Archive for the ‘FTC / advertising law’ Category

“Star Trek” Law Enforcement at FTC?

Thursday, February 9th, 2012

Antitrust officials at the FTC are looking into Google. Background here and here.

Google, of course, is a big player in blogging, with its Blogger platform.

Now comes Reagan-era former FTC chairmen James C. Miller III and Daniel Oliver arguing in the Washington Examiner that against the FTC investigation, deriding it as “returning to its Star Trek law enforcement policies – that is, to boldly go where no agency has gone before.”

That’s a cheap shot. The FTC has to break new ground when monopolizers do. That would mean they are doing their job.

Miller and Oliver say that antitrust law “is for consumer welfare, not competitor welfare.” True. I totally agree with that. But Miller and Oliver go from there to a silly argument:

Has anyone heard consumers complaining about Google? We have not, probably because consumers are under no pressure to use Google. They do so because they get what they want from Google, and they get it for free.

Duh. So what? Consumers also don’t complain about predatory pricing – designed to drive out competitors. But consumers are sure hurt when competition eventually dries up.

I have no reason to think Google is engaging in any anti-competitive conduct. Time and time again, I see them on the anti-anti-competitive conduct side. But there’s no reason for the FTC not to look into it.

The best part of the op-ed is when Oliver and Miller disclose they are “advisers to Google,” and then immediately say, “but their thoughts and views are their own.”

Ha. Sure. Their arguments may still have merit regardless of their relationship to Google. But to lamely claim their opinions to be unfettered erases credibility in my book.

The real reason Google seems not to be a potential antitrust threat is that in the cyber world, today’s charging gorilla can quickly be hunched over wheezing (Microsoft, MySpace, and many others.)

But bellyaching about the FTC looking into it and doing their jobs is sorry work.

Monic Sun and Feng Zhu on the Effects of Ad Revenue and Content Commercialization

Thursday, January 5th, 2012

View of building exteriorStanford University Graduate School of Business (Photo: EEJ)

Attempting to extract advertising revenue from your blog introduces a myriad of potential legal problems. I’ve said before, I think it’s not worth the hassle for the tiny bits of coin you might eek out. Now here comes an interesting paper form Monic Sun, Assistant Professor of Marketing at the Stanford Graduate School of Business, and Feng Zhu, Assistant Professor of Strategy, Management and Organization from the University of Southern California Marshall School of Business. The working paper, posted to SSRN, is Ad Revenue and Content Commercialization: Evidence from Blogs.

Investigating a new ad-revenue-sharing program introduced to a Chinese blogging platform, Sun and Zhu conclude that the availabilty of ad revenues increased the quality of participating bloggers’ posts and caused an overall shift toward “popular” topics, including primarily the stock market, celebrities, and “salacious content.”

What does that say about the desirability or perniciousness of blog ads? Good question. And here’s another: To what extent might these results be affected by the repression of political speech in China? After all, political speech is a huge driver of blogging in the rest of the world.

Here’s the abstract:

Many scholars argue that content providers, when incentivized by ad revenue, are more likely to tailor their content to attract “eyeballs,” and as a result, popular content may be excessively supplied. We empirically test this prediction by taking advantage of the launch of an ad-revenue-sharing program initiated by a major Chinese portal site in September 2007. Participating bloggers allow the site to run ads on their blogs and receive 50% of the revenue generated by these ads. After analyzing 4.4 million blog posts, we find that, relative to nonparticipants, popular content increases by about 13 percentage points on participants’ blogs after the program takes effect. This increase can be partially attributed to topics shifting toward three domains: the stock market, salacious content, and celebrities. We also find evidence that, relative to nonparticipants, participants’ content quality increases after the program takes effect.

How Can You Teach Free Speech’s Limits if You Don’t Understand Them Yourself?

Wednesday, December 28th, 2011
miniaturized version of portion of front page of website

From the front page of American Justice Associates' website

As a postscript to yesterday’s post about court-ordered free-speech lessons for Occupy L.A. protesters, let’s look at one more heaping spoonful of irony.

Jeffrey P. Hermes at CMLP blog pointed out that American Justice Associates, who has been tapped to run the course, bills itself on its website as “a supportive arm of the Los Angeles City Attorney’s Office since 1995.” Yet, as Hermes notes, the company is a private firm and not a branch of the government.

