In This Issue:

Linda Goldstein, Marc Roth and Lauren Aronson Invited to Present at BAA's 35th Annual Marketing Law Conference

The Brand Activation Association's 35th Annual Marketing Law Conference will address a wide array of hot button issues impacting the advertising and marketing industry, including social media, sweepstakes and contests, mobile marketing, financial services marketing, gambling and online gaming and cause marketing, among many other topics.

Linda Goldstein, Chair of Manatt’s Advertising, Marketing & Media Division, will explore cutting-edge legal issues involving multiplatform sweepstakes and contests as well as offer practical guidance for structuring innovative promotional campaigns in her presentation titled “Master Class: Sweepstakes, Contests, Games and Other Brand Activation Tools.”

Manatt partner Marc Roth has been invited to participate in a panel discussion titled “Mobile Marketing Influx: Emerging Methods & Emerging Technologies” that will offer strategies for executing novel mobile promotions while avoiding potential legal and regulatory pitfalls.  His copresenters include Ira Schlussel (SVP and General Counsel of ePrize) and Genie Barton (VP & Director, Online Behavioral Advertising Program & Mobile Marketing Initiatives, Council of Better Business Bureaus).

In addition, Manatt’s Lauren Aronson has been asked to lead an interactive roundtable discussion focused on “New Developments in Environmental Marketing” to help provide guidance as to what companies need to be thinking about when making “green” claims about their products.

The conference will be held November 18-20, 2013 at the Chicago Marriott Downtown Magnificent Mile.

PLEASE NOTE: As a friend of Manatt, Phelps & Phillips, LLP, we are pleased to extend an offer of discounted registration which amounts to a $100 reduction in overall fees. Please visit the BAA Web site to take advantage of this discount by entering the following priority code at registration: MANATT100.

Fourth Circuit "Likes" First Amendment Protection for Social Media Speech

A Facebook "like" is speech protected by the First Amendment, the Fourth U.S. Circuit Court of Appeals ruled, reversing a federal court decision that the form of social media communication was not eligible for constitutional protection.

“On the most basic level, clicking on the ‘like’ button literally causes to be published the statement that the user ‘likes’ something, which is itself a substantive statement,” the three-judge panel wrote. “In the context of a political campaign’s Facebook page, the meaning that the user approves of the candidacy whose page is being liked is unmistakable.”

The underlying facts of the case involved a sheriff’s office in Hampton, Virginia. During a 2009 election campaign, a handful of employees supported a challenger to incumbent sheriff B.J. Roberts, who had held the office for 17 years. When Roberts won reelection, he terminated six employees who supported the challenger. They sued the sheriff, alleging that he violated their First Amendment rights to free speech and free association.

Each of the employees stood behind the challenger in various ways, but two demonstrated their support on Facebook. Daniel Ray Carter, Jr., and Robert W. McCoy both visited the Facebook page of Jim Adams, the challenger. Carter “liked” the page and posted a “message of encouragement,” while McCoy authored a post to indicate his support. Roberts was made aware of the social media activities by other members of the department and made speeches during shift changes at the office in which he expressed his disapproval of the actions and added that he would be sheriff for as long as he wanted.

A federal judge dismissed the suit, finding that Carter and McCoy had engaged in insufficient speech to merit constitutional protection.

But the Fourth Circuit reversed, finding that the Facebook actions were not just constitutionally protected speech but also symbolic expression. “Liking a political candidate’s campaign page communicates the user’s approval of the candidate and supports the campaign by associating the user with it,” the court said. “In this way, it is the Internet equivalent of displaying a political sign in one’s front yard.”

The fact that the record was unclear about the content of the message posted by McCoy was irrelevant, the court said. “Certainly a posting on a campaign’s Facebook page indicating support for a candidate constitutes speech within the meaning of the First Amendment,” the panel wrote. “That the record does not reflect the exact words McCoy used to express his support for Adams’ campaign is immaterial as there is no dispute in the record that that was the message that McCoy conveyed.”

Given that Carter’s and McCoy’s speech was of a political nature, it was entitled to the highest level of protection, the panel said. However, qualified immunity protected the sheriff from monetary claims against him in his individual capacity, while Eleventh Amendment immunity protected him in his official capacity against suits seeking monetary relief.

Therefore, Carter, McCoy, and one other employee (who engaged in more traditional means of political support with a bumper sticker on his car) could pursue their claims for reinstatement, the court concluded.

