Washington State Debates Personal Data Protections
Will the Evergreen State join Colorado and Cali and flick the data off-switch?
...Doesn’t Mean They’re Not Out to Track You
Assume for the moment that you’re privacy minded. By that, we mean you’re in a state of mind that goes beyond toying with private browser extensions or password managers.
Let’s assume instead that you’re interested enough in privacy to want to opt out of trading your personal data whenever you browse — to ruthlessly withhold your information from every site you visit.
If you are this type of person, then you know just how difficult a prospect the withholding of your personal data is. Not simply because you are expected to opt out on a website-by-website basis but also because you need to repeat the process every time you revisit a site … and because certain sites will break when you withhold information … and because other sites and services make the process of rejecting their tracking indisputably onerous.
Nuclear Option
Maintaining privacy online is akin to having a wrestling match with a spider’s web. Every interaction invokes multiple new commitments that are overlapping and very sticky.
Many consumers don’t mind the benefits that come from allowing some forms of data collection. But what’s the best way out for consumers who never want their data collected? There are services that promise to help people opt out of data collection, but they’re often prohibitively expensive. More popular are one-click-opt-out options provided by browser extensions, which burn off the hydra’s heads behind the scenes. But a truly comprehensive solution will need to address the problem at its root, and that means legislation.
Enter Washington State Senator Reuven Carlyle. His proposed bill SB 5813 would offer a single on/off switch that keeps the targeted advertising leviathan from sucking up consumers’ personal data, which would include personally identifiable information (PII), as well as information gleaned from browsing habits and history.
The Takeaway
The Federal Trade Commission endorsed just such an approach more than a decade ago. Carlyle’s proposal bears the stamp of the 800-pound gorilla of all data protection laws, the California Consumer Privacy Act (CCPA), which we’ve covered in depth. Consumer opt-out is built into the CCPA’s DNA, and the Golden State’s attorney general recently threw his weight behind Global Privacy Control — a new specification that allows browsers to communicate a “Do Not Sell” request to any website a user visits. Colorado recently passed a similarly robust law.
SB 5813 is moving through the Washington State legislative process. You can check out the first public hearing on the bill here, around 57 minutes in. We’ll keep you posted on this and other similar legislation, as well as any movement on the federal front, which would bring what some believe is needed but controversial simplicity to the emerging patchwork of state-level personal data regulations.
A Boxer, a Baller and a Model Walk Smack into the Bar
Kardashian et al. accused of selling cryptocurrency then selling out
Another Incubus
Ethereum is the name of the blockchain technology underlying EMAX, a new ERC-20 cryptocurrency token that was recently launched on the Ethereum network.
The name of the technology was inspired by the eponymous 19th-century scientific concept. As one Ethereum co-founder explained: “I immediately realized that I liked [Ethereum] better than all of the other alternatives that I had seen; I suppose it was the fact that [it] sounded nice and it had the word ‘ether’, referring to the hypothetical invisible medium that permeates the universe and allows light to travel.”
Sounds wonderful, no? A perfect geek name for the latest tech in the thick of the geek trend du jour?
Unfortunately, the existence of ether isn’t hypothetical; it’s completely debunked. Experiments in the late 1800s demonstrated that light didn’t need the ether — or any other medium — to travel anywhere.
Pump-a-Chump
The modern cryptocurrency company EthereumMax is also accused of being a mirage of sorts, at least according to a class action complaint recently filed in the Central District of California. In the complaint, plaintiff Ryan Huegerich alleges that EthereumMax, the company behind the creation of the EMAX token, used celebrity endorsers to “pump” the value of currency and allow them to make a killing off the artificially high prices.
Huegerich names three celebs — mega-influencer Kim Kardashian, NBA player Paul Pierce and boxer Floyd Mayweather — as co-defendants in the case. He claims that the celebrities acted in league with EthereumMax executives to promote the currency shortly after it was introduced to the market.
Pierce talked up the product in the wake of his acrimonious split with sports network ESPN. Mayweather helped list the currency as the “exclusive Cryptocurrency accepted for online ticket purchasing” for the Floyd Mayweather vs. Logan Paul Pay-Per-View event, and even touted the currency at Bitcoin’s 2021 conference in Miami. Kardashian posted advertising for EthereumMax on her Instagram account, which, according to the United Kingdom’s Financial Control Authority, became “the financial promotion with the single biggest audience reach in history.”
According to Huegerich, the value of the EMAX token grew 632% in just two weeks due to the efforts of the celebrity trio.
The Takeaway
And then the bottom fell out. According to the complaint, the value of EMAX plummeted shortly after Kardashian posted her Instagram ad, but not before the endorsers and the executives had dumped their own holdings in the token.