That’s pretty funny, because you imagine that one of the first things they will say in this free-speech class is that the First Amendment’s guarantee of free expression is not absolute. And that’s true. Of course, one of the hallowed examples of speech that’s not entitled to protection is false advertising. There’s federal and California state law that prohibits false statements in advertising. And saying your organization is an “arm” of the city attorney’s office, when it’s really a private contractor, sure seems false to me.

Patent diagram of a crutchBut I’m going to try to be thorough and fair before I accuse anyone of making false and misleading statements.

I’ll begin with the obvious: The word “arm,” when used in conjunction with an organization, is ordinarily understood to mean a branch of the organization.

Now, American Justice Associates could argue that you’ve got to look at the fact that they use the word “arm” in context with the word “supportive.” They claim to be “a supportive arm.” But then we have to ask, what the heck is a “supportive arm” anyway?

If “supportive arm” doesn’t mean a helpful branch of the government, then it’s oxymoronic. Arms don’t support. Okay, well, I guess arms are supportive for someone who is down on their hands and knees. So is that what American Justice Associates is saying about justice in Los Angeles? That it’s crawling on the floor? That’s pretty rough.

So, I have to conclude that “arm,” as American Justice Associates uses it, is false and misleading.

I think what they probably should revise it to is “crutch”: American Justice Associates – The Crutch of the LA City Attorney’s Office. That’s what they seem to mean when they put themselves out there as the solution to a justice system too overburdened to try defendants and put the guilty ones in jail.

FTC Wins Settlement from FB

Tuesday, December 6th, 2011

wobbly Facebook logoFacebook has entered into a big settlement with the Federal Trade Commission – America’s top consumer cops – regarding privacy of user data. As part of the deal, FB will warn users about privacy changes and must submit to biennial privacy audits for the next two decades.

I love the FTC. They do good stuff. Of course, it’s good to note also that FB has done a lot of backpedaling on privacy issues because of user backlash – a kind of semi-organized consumer pressure that is possible these days because of social networking technologies like, um, Facebook!

Here’s what Zuckerberg said in his blog post about the settlement (which he rosily calls a “settlement”):

… I’m the first to admit that we’ve made a bunch of mistakes [including] a small number of high profile mistakes, like Beacon four years ago and poor execution as we transitioned our privacy model two years ago …

[W]e’re making a clear and formal long-term commitment to do the things we’ve always tried to do and planned to keep doing — giving you tools to control who can see your information and then making sure only those people you intend can see it. In the last 18 months alone, we’ve announced more than 20 new tools and resources designed to give you more control over your Facebook experience.

I actually think Facebook is getting quite a bit better – not just about privacy, but about being a better service altogether. I predicted the demise of Facebook earlier this year. If Facebook keeps changing fast enough, it might hold on. But I just don’t think it will. Fundamentally, the company seems out of touch with what people want. Like the Facebook ticker feature that was new this fall – that’s just creepy.

Here are the words from the parties:

Here are some write-ups:

I’m on the New Lawyer2Lawyer Podcast

Monday, October 31st, 2011

Lawyer2Lawyer logoI’m on the new episode of the Lawyer2Lawyer podcast talking about the Virginia State Bar’s disciplinary case against attorney Horace Hunter because of his blogging. It’s a case that pits legal ethics rules against the First Amendment.

The host of the program is Bob Ambrogi, and other guests are Kevin O’Keefe, CEO of LexBlog, and Peter Vieth, legal editor of Virginia Lawyers Weekly.

I really enjoyed doing the show, and it’s a great case to talk about.

Lawyers Smacked for Knee Slaps

Tuesday, August 9th, 2011

NexGen knees marketed by Cyberdyne Systems, umm, I mean 'Zimmer medical products company of Northern Indiana.' (Photo: Zimmer)

Alex Nussbaum and David Voreacos of Bloomberg report that Zimmer, the world’s largest maker of knee and hip implants, is suing lawyers who sue them. And their offensive against plaintiffs’ lawyers is headed into the blogosphere.

