An Analysis of the Requirement to Verify Consumer Requests and Parental Consents

On October 10, 2019, California Attorney General Xavier Becerra announced a long-awaited notice of proposed rulemaking and draft regulations for the California Consumer Privacy Act (CCPA), California’s new consumer privacy law, which we have analyzed here and here.

In parts one and two of our multi-part series regarding the draft CCPA regulations, we focused on businesses’ notice obligations and handling consumer requests.

In this third part of our series, we focus on proposed regulations regarding “verifiable” consumer requests, including the standards for verifying different types of requests received from consumers. As discussed below, the proposed CCPA regulations provide detailed guidance that will have important ramifications for businesses that possess or process consumer information.

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On November 5, 2019, the Federal Trade Commission released a, first-of-its kind, guidance targeting online influencers. The new guide titled “Disclosures 101 for Social Media Influencers” informs influencers when and how they must disclose sponsorships with brands to their followers.  This is part of the FTC’s increasing focus on making product endorsements more transparent.

When the FTC revised the Testimonial and Endorsement Guides (“Endorsement Guides”) in late 2009, the blogosphere panicked, assuming that the government would target the so-called “mommy bloggers.”  However, these fears were assuaged when the FTC’s enforcement activities were focused on brands, advertising industries, and the networks that linked brands to influencers.  Beginning in 2017, the FTC’s focus has increasingly shifted to the influencers.

In 2017, the FTC had sent more than 90 educational letters to social media influencers and brands and later, the FTC sent 21 warning letters to social media influencers regarding their Instagram posts.  In addition, the FTC settled its first ever case against two social media influencers with an ownership stake in CSGO Lotto, an online gambling service.  According to the FTC’s Complaint, the influencers promoted CSGO Lotto without disclosing that they owned the company.

In its November 2019 guidance, however, the focus is squarely on influencers. The FTC released a guidance document, “Disclosure 101 for Social Media Influencers,” designed to give influencers pointers for complying with the Testimonial and Endorsement Guides.  In this document, the FTC states “As an influencer, it’s your responsibility to make these disclosures, to be familiar with the Endorsement Guides, and to comply with laws against deceptive ads. Don’t rely on others to do it for you.” (emphasis in original).

Not surprisingly, the guidance document reiterates prior guidance and reminds influencers to disclose material connections, ensure that their reviews reflect actual experiences with the product, and avoid making false claims that the advertiser cannot substantiate.  However, the guidance document also underscores the need for the FTC to revise the FTC Guides and update them to the social media ecosystem of 2019.  Ten years later, the FTC’s guidance can generate significant confusion about what to disclose and how.

For example, the Disclosure 101 Guidance states that an influencer is required to disclose his or her relationship with the brand “if [the] brand gives [the influencer] free or discounted products or other perks” and the influencer “mention one of its products, even if [the influencer wasn’t] asked to mention that product.” (emphasis in original).  The ambiguity of this language can create conflicting expectations between the brand and the influencer.  What if the brand has periodically given the influencer free or discounted products but there is no formal relationship? Is the influencer still obligated to disclose the relationship when showing or discussing a product that the influencer purchased but was not gifted?  What if a brand takes an influencer on an all-expense paid trip to a tropical location to celebrate a product launch?  Is the influencer obligated to disclose that he or she went on that trip when discussing the brand’s products in the future, even when the influencer purchased those products? The FTC’s guidance suggests that some type of disclosure may be needed and the brand should clearly communicate its expectations to the influencer.

Furthermore, the FTC’s guidance suggests that there should be a one-size-fits-all approach for disclosures.  We can all agree that the FTC believes that gifting a free product to an influencer in the hopes that the influencer mentions the product to his or her followers constitutes a material connection requiring disclosure.  However, how should that relationship be disclosed? In an example in the Disclosure 101 document, shown below, the FTC suggests that the influencer could state “Thanks to Acme for the free product! #AcmePartner #ad” in combination with a post featuring gifted products.