To read the decision in Bland v. Roberts, click here.

Why it matters: While not an unexpected outcome, the Fourth Circuit’s decision makes clear that speech on social media is entitled to constitutional protection, even as slight as a single click to “like” a page. “That a user may use a single mouse click to produce that message that he likes the page instead of typing the same message with several individual key strokes is of no constitutional significance,” the court noted.

International Sweepstakes Scam Shut Down by FTC

The Federal Trade Commission recently targeted a "massive sweepstakes scam" involving defendants who made more than $11 million sending direct mail notices that recipients were sweepstakes winners.

Liam O. Moran and his companies – Applied Marketing Sciences, Standard Registration Corporation, and Worldwide Information Systems Incorporated – allegedly sent personalized letters to more than 3.7 million consumers worldwide (including Canada, France, Japan, the United Kingdom, and the United States) proclaiming “Over TWO MILLION DOLLARS in sweepstakes has been reserved for you!” Those over the age of 65 constituted the vast majority of victims.

The letters appeared “professional and official,” the agency said, “often including suggestive seals, approval stamps, bar codes, pin numbers, and routing numbers meant to convey that the letters are coming from, or specifically authorized by, a governmental entity or sweepstakes provider.”

By sending in a small fee—typically $20 to $30—the consumer was guaranteed to receive the prize money. The defendants amped up the mailing with a sense of urgency, the FTC added, with statements that the offer is “extremely time-sensitive” or an “immediate response is required.”

But “dense, confusing language” located on the back of the mailings directly contradicted the “bold claims of major winnings,” the agency said. Readers were told that they had not in fact won a prize but would be paying for a list of available sweepstakes. “Given the location, and content of this language, it does not adequately inform consumers that they have not won a substantial cash prize.”

“None of the consumers who have paid defendants’ fee have received the substantial cash prize promised in defendants’ mailing,” the agency claimed. “In fact, most consumers have received nothing at all from defendants, not even the report of available sweepstakes and contests defendants purportedly compile for consumers.” Consumers who paid the fee received additional letters requesting more fees. 

A California federal judge halted the defendants’ operations, ordered an asset freeze, and appointed a receiver while the agency continues to pursue a permanent end to the defendants’ efforts and a possible financial recovery.

To read the complaint in FTC v. Applied Marketing Sciences, click here.

Why it matters: Even with the agency’s focus on more technologically advanced methods of consumer deception – native advertising, for example, or the intersection of privacy rights and the Internet of Things—the FTC still keeps an eye out for traditional marketing scams. The agency noted that Moran has “been in the business” since 1995 and has already been subject to two cease and desist orders from the U.S. Postal Inspection Service. Still, he has managed to run his latest operation for seven years.

FTC Schedules Workshop on Native Advertising

Content or advertising? It's a question facing many marketers these days – and sometimes the answer is both.

This phenomenon – known as “native advertising” or “sponsored content” – results in ads that mirror the content near which they appear or blend in with the news. Expressing concern about these increasingly blurred lines and the impact on consumers, the Federal Trade Commission announced that it will host a workshop December 4 on native advertising and sponsored content.

Consumers struggle to distinguish what is, and what isn’t, an ad, the agency said, particularly as the use of native advertising continues to increase. Instead of clearly delineated advertisements – the classic rectangular banner ad, for example – the boundaries between content and advertising are disappearing.

The workshop will convene “publishing and advertising industry representatives, consumer advocates, academics, and government regulators to explore changes in how paid messages are presented to consumers and consumers’ recognition and understanding of these messages,” the FTC explained.

Topics will include how to maintain the historic wall between content and advertising and the challenges faced by publishers in keeping that wall erect; how paid messages are integrated into various formats like mobile apps and smartphones; how to effectively differentiate ads from content by using techniques such as visual cues or labels; and what research findings tell us about what consumers notice and understand about native advertising.

The FTC encouraged public comment on these issues as well as any other relevant submissions.

For information on submitting a comment or more details about the workshop, click here.