After lawyer/blogger Brett Emison wrote a blog post about failures of Zimmer’s NexGen knees, he got a letter from Zimmer attorneys demanding he stop what they termed “alarmist fear mongering.”

Emison called Zimmer’s conduct “a blatant attempt to try to frighten plaintiffs’ lawyers from pursuing these cases.”

I myself don’t need to get a warning letter to be frightened. Look at that promotional picture of Zimmer’s technologically advanced knees. Don’t tell me those won’t be useful to the machines after Skynet takes over. Everyone knows that the only thing humanity has going for it in a war against robots is that robots are generally slow and lumbering. If you stick knees like those in terminator-series cyborgs, they’ll be able to jog effortlessly all over the post-apocalyptic landscape picking off humans at will.

Well, with Zimmer raking in $1.8 billion in annual artificial-knee revenues, its not surprising they would be somewhat, shall we say, inflexible when it comes to assaults on their safety record. And Zimmer’s legal gambit appears to be working. Bloomberg reports that Zimmer has settled four of its law-firm lawsuits on terms requiring retractions.

Law professor and dean of Roger Williams Law School David Logan says in the story that recent U.S. Supreme Court decisions have given lawyers the freedom to say anything not “provably false or misleading.” That, in turn, has “opened up a new front in the product-liability wars” with corporate defendants suing lawyers as they go searching for clients.

With “blawgs” already constituting a leading means of lawyer rainmaking, we may see Zimmer-type offensives become more and more important in shaping the legal context of law-blogging. Of course, on “Blog Law Blog,” I can only blog so much about the law of law blogging. To provide in-depth commentary in this arena, I will soon be launching my new blog, Law Blog Blog Law Law Blog.

Or, on the other hand, maybe I’ll skip that.

Eric Goldman’s Notes from Law & Econ of Search and Ads

Friday, June 24th, 2011

Eric Goldman has posted his notes from the Google-sponsored conference “The Law and Economics of Search Engines and Online Advertising” at the George Mason University School of Law. It includes a lot of insight into Google search, how it works, and why Google make some of the choices it does in formulating search results.

Don’t Get Too Excited About Your Company’s Social Media Debut Yet!

Friday, May 20th, 2011

Headshot of Michelle Sherman and social media logo

Michelle Sherman of law firm Sheppard Mullin blogs about social media law

Michelle Sherman, a lawyer with L.A.’s Sheppard Mullin, has a new blog post Sherman’s post asks the question:

Is Your Company’s Social Media Launch Ahead Of Its Compliance Program?

What a buzz kill, huh? This is why people don’t love lawyers. You’re all excited about your company’s social media debut, and then all of a sudden you remember, OH YEAH, I HAVE TO THINK ABOUT THE LAW!. And then you have to pay by the hour, and all of a sudden you are really grumpy.

But, of course, Michelle is right. Any business going into social media as a way to win customers and make money ought to learn something about the law before they do. There are a lot expensive mistakes you can make.

And why, you may ask, why has the law thrown up a bunch of hurdles that make for those potentially expensive mistakes? It’s because there are a lot of people who want to use social media to rip off customers. So, basically, the unscrupulous folks out there ruin it for everybody. Next time you’re grumpy about legal bills, pause for a moment to send some bad juju the way of the sleazes out there who are the reason so many laws exist.

Anyway, Michelle’s post contains a nice rundown of the FTC v. Twitter lawsuit (settlement recently finalized) and the FTC v. Google Buzz settlement.

Acai Berries!!! The FTC Closes in on Jesse Willms

Thursday, May 19th, 2011

The life-is-good smile of Jesse Willms (Photo:

The FTC has filed a lawsuit [pdf] targeting a Canadian online marketer, 24-year-old Jesse Willms, who has apparently made a fortune selling that acai berry weight-loss stuff. And as you no doubt know, acai berries have been a staple blog ad. Willms himself is a big believer in blogging for dollars. You can read his thoughts in his post Blogging To Grow Your Business.

But to the extent you’re reading that, also consider reading what the FTC is writing:

The Federal Trade Commission has brought a law enforcement action against an online operation that allegedly raked in more than $450 million from consumers in the United States, Canada, the United Kingdom, Australia, and New Zealand by luring them into “free” or “risk-free” offers, and then charging them for products and services they did not want or agree to purchase. As part of its ongoing efforts to stamp out online fraud, the FTC seeks to stop the operation’s illegal practices and make the defendants repay injured consumers.