If proven, the allegations could create some discomfort for the celebrities in question — especially Mayweather, who Huegerich claims has a spotty record promoting cryptocurrencies. “In November 2018, Defendant Mayweather...settled charges with the United States Securities and Exchange Commission for failing to disclose payments they received for promoting fraudulent cryptocurrency investments,” the complaint maintains. In addition to more than $600,000 in fines, Mayweather “agreed not to promote any securities — digital or otherwise — for three years,” making the current alleged actions a violation of the settlement agreement.
Ryan Huegerich v. Steve Gentile et al. is shaping up to be a fascinating confluence of some of our favorite subjects — cryptocurrency, online personalities and deceptive advertising. As of now, only the complaint has been filed; we’ll keep you posted on what happens next.
NAD: Glad Needs to Clean Up Its Clorox-Related Product Claims
Cross-marketing can lead to unwarranted associations, negative attention
Folie-a-Phew?
When Glad Products Company teamed up with Clorox, it probably didn’t think it was getting much more than a mutually beneficial marketing opportunity.
Together the companies produced the prosaically named ForceFlex Plus with Clorox Tall Kitchen Drawstring Bags, a product for which the appeal is obvious. The scent of Clorox applied to kitchen garbage bags — short of diaper pails, the smelliest repository in the home — is a natural match. Who doesn’t want their trash smelling fresh? Or, at the very least, not smelling at all. However, what the product lacked was the disinfecting power of bleach.
So this hybrid product attracted negative attention from competitor Reynolds Consumer Products, which sought review before the National Advertising Division (NAD) of several claims made on Glad’s website, on the product’s packaging and in various commercials.
A Good Scrubbing
At the heart of the complaint is the other virtue associated with Clorox: cleanliness. The Clorox name, associated as it is with the cleaning and disinfecting qualities of bleach, isn’t simply about a fresh smell. Reynolds used this other association to challenge the advertising before NAD.
As usual, NAD produced a nuanced review. Glad’s product packaging escaped unscathed. Claims of “Eliminates Food & Bacterial Odors” and “Lemon Fresh Bleach Scent” passed the smell test. The Clorox logo was “appropriately tied to the odor elimination benefit it provides,” and reference to “bleach” in the second tag was “clearly related” to the scent of the product.
Claims made on the company’s website and in commercial advertising didn’t fare as well. The product was touted as both helping consumers “maintain a clean and healthy home” and keeping the home “feeling clean & healthy.” These claims, NAD held, could be construed to offer a health benefit — for instance, disinfection — and, without substantiation, should be discontinued.
Similarly, a “brief, small-font visual disclosure” that read “this product is bleach-free” in a 30-second commercial for the garbage bags couldn’t “cure the message that Glad ForceFlex bags provide cleaning and disinfecting benefits of Clorox.” Therefore, NAD recommended the commercial be discontinued.
The Takeaway
Glad agreed to all the changes, as most companies do when hearing from NAD.
The lesson is clear: In the absence of qualified claims, cross-marketing with another brand requires you to justify the attributes associated with that brand. Glad may not have even considered that the association with Clorox carried a whiff of health or cleanliness claims, but NAD assumed that consumers would draw the connection. (Indeed, Clorox has faced similar challenges all by its lonesome.)
Be precise about the benefits you’re offering the consumer and be ready to back them up — even if they seem to attach only by association. Anything less than that will create uncertainty in the minds of your customers and an opening for the competition.
Coinbase’s Dogecoin Sweepstakes Inspires False Ad Suit
Free entry alternatives need to be front and center, or else...
Asking for Trubble
Normally we like nothing better than to dive headfirst into some Internet-spawned nonsense, from the antics of influencers to the origin of dank memes — if it relates, of course, to advertising practices and disputes.
But this one is just too much of a headache.
The meme underlying the present story is the decade-old “doge” meme, a phenomenon with roots going back 15 years. It involves multiple Shiba Inu dogs on multiple continents, canine death hoaxes and 4chan-mounted raiding parties. Its evolution is as convoluted as its significance is ephemeral.
We’re just going to give you a link and let you fend for yourselves.
Such History
Moving on.
Dogecoin is a cryptocurrency that piggybacked, conceptually at least, on the doge meme — the developers used the Shiba Inu as their symbol, hoping to make a satirical point about the overwhelming hype surrounding cryptocurrencies at the time (2013, to be precise).
In the upside-down world we live in, it should come as no surprise that instead of serving as a punchline, Dogecoin took off — and developed into a leading cryptocurrency with a $50 billion market capitalization in 2021. Its imprimatur, replete with cute Japanese dog, has become associated with all sorts of high-profile activity, including a SpaceX rideshare mission to the moon.