Why it matters: The FTC said the workshop will build upon prior efforts to differentiate among the types of advertising to make sure that consumers are aware. Other recent updates include revisions to the Endorsement Guides, which addressed the use of testimonials and endorsements in all media as well as the growing use of blogging, viral marketing, and advertising in other social media platforms. In May, the Dot Com Disclosures were brought up to date after 13 years, emphasizing that existing laws apply with equal force in the mobile ecosystem – for example, if a disclosure is necessary and doesn’t fit on an iPhone screen or within the 140-character limit of Twitter, then the ad should not be disseminated. And most recently, updates to the Search Engine Advertising guidance were released, where the agency encouraged greater distinctions between natural and paid search results.

FTC Deal Includes Ban on Telemarketing and Robocalls for Defendants

Permanent bans on telemarketing and robocalls were part of a settlement deal between the FTC and a group of defendants.

Treasure Your Success, Ambrosia Web Design, and related individuals agreed to settle charges that the defendants violated Section 5 of the FTC Act and the Telemarketing Sales Rule by relying upon robocalls to convince consumers to pay up-front fees for credit card interest rate reduction services.

For payments of up to $1,593, Florida-based Treasure Your Success promised consumers it could lower their credit card interest rates to just three percent. Calls typically began with a prerecorded message urging recipients to press one to speak with a representative. Consumers who did so heard a sales pitch from a telemarketer before being scammed into paying an up-front fee for a rate reduction. According to the FTC, consumers “typically failed to get any interest rate reduction or any savings at all.”

Ambrosia Web Design similarly used prerecorded calls instructing recipients to “press one” if they were interested in a reduction of credit card interest rates which telemarketers sometimes intimated were connected with a government program. The company also illegally called numbers on the National Do Not Call Registry and laundered credit card payments by processing them for other telemarketers through Ambrosia accounts and vice versa, the FTC alleged.

Pursuant to the settlement deals, the defendants are banned from delivering robocalls and telemarketing, as well as advertising, marketing, promoting, or offering for sale any debt relief product or service, or assisting others in doing so. In addition, the defendants are prohibited from using certain payment process methods like remotely created checks, which the agency said “are often used to conduct fraud.” Misrepresentations regarding any “financial products or services” or the efficacy of a product or service are also forbidden.

Monetary judgments of $8.3 million against Treasure Your Success and related individuals and more than $2 million against the Ambrosia defendants were suspended due to an inability to pay.

To read the complaints and the final orders in the case, click here.

Why it matters: In a press release about the settlements, the agency said the cases are part of its continuing “crackdown on illegal robocallers.” The complaints against Treasure Your Success and Ambrosia Web Design were filed as part of joint law enforcement effort with state officials in Arizona, Arkansas, and Florida against five different companies that the FTC said made millions of illegal prerecorded calls.

NAD Takes a Stand on Fake Lashes

The National Advertising Division has recommended that L’Oreal should stop the use of eyelash inserts in mascara advertisements that make quantified performance claims, or explicitly inform consumers in the main message that the model featured is wearing lash inserts.

The NAD requested substantiation for claims made in print and Web site advertising for two products: Maybelline “Rocket” mascara and L’Oreal Paris “Telescopic Shocking Extensions.”

Express claims for both products – such as “8X Bigger. Smoother. Even.” for Rocket and “Length + Impact Without Extensions. Now surround lashes base to tip for the high-impact look of extensions from a mascara” for Telescopic – had a reasonable basis and passed the self-regulatory body’s scrutiny.

However, NAD found that the ads conveyed implied claims that consumers who used the mascara products would get lashes like those depicted in the images, which were not achieved solely by using the promoted mascara.

The NAD ruled in a prior case that in the context of a quantified performance claim, the use of artificial enhancement to plump up a model’s lashes constituted a false demonstration. “NAD sees no reason to come to a different conclusion here where the lashes are artificially enhanced by adding volume, physically rather than digitally, through the use of lash inserts.”

Because the model in the Telescopic ad used only “two or three” individual lash inserts, the NAD determined that the lashes shown in that advertisement were not artificially enhanced and were therefore an accurate depiction of the product’s performance.

But the self-regulatory body reached a different conclusion when considering the messages implied by the Rocket ad, rejecting L’Oreal’s argument that cosmetic advertising should not be held to the same rule as other industries because consumers understand that stylized “glamour shots” are just visuals, not intended to represent typical consumer results. Or, more succinctly: Consumers do not expect to look like the model featured in the ad.

L’Oreal commissioned a consumer perception survey which the advertiser said demonstrated its contention. While finding that the study was reliable and well-controlled, the NAD said that it actually proved the opposite point, “that the image does, in fact, convey a performance benefits message and is relevant to the net impression created by the advertisement as a whole.”