The Toronto Star reports that Willms said in a statement, “We believe our business practices are compliant with the law and are working to resolve this disagreement with the appropriate government agencies.” Big surprise there.

The Star also notes that Jesse Willms says on his blog, “I consider myself to be a hard worker, I understand there are no shortcuts in life, and I believe that fundamentally every successful business must focus on product value and customer satisfaction.”

Another whopping surprise.

The lawsuit looks to be making use of the recently enacted Restore Online Shoppers’ Confidence Act [pdf], which requires online retailers to “clearly and conspicuously” disclose all material terms in a proposed transaction before obtaining the consumer’s billing information. The act also requires the retailer to give consumers an easy way to put a stop recurring charges on a debit or credit card.

UK’s Advertising Standards Authority Eyeing Websites for Enforcement

Tuesday, February 8th, 2011

Union Jack - flag of the United KingdomI love listening to radio stations abroad via the internet. I quite commonly listen to Capital 95.8 FM out of London. In addition to helping me get ready for the royal wedding (Lily Allen on June 11h, of course!) I’ve also learned something relevant to blog law.

A public service announcement from the United Kingdom’s Advertising Standards Authority was letting listeners know that beginning March 1, 2011, the ASA’s jurisdiction in cyberspace is expanding. The ASA’s mandate will now include advertiser’s own websites, instead of just the per-se paid-for-placement adverts that try to draw consumers to the advertiser’s websites.

So if you’re blogging to market your own products or services in the UK, then straighten up and fly right. If you’ve got a commercially oriented blog and you have UK connections, read up on what the ASA is up to.

Image: EEJ (Konomarked flag photos on Flickr.)

Rebecca Tushnet on Regulation of Commercial Speech and User-Generated Ads

Wednesday, November 10th, 2010

Professor Rebecca Tushnet of the Georgetown University Law Center has posted to SSRN Attention Must Be Paid: Commercial Speech, User-Generated Ads, and the Challenge of Regulation on SSRN. The paper is being published by the Buffalo Law Review. Cite: 58 Buffalo Law Review 721 (2010)

Here is the abstract:

This Article examines the dynamics that drive advertisers to push into new formats, and the law’s ability to regulate them. I argue that it will remain possible, and constitutional, to identify advertising and subject it to prohibitions on false and misleading claims, even for ads in unconventional formats. The article also addresses the ways in which regulators were caught off-guard by these new formats. In particular, Section 230 of the Communications Decency Act, which frees online service providers and users from liability for content generated by other users, poses some unanticipated barriers to regulating advertising. Yet despite section 230’s provisions, regulators retain flexibility in many situations. The Article considers the Federal Trade Commission’s (“FTC”) recent revisions of its guides on testimonials and endorsements. The guidelines apply to bloggers and others who receive substantial benefits from advertisers in return for their endorsements. After exploring the First Amendment challenges posed by such situations, including questions that go to the heart of the justification for regulating commercial speech, I contend that neither section 230 nor sound policy require the FTC to ignore these new forms of communicating with potential purchasers.

Robinson on FTC v. Reverb Settlement

Wednesday, September 1st, 2010

Eric P. Robinson on Blog Law Online discusses a settlement reached by Reverb Communications and the FTC over endorsement activity. The case isn’t about blogging itself, but it does fall under the FTC’s guidelines for “new media,” and that does include blogs.

Mall-Haul Vloggers and the Law

Friday, August 20th, 2010

Blair Fowler shows off snake-skin 4-and-a-1/2-inch gladiator heels from Shoes of Prey on her juicystar07 vlog.

The July issue of Marie Claire magazine (p. 75 in print, online here) has an interesting story by Abigail Pesta about shopaholic vloggers and the emerging YouTube genre of mall-haul videos.

Let’s explore the legal implications, shall we?

Marie Claire says that the fashion and beauty industry is sending “loads of free stuff” to the vloggers in the hopes of getting good reviews. There’s nothing illegal about getting free stuff. (Whew!) But if vloggers do go online singing the praises of their buddy swag-slingers, they’ll need to be upfront about it and disclose the relationship to viewers. (It’s all part of the new Federal Trade Commission guidelines.)

