enforcement efforts and these letters are a clear indication that the FTC remains focused on ensuring that advertisers make reliable and truthful environmental claims. Further, in its press release the FTC noted that companies “should not assume their claims are fine” if no letter was received. This enforcement effort, therefore, serves as a reminder that special attention must be taken when an environmental or “green” claim is made.

Key Takeways

These recent warning letters demonstrate that advertisers must not forget that the FTC is always watching regardless of the industry you are in, the claims you are making, or the medium in which you are advertising. Therefore, thinking, “no one will notice if we do [x, y, or z] … just this one time” is never a safe approach.


[1] The advertisers had until October 21, 2014 to respond to the letters. We will continue to watch for developments.