Respondents agreed that the mascara would increase the volume and thickness of their lashes. Rather than recognizing that the model was wearing fake eyelashes, the respondents indicated that they would have different results than the ad because their lashes were different than those of the model. Just three out of 206 respondents referenced fake eyelashes.

“It is clear that the image of the lashes does, in fact, convey a message to consumers regarding the product’s performance capability,” the NAD wrote. “Further, although the express performance claims promote the ability of Rocket mascara to produce lashes that are ‘8X Bigger,’ the photograph is not an accurate depiction of the volume that can be achieved by applying the mascara alone without the use of lash inserts, thus it is literally false.”

A “tiny disclaimer” at the bottom of the page noted “lashes styled with inserts” but was insufficient and directly contradicted the message conveyed by the advertisement, the NAD noted.

“NAD is simply restating what the law requires – that when you make a performance claim for mascara and include a photograph depicting a woman wearing the mascara, the picture should not be enhanced by artificial means – either digitally or physically.”

Therefore, the NAD recommended that L’Oreal discontinue the use of lash inserts in mascara ads that make quantified performance claims or state clearly that the product is being used in conjunction with artificial lashes in the main part of the ad.

The decision also cautioned the company “to ensure that future images used in connection with claims for [Telescopic] ‘lengthening’ mascara do not include the use of any lash inserts which enhance the length of the model’s lashes or otherwise artificially enhance any other attribute of the eyelashes expressly promoted in the advertisement, or to clearly disclose, as part of the main claim, that the model’s lashes have been artificially enhanced.”

In its advertiser’s statement, L’Oreal said that it planned to appeal the decision to the NARB.

“The photo is a professionally styled depiction of a glamorous and fashionable model; it is not presented as a product demonstration that invites consumers to rely on their own visual perception of the model for proof of quantitative claims appearing elsewhere in the ad.” It also objected to NAD’s recommendation regarding future Telescopic ads, which L’Oreal said “mandat[ed] the content of hypothetical future advertising.”

To read the NAD’s press release about the decision, click here.

Why it matters: The self-regulatory body emphasized that the decision “is not suggesting that the beauty industry take the ‘beauty’ out of cosmetic advertising. That would be a loss for the industry, as well as for consumers who enjoy seeing glamorous advertisements featuring products that can help them look their very best. Further, the cosmetics industry (like the food and other industries) is free to use expert stylists and excellent lighting and models blessed with unusually long or voluminous eyelashes to create a ‘beauty shot.’ ” With the case on appeal to the NARB, L’Oreal will get a second shot.

Comcast and CenturyLink Battle Over Claims of Internet Speed

Comcast Cable Communications can support overall speed claims made for its Xfinity Triple Play services, the National Advertising Division determined, but clarification is necessary for specific comparisons of Internet speed with a competitor.

CenturyLink challenged print and broadcast advertising claims like “Up to 4x faster than CenturyLink” and “Xfinity gives you the fastest internet.” While conceding that Comcast’s $99 Triple Play service (bundled Internet, voice, and video/TV) is faster than CenturyLink’s bundled services, CenturyLink argued that its stand-alone Internet speeds are faster than Comcast’s Triple Play.

The language of Comcast’s advertisements conveys to consumers that CenturyLink’s services are never faster, the challenger contended, “which is simply not the case.”

But just because an ad contains one comparative claim does not mean that consumers will reasonably interpret every claim within the same advertisement as similarly comparative, Comcast said. The ads at issue compare CenturyLink’s bundled service to Comcast’s bundled service – which is twice as fast.

Comcast also noted that only a small percentage of CenturyLink customers are actually eligible to subscribe to its highest speed Internet service.

The NAD found some uncertainty in Comcast’s ads. While the “faster” claims were not explicitly tied to stand-alone or bundled service, the fact that such a small percentage of CenturyLink subscribers were even eligible for the company’s one faster service meant Comcast could support its claims. The mere existence of a higher speed service from CenturyLink did not render Comcast’s claims false.

However, the self-regulatory body did advise that Comcast clarify some of the claims in its ads. “Although the advertiser provided a reasonable basis for its overall speed claims, NAD recommended that the advertiser more narrowly tailor the challenged advertisements offering the $99 Triple Play package and in which Comcast generally claims to have the fastest overall speeds, to further delineate or separate its claims regarding its offering and its broader overall speed claim.”