To see how this is playing out on YouTube, I watched a video in which juicystar07 (née Blair Fowler) plugged custom-designed footwear from Shoes of Prey. According to Marie Claire, Shoes of Prey got 200,000 visitors to their site after Fowler discussed the brand on her vlog. While I can’t be sure of which video Marie Claire was talking about, the video I watched seemed to introduce Shoes of Prey to Fowler’s viewers. The video was, in my view, entirely on the up and up. Fowler says in the video that Shoes of Prey sent her the shoes and that she has been talking with the firm’s “head honcho.” Fowler does not explicitly say that she received the shoes for free, but the implication is clear, I think.

(Also noteworthy: The video evidences solid production and post-production work. It’s a good example of the level of polish that can be achieved with citizen-produced media.)

FTC Factsheet on Blogger Endorsement Guidelines

Monday, August 9th, 2010

FTC headquarters in Washington, D.C. (Photo: Jonathan B. Morgan, FTC)

The Federal Trade Commission has issued a factsheet on last year’s revisions to its guidelines on testimonials and endorsements in advertising. Those revisions made it clear the FTC includes social media within its jurisdiction. Bloggers who engage in compensated buzz marketing and are not upfront about it are running afoul of federal unfair-competition law, under the new guidelines.

Attorney Eric P. Robinson has analysis at CMLP.

I’ve gotta say, I think this FTC factsheet is really well written. Kudos to the FTC. It’s really refreshing to see legal guidance doled out with phrases like,

It’s all pretty common sense: Don’t mislead readers into thinking that you are giving an unbiased testimonial if you’re on the take.

If you want an example of someone who doesn’t get it, check out the story of the New York Times food critic who reviewed the food at his own wedding. Ah, the taste of integrity!

In the factsheet, FTC helpfully boils the guidelines down to three key points:

The revised Guides – issued after public comment and consumer research – reflect three basic truth-in-advertising principles:
  • Endorsements must be truthful and not misleading;
  • If the advertiser doesn’t have proof that the endorser’s experience represents what consumers will achieve by using the product, the ad must clearly and conspicuously disclose the generally expected results in the depicted circumstances; and
  • If there’s a connection between the endorser and the marketer of the product that would affect how people evaluate the endorsement, it should be disclosed.

Then, the FTC answers your questions. Here are a few of the Q&A pairs:

What are the essential things I need to know about using endorsements in advertising?
The most important principle is that an endorsement has to represent the accurate experience and opinion of the endorser:
  • You can’t talk about your experience with a product if you haven’t tried it.
  • If you were paid to try a product and you thought it was terrible, you can’t say it’s terrific.
  • You can’t make claims about a product that would require proof you don’t have. For example, you can’t say a product will cure a particular disease if there isn’t scientific evidence to prove that’s true.
Do the Guides hold online reviewers to a higher standard than reviewers for paper-and-ink publications?
No. The Guides apply across the board. The issue is – and always has been – whether the audience understands the reviewer’s relationship to the company whose products are being reviewed. If the audience gets the relationship, a disclosure isn’t needed. …
I’ve heard that every time I mention a product on my blog, I have to say whether I got it for free or paid for it myself. Is that true?
No. If you mention a product you paid for yourself, the Guides aren’t an issue. Nor is it an issue if you get the product for free because a store is giving out free samples to all its customers. The Guides cover only endorsements that are made on behalf of a sponsoring advertiser. …
What if all I get from the company is a $1-off coupon, or if the product is only worth a few dollars? Do I still have to disclose?
Here’s another way to think of it: While getting one item that’s not very valuable for free may not affect the credibility of what you say, sometimes continually getting free stuff from an advertiser or multiple advertisers is enough to suggest an expectation of future benefits from positive reviews. If you have a relationship with a marketer who’s sending you freebies in the hope you’ll write a positive review, it’s best if your readers know you got the product for free.
I have a website that reviews local restaurants. It’s clear when a restaurant pays for an ad on my website, but do I have to disclose which restaurants give me free meals?
If you get free meals, it’s best to let your readers know so they can factor that in when they read your reviews. Some readers might conclude that if a restaurant gave you a free meal because it knew you were going to write a review, you might have gotten special food or service.
Is there special language I have to use to make the disclosure?
No. The point is to give readers the information. Your disclosure could be as simple as “Company X gave me this product to try . …”
Do I have to hire a lawyer to help me write a disclosure?
No. What matters is effective communication, not legalese. A disclosure like “Company X sent me [name of product] to try, and I think it’s great” gives your readers the information they need. …
Would a single disclosure on my home page that “many of the products I discuss on this site are provided to me free by their manufacturer” be enough?
A single disclosure doesn’t really do it because people visiting your site might read individual reviews or watch individual videos without seeing the disclosure on your home page.
What about a platform like Twitter? How can I make a disclosure when my message is limited to 140 characters?
The FTC isn’t mandating the specific wording of disclosures. However, the same general principle – that people have the information they need to evaluate sponsored statements – applies across the board, regardless of the advertising medium. A hashtag like “#paid ad” uses only 8 characters. Shorter hashtags – like “#paid” and “#ad” – also might be effective.
Are you monitoring bloggers?
We’re not monitoring bloggers and we have no plans to. If concerns about possible violations of the FTC Act come to our attention, we’ll evaluate them case by case. If law enforcement becomes necessary, our focus will be advertisers, not endorsers – just as it’s always been.