© FTC

Many brands currently suggest different types of disclosure language to reflect the range of relationships they have with their influencers.  It is not clear that #AcmePartner and #ad are interchangeable ways to describe the relationship between the brand and the influencer, as the FTC suggests.  Within the social media ecosystem, there are different levels of ties between influencers and brands.  A brand “Partnership,” for example, suggests a close relationship between an influencer and a brand that extends beyond receipt of free product.  And an influencer’s audience may understand the disclosure “ad” to describe content that the brand pays for and has pre-approval rights.  While sending “PR” to influencers without any obligation that the influencer talk about or show the product to their followers indisputably creates a material connection that requires disclosure if the influencer talks about the freebies, the brand does not ordinarily have a right of prior approval for such content. Thus, while the FTC’s guidance recommends #ad as an appropriate disclosure, the brand may prefer the influencer to disclose by stating “Thank you for the free product” to distinguish it from content that the brand directly pays for and controls.

Going forward, brands should consider referring influencers to the FTC’s Disclosure 101 Guide in its agreements as a reminder that influencers are potentially liable for failure to comply with the Endorsement Guides.  However, it is equally important for brands to provide clear guidance to influencers to ensure that the brand and the influencer are aligned on disclosure obligations and how best to disclose.

 

Chris Cole, co-chair of Crowell & Moring’s Advertising & Media Group and chair of the American Bar Association’s Section of Antitrust Committee on Advertising Disputes and Litigation, recently joined the ABA antitrust section’s podcast, “Our Curious Amalgam,” to provide insights into how advertising disputes and investigations are triggered.

In this episode, “Who is Watching the Ads? The Biggest Mistakes Advertisers Make that Trigger Investigations,hosts John Roberti and Ricardo Woolery asked Chris to cover some of the key questions regarding this area of law, including some common mistakes advertisers make – and how to avoid them. The interview covered a range of topics including:

  • How advertising disputes relate to antitrust law
  • Today’s multi-faceted advertising campaigns, which include online video, social media, and influencers
  • Types of advertising risks
  • Enforcement activity at the State AG and federal levels, including the FTC and NAD

Click here to listen to the episode.

About the Podcast

Our Curious Amalgam explores topics in antitrust, competition, consumer protection, data protection, and privacy law around the world with leading experts in those areas. It is an amalgam because it is a group of diverse topics all in one place. It is curious because it gets the experts and asks them in-depth questions.

 

On October 10, 2019, California Attorney General Xavier Becerra announced a long-awaited notice of proposed rulemaking and draft regulations for the California Consumer Privacy Act (CCPA), California’s new consumer privacy law, which we have analyzed here and here.

In part one of our multi-part series regarding the draft CCPA regulations, we focused on businesses’ notice obligations. In this second part of our series, we focus on businesses’ obligations to respond to consumer requests. As discussed below, the draft CCPA regulations provide detailed guidance that will have important ramifications for businesses that control or process information about California consumers, particularly in light of CCPA’s broad definition of personal information.

Before these proposed CCPA regulations are approved and implemented, interested parties have until December 6, 2019, to submit written comments regarding the draft regulations and to participate in town hall meetings hosted by the Attorney General’s Office in Sacramento, San Francisco, Los Angeles, and Fresno. Any businesses impacted by the CCPA should carefully consider whether submitting comments or requested amendments are appropriate.

Representatives of the Attorney General’s office have indicated that July 1, 2020 is the anticipated date for CCPA enforcement to begin, but reiterated that CCPA takes effect on January 1, 2020, which means that class action exposure and other provisions apply as of that date.

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How can you tell if an online review is truly genuine? Who’s regulating? Who’s watching?

Lauren Aronson, vice chair of the Consumer Protection Committee at the ABA Antitrust section, addresses these questions in Episode #7 of the ABA antitrust section’s podcast, “Our Curious Amalgam,” speaking on the topic, “Too Much Influence? Consumer Protection for online reviews and influencers.” It is well known that consumers increasingly refer to online reviews before making purchases.  They consult retailer platforms and often search for reviews from their favorite social media influencers. In this podcast, Lauren joins hosts John Roberti and Elyse Dorsey to discuss the regulation of online reviews and influencers and issues brands should consider when working with influencers or soliciting consumer reviews.

Click here to listen to the podcast.