A greater sequence between claims or the use of a clear and conspicuous disclosure with regard to the speed claims would help, the NAD said. Comcast should also ensure that all iterations of the $99 package explain that it is an introductory offer.

To read the NAD’s press release about the decision, click here.

Why it matters: The highly competitive market for Internet and television subscribers has kept the NAD busy.  The self-regulatory body has also recently settled disputes between Comcast and Verizon about unsupported Internet speed claims, in which it recommended that Verizon halt certain claims and Comcast stop advertising that Xfinity Internet service “is the fastest in the nation.”

Kellogg's False Ad Settlement Receives Final Approval—Again

After the 9th U.S. Circuit Court of Appeals tossed a $10.6 million deal in a false ad suit challenging claims for Kellogg’s Frosted Mini-Wheats cereal, a federal court judge has signed off on an amended $4 million agreement.

The false advertising suit was based on allegedly misleading statements like “Does your child need to pay more attention in school? … A recent clinical study showed that a whole grain and fiber-filled breakfast of Frosted Mini-Wheats helps improve children’s attentiveness by nearly 20%.”

The parties reached a deal to settle the suit for $10.6 million: $2.75 million would be distributed to class members; $5.5 million worth of cereal would be donated to charity; and $2 million would go to class counsel fees.  Kellogg also agreed to refrain from making claims about children’s cognitive development for a period of three years.

But the 9th Circuit reversed the approval and found numerous problems with the terms – including “excessive” attorney’s fees and a lack of specifics on the food donated to charity. The federal appellate panel said the cy pres portion of the deal was not “sufficiently related” to the plaintiff class and had “little or nothing to do with the purposes of the underlying lawsuit or the class of plaintiffs involved.”

Heading back to the drawing board, the parties reached a second agreement earlier this year. Under the proposed settlement, Kellogg would provide a $4 million fund which would cover distribution to class members (eligible for reimbursement of $5 per box up to $45 per class member), administration costs of almost $1 million, and attorney’s fees of $1 million. The injunctive relief remained identical.

Judge Gonzalez gave her final approval in September, with just six objections from class members.

“Here, after careful review, the proposed settlement appears fair, adequate, and free of collusion,” Judge Gonzalez wrote. “The settlement provides the class with both a substantial cash recovery as well as significant injunctive relief, which together amount to over $4 million in value achieved for the class. Moreover, the reaction of the class has been largely positive and the few objections are without merit.”

Notice costs of approximately $900,000 were reasonable, as were the counsel fees of $1 million, which constituted 25 percent of the cash fund, and Judge Gonzalez noted this was in line with California’s benchmark for counsel fees (33 percent) and the federal benchmark (25 percent). “The $1 million requested fee is essentially at cost without any multiplier and thus appears reasonable, perhaps even a discount, given the risks borne by counsel proceeding on a contingency, the duration and complexity of the case, and the substantial benefit realized for the class.”

To reflect the nature of the plaintiff’s false advertising claims, the parties amended the possible cy pres recipients to reflect the nature of the plaintiff’s false advertising claims to Consumers Union, Consumer Watchdog, and the Center for Science in the Public Interest.

To read the opinion granting final approval to the settlement in Dennis v. Kellogg, click here.

Why it matters: The second time could prove to be the charm for the parties unless an objector takes the case back up to the 9th Circuit. Despite the settlement, however, the case will live on, as Dennis has become the touchstone in false advertising consumer class action settlement agreements. The federal appellate panel’s decision, frequently cited by other courts, provided a warning to other litigants regarding the court’s standards of review in class action settlements.

Fake Online Reviews Targeted by N.Y. Attorney General

Using a fake yogurt shop as part of a sting operation, New York Attorney General Eric T. Schneiderman cracked down on deceptive Internet reviews. As a result 19 companies entered Assurances of Discontinuances, paid a total of $350,000, and agreed to halt the practice.

“What we’ve found is even worse than old-fashioned false advertising,” Schneiderman told The New York Times. “When you look at a billboard, you can tell it’s a paid advertisement – but on Yelp . . . you assume you’re reading authentic consumer opinions, making this practice even more deceiving.”

The yearlong investigation, dubbed “Operation Clean Turf,” challenged the increasing practice of “astroturfing,” defined by the AG’s office as a form of false advertising involving the “practice of preparing or disseminating a false or deceptive review that a reasonable consumer would believe to be a neutral, third-party review.”