Wedding Gifts and the FTC’s Differential Treatment of Bloggers and Mainstream Media

Monday, July 5th, 2010

View from the rooftop of the Empire HotelEric P. Robinson at Blog Law Online has analyzed a flap over Josh Ozersky, a food reviewer who wrote about the food at his own wedding, created by prominent NYC chefs, but did not disclose that the menu items had been given to him as wedding gifts.

Reviewing the food at your own wedding? I thought that’s what in-laws were for.

But there’s a blog-law issue here. Robinson notes:

As an online columnist for a major, “mainstream” media organization, Ozersky’s problem is primarily an ethical one between him and his employer, and between him and his readers, who may discount his praise of certain chefs or restaurants, based on his relationships with them.

But if Ozersky was a blogger, he may have faced penalties under the FTC’s endorsement guidelines …

As I’ve noted before, the FTC rules explicitly state that “”bloggers may be subject to different disclosure requirements than reviewers in the traditional media.”

A post that Robinson did last year about the FTC’s different treatment for bloggers than for the mainstream media is here.

Ozersky’s review of the food at his own wedding is here. The New York Times reports on the Ozersky affair here.

Note: Ozersky’s wedding reception was held on the roof of the Empire Hotel. Nice. Above is a picture I took from the Empire Hotel rooftop a couple years ago when I stayed there. Funny story: When I checked in, they gave me a key, and I went to the room, opened the door, and there was a guy already in the room – apparently another Eric Johnson. That’s why I like using my middle initial!

FTC Attorney Discusses Rules for Blogging About Products

Friday, May 28th, 2010

David M. Newman, an attorney with the Federal Trade Commission, discussed how FTC rules apply to blogs and bloggers in a just-published piece for New York’s Practising Law Institute.

With regard to blogs, he said:

The core principles of Commission consumer protection jurisprudence are flexible enough to adapt to new media and new marketing techniques. As Gertrude Stein might have said, “deception is a deception is a deception.” Nevertheless, the Commission has had to address how existing deception and unfairness standards apply to marketing on the Internet and through social media.

Blog Endorsements. The Commission recently announced that bloggers who review products or services in their blogs will have to disclose if they receive free products or compensation in connection with the review. This is not designed to stifle blogs, but it is designed to ensure that bloggers who have turned their websites into commercial ventures, where they promote an advertiser’s product in exchange for free products, payments or other perks, reveal that relationship to readers. It is a new application of the well established principles in the Commission’s Endorsement Guides, which have always required that endorsers disclose any compensation or connection with the product they are endorsing.

From: 1811 PLI/Corp 679, PLI Order No. 22603, May-June 2010 (citations removed).

The revised guidelines to which Mr. Newman refers are here (pdf format). The FTC’s press release about the revisions to the guides is here.