With a profile like that, a $1.2 million Dogecoin sweepstakes offered by cryptocurrency exchange platform Coinbase seems downright banal. But not for our purposes.
Coinbase, by some measures the largest crypto platform, opened the sweepstakes to its account holders in June 2021, advertising it thus:
“Trade DOGE. Win DOGE. Starting today, you can trade, send, and receive Dogecoin on Coinbase.com and with the Coinbase Android and iOS apps. To celebrate, we’re giving away $1.2 million in Dogecoin. Opt in and then buy or sell $100 in DOGE on Coinbase by 6/10/2021 for your chance to win. Terms and conditions apply.”
To prevent the contest from being considered an illegal lottery, Coinbase allowed users to enter for free via snail mail. Unfortunately, this mode of entry was allegedly buried under layers of clicks in the sweepstakes’ official rules. According to the (seemingly inevitable) false advertising class action brought against the company in California’s Northern District, the advertising message led readers to believe that they must enter the sweepstakes by purchasing Dogecoin when, in fact, they didn’t need to at all.
The Takeaway
The court recently allowed the suit to survive a motion to dismiss, ruling that “while Coinbase may have actually disclosed the free method in the Dogecoin sweepstakes’ Official Rules, its advertising methods heavily directed people to make a trade in order to participate in this sweepstakes.” Coinbase failed to compel arbitration and is now facing down the prospect of a trial.
You have to be careful when setting up a sweepstakes; they can be a minefield of unexpected consequences.
In this case, simply offering an alternate method of entry didn’t help Coinbase dodge a legal challenge. The company needed to clearly and conspicuously disclose the alternative. In fact, if you’re going to offer a way to enter that requires a payment or a purchase, you must promote the free method with the same vigor and prominence with which you promote the paid one.
Otherwise, much legal fees. Very lawsuit. Wow.
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Check Out Our Latest Blog Posts
Thoughts on Working with B2B Influencers
There was a good piece in MediaPost’s Marketing Insider, available here, on business considerations for working with B2B influencers. We thought we might add our legal tips to Justin Levy’s five tips list. That way we get to 10, and, well, anything short of a top 10 countdown just seems like it’s missing something.
All Eyes on Us – the Latest FTC Case Involves Contact Lenses plus an Important Lesson About Incentivized Reviews
Up until now, most of the FTC’s law enforcement involving the Contact Lens Rule (Rule) has focused on sellers of cosmetic or decorative lenses. Indeed, safety concerns about decorative lenses were newsworthy in 2010, when Lady Gaga appeared in her Bad Romance video with “cartoonishly large eyes.” But the agency just announced a case against a more prominent player in the industry, Vision Path, which markets Hubble contact lenses. The case also provides an important reminder about reviews.
Texas' Latest Lawsuit Against Google Challenges Endorsements Made by Radio Personalities
The State of Texas sued Google in state court for allegedly deceptive advertisements by radio personalities (radio DJs) praising the Google smartphone, the Pixel 4. The lawsuit claims that Google violated the state’s Deceptive Trade Practices Act when it used radio personalities to read scripted testimonials before they had access to the phone. According to the state’s petition, the media company had requested, and allegedly was initially refused, Pixel 4 phones from Google to validate the endorsement claims.
FTC Reviews Fashion Nova – Review Suppression Leads to Double Trouble
In April 2020, when we were all focused on finding masks and hand sanitizer, the Federal Trade Commission (FTC) announced a $9.3 million settlement with Fashion Nova. The agency alleged that the company violated the Mail Order Rule by failing to notify consumers of shipping delays, failing to notify consumers of their cancellation rights and providing gift cards instead of refunds for unshipped orders. Two exceedingly long years later and Fashion Nova is again in the hot seat, but for a very different issue – its alleged suppression of negative customer reviews on its website. It will pay an additional $4.2 million to settle the latest allegations.
Nothing to See Here … Move Along. The Seventh Public Commission Meeting on Identity Theft
Yesterday’s sole topic for the monthly public Federal Trade Commission (FTC) meeting was identity theft. That’s it. No policy statements, no votes, no repeal of carefully crafted bipartisan policy documents, just identity theft, statistics about identity theft and the FTC’s resources about identity theft. It is unclear why we needed a meeting to discuss this since the FTC has had an excellent website dedicated to identity theft for many years and has been providing education and guidance about the issue for decades. These are great resources, and it is helpful to remind the public about them. It is difficult, however, to see the fierce sense of urgency for this meeting.
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