Members of the AG’s office posed as the owner of a Brooklyn yogurt shop suffering from poor reviews and sought out reputation management companies for help. The defendants allegedly violated state statutes on fraud, deceptive practices, and false advertising law by creating the fake reviews and posting them in an attempt to raise online ratings on sites such as Google Local and Yelp. They posted reviews for a teeth-whitening service and a charter bus operator, among other companies seeking positive recommendations.

The investigation revealed that reputation management or search engine optimization (SEO) companies used a variety of techniques, such as paying freelance writers in Bangladesh and Eastern Europe $1 to $10 per review, creating hundreds of fake online profiles on consumer review sites, and providing real customers with $50 gift certificates for authoring a positive review.

Some businesses even solicited review writers on sites such as Craigslist and Freelancer.com, Schneiderman said, with one SEO company posting the following request: “We need a person that can post multiple positive reviews on major REVIEW sites. Example: GoogleMaps, Yelp . . . . Must be from different IP addresses . . . . So you must be able to have multiple IPs. The reviews will be only few sentences long. Need to have some understanding on how Yelp filters works.”

Companies paid penalties ranging from $2,500 to nearly $100,000 each for a total of $350,000 and agreed to halt the practice. Two of the companies included Swam Media Group, Inc., and Scores Media Group, LLC, which posted 175 fake reviews of dancers at the adult club Scores. eBoxed also reached an agreement with the AG after posting more than 1,500 fake reviews for its clients. The New York City-based SEO company tried to avoid detection by changing the IP address of the computer from which it posted the reviews each week.

To read the AG’s press release about the investigation, click here.

Why it matters: AG Schneiderman’s enforcement action was the largest taken to date by any state or federal agency addressing the issue of astroturfing. “This investigation into large-scale, intentional deceit across the Internet tells us that we should approach online reviews with caution,” Schneiderman said in a press release. “And companies that continue to engage in these practices should take note: Astroturfing is the 21st century’s version of false advertising, and prosecutors have many tools at their disposal to put an end to it.” Although the investigation focused on New York-based companies, it could spawn similar actions in other states. Florida has pursued two enforcement actions against a company that posted fake reviews and failed to provide sufficient disclosures, while the Federal Trade Commission brought actions against two different companies for allegedly posting fake online reviews – Legacy Learning Systems in 2011 and Reverb Communications in 2009.

Senate Data Broker Investigation Grows

Sen. Jay Rockefeller, D-W. Va., signaled his intent to continue an investigation of data brokers by sending an additional 12 letters requesting information from Internet publishers.

Last fall, Sen. Rockefeller sent letters to nine data brokers – including Acxiom and Experian – seeking information on how they compile and sell consumer data. The Chairman of the Senate Committee on Commerce, Science, and Transportation expressed concern that “consumers are largely unaware of how your company uses their sensitive information for financial gain.” 

The September 24 letters to sites About.com, babycenter.com, bankrate.com, cafemom.com, fool.com, ehealthforum.com, financeyoungmoney.com, health.com, investopedia.com, mensfitness.com, realage.com, and self.com sought similar information about the collection and use of consumer information. Sen. Rockefeller queried whether the sites collect “health, family, financial or other information” provided by consumers who respond to a questionnaire or survey, or who enter a sweepstakes.

He also asked whether that data is then linked to personally identifiable information to create a broader profile and what, if any, data is shared with third parties. “When consumers provide personal information in interactions with websites, they may not be aware that data they are sharing may be shared with data brokers,” he wrote. “Consumers may also not be aware of how that information may be used once it has been shared with data brokers.”

Sen. Rockefeller’s second round of letters was prompted by the data broker responses he received. Web sites that gather information directly from consumers “may be a source of consumer information for data brokers,” he wrote, and respondents have indicated that they “obtain information from consumer-facing website sources.”

Sen. Rockefeller did note that the data brokers have been less than forthcoming. He noted that “several major data brokers have refused to identify to the Committee specific sources of the consumer information they obtain – or the specific entities that in turn have compiled information from individual website sources,” instead, those brokers have generally replied that they derive data from online “sweepstakes” and “questionnaires.”

One thing has been made clear to the committee, however: data brokers market consumer information by categorizing consumers based on their likely behaviors and characteristics.

“Regardless of whether such characterizations are positive, negative, or erroneous, the process of determining these characterizations is not transparent to the consumer,” Sen. Rockefeller wrote. Privacy policies leave room for sites to share data and do not disclose how and to whom information is shared. 

The Direct Marketing Association spoke out against Sen. Rockefeller’s continued investigation. “The companies targeted in Chairman Rockefeller’s ‘data broker’ investigation have submitted tens of thousands of pages explaining their business models and the incredible value that responsible data use provides to consumers,” DMA’s senior vice president of government affairs Peggy Hudson said in a statement. “It is unfortunate that after receiving all of the evidence, Chairman Rockefeller has chosen to single out a couple of poorly named marketing categories as a reason to demagogue an industry.”

To read Sen. Rockefeller’s letter to self.com, click here.

Why it matters: The scrutiny currently being accorded to data brokers does not show any signs of abating. In addition to Sen. Rockefeller’s continued investigation, members of the Federal Trade Commission have publicly spoken out about big data. Commissioner Julie Brill authored an op-ed in The Washington Post that compared data broker practices to the National Security Agency’s collection of personal information. She called for greater transparency and the adoption of a “Reclaim Your Name” program by the data broker industry. Her remarks were followed by FTC Chairwoman Edith Ramirez’s warning that the agency intends to keep a close eye on companies with large quantities of data. “With big data comes big responsibility,” she noted.

First Lady: More Healthy Food Ads Directed at Kids, Please

At a summit on food marketing held at the White House, First Lady Michelle Obama made “one simple request: and that is to do even more and move even faster to market responsibly to our kids.”

Delivering the opening remarks at the inaugural White House Convening on Food Marketing to Children, Mrs. Obama – an advocate for the Let’s Move! campaign to end childhood obesity – called on members of the media and entertainment industry as well as food and beverage companies to renew their efforts to promote healthier eating.

The First Lady acknowledged the efforts of several marketers and food companies that have already worked to decrease advertising targeted to children. In addition to the 17 companies that have signed on to the Children’s Food and Beverage Advertising Initiative and have adopted standards for child-directed marketing, she referenced the Walt Disney Company’s decision to phase out ads for junk food from its theme parks, Web sites, and media channels.

“I know this wasn’t easy,” she said. “Forging consensus among fierce competitors is a challenge to say the least. But these new standards are beginning to have an impact, and I commend all of these companies for taking action.

“But of course, while limiting the marketing of unhealthy food is critical, it’s not enough,” the First Lady added. “We also need companies to actually market healthy foods to kids – foods that have real nutritional value, foods that are fortified with real fruits and vegetables, whole grains and low-fat dairy.”

Children spend almost eight hours a day in front of some kind of screen and as a result view thousands of food advertisements each year, she said. Eighty-six percent of those ads are for products loaded with sugar, fat, and salt, while the average child sees just one ad per week for a healthy product like water, fruit, or vegetables.

The First Lady asked attendees “to actually use your licensed characters to promote healthy food” and to create “demand for health foods so that kids actually start ‘pestering’ us for those foods in the grocery store.” Profits will follow, she said, citing a recent campaign by Birds Eye Vegetables, which featured characters from the popular kids’ show iCarly. The company saw an increase in sales of 50 percent over a two-month period.

“If anyone can get our kids to eat their vegetables, it’s all of you,” she said.

To read the text of Mrs. Obama’s remarks, click here.

Why it matters: The First Lady urged representatives from food and beverage companies and the media and entertainment industry to take part in what she characterized as a “cultural shift” in the country in which consumers are making healthier choices about food.  Analogizing to the rise of “going green,” Mrs. Obama suggested that “this societal challenge” could be seized “as an unprecedented business opportunity.” Some advocates for federal legislation aimed at regulation of child-directed advertising saw her comments as an indication the Administration may take a closer look at the issue. “I think this is a starting point,” Margo Wootan, director of nutrition policy at the Center for Science in the Public Interest, told the L.A. Times. “For the first lady and the White House saying they are going to focus on food marketing and make it a priority, that’s significant."

Topics:  Advertising, Comcast, Data Brokers, Fake Reviews, First Amendment, FTC, Kellogg, Native American Issues, Robocalling, Scams, Social Media, Sweepstakes, Telemarketing

Published In: Antitrust & Trade Regulation Updates, Communications & Media Updates, Constitutional Law Updates, Consumer Protection Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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