About the Podcast

Our Curious Amalgam explores topics in antitrust, competition, consumer protection, data protection, and privacy law around the world with leading experts in those areas. It is an amalgam because it is a group of diverse topics all in one place. It is curious because it gets the experts and asks them in-depth questions.

On October 10, 2019, California Attorney General Xavier Becerra announced a long-awaited notice of proposed rulemaking and draft regulations for the California Consumer Privacy Act (CCPA), California’s new consumer privacy law, which we have analyzed here and here.

In this first part of our multi-part series on the CCPA regulations, we will focus on how the draft regulations affect businesses’ notice obligations under the CCPA. As discussed below, the new regulations provide detailed guidance that will have important ramifications for businesses, in particular those that sell or otherwise monetize consumer information.

Click here to continue reading the full version of this article.

The ICO Bares its (Sharp) Teeth: What You Need to Know About GDPR One Year On

We have now seen the ICO bare its teeth with huge proposed fines for GDPR breaches.

In this session, we will be hosting a panel discussion on practical issues around GDPR one year (and a bit) on, what organisations need to be doing to avoid missteps, and the likely consequences if they get it wrong. Retailers & consumer products companies will benefit from learning the latest on GDPR enforcement. This session is taking place on Thursday the 17th of October at Chartered Accountants’ Hall in London. To RSVP or send any questions about this event, please contact Anna Prescott.

Takeaways:

  • Latest developments of GDPR & Brexit effect
  • ICO enforcement and fines – key emerging themes
  • Practical steps organisations can take to avoid problems
  • Operational risks and priorities
  • Lessons learned from prior mistakes
  • Follow on claims and class actions

Our Panel:

Crowell & Moring is pleased to announce that partner Kris Meade will be speaking at the Retail Industry Leaders Association (RILA) 2019 Retail Law Conference.

Kris Meade will be joined by Louise Brock, General Counsel of Bridgestone Americas for a session titled, “Pay Equity Laws and More: Bridging the Gap.” The importance of pay equity is making headlines worldwide, from corporate boardrooms and the U.S. Women’s Soccer team to state legislatures and international law-making bodies. Program attendees will learn best practices surrounding pay equity, discuss the ever-increasing demand for transparency in this arena, and recognize the importance of pay equity as a market differentiator as their companies compete for talent on a global stage.

The 2019 Retail Law Conference is being held at the JW Marriott in Nashville, Tennessee, October 16th through October 18th.

The Miscellaneous Tariff Bill (MTB) process is administered by the U.S. International Trade Commission (ITC). Under the MTB process, U.S. importers may petition for duty-free or reduced-duty treatment of certain imported products by submitting an MTB petition to the ITC. The ITC has indicated that it will open its portal and begin accepting MTB petitions at 8:45am on October 11, 2019.

In general, for an MTB petition to be successful, there must not be any domestic industry opposition and any reduction of duties resulting from the change to the duty rate for the proposed product breakout may not exceed $500,000 per annum. Importers can request an elimination or reduction of duties, depending on the annual duty savings anticipated and the $500,000 threshold.

Additionally, merchandise classification is one of the more complicated, but critically important, aspects of submitting a petition for a duty suspension or reduction under the MTB petition process. The ITC’s website indicates that almost 700 (or 28 percent) of the petitions listed in the Commission’s final 2017 report were not recommended to Congress for inclusion in an MTB.  Many of these due to issues regarding classification and the ability of U.S. Customs and Border Protection (CBP) to administer the claimed provision.

Any successful MTB petition would then need to pass Congress and be signed into law by the president before becoming effective. If signed into law, then the MTB petitions may become effective January 1, 2021, with an expiration date of December 31, 2024.

The ITC’s new petition procedures appear more stringent than those applied during the 2016 round of MTB petitions. They indicate that the petitions should include (to the extent available): (1) CBP rulings issued on the product; and (2) a copy of other CBP documentation indicating where the article is classified in the HTS. Additionally, the petitions should include:

  1. an estimate of both total value and dutiable value for the product for the next five calendar years;
  2. an estimate of the share of total imports represented by the petitioner’s imports of the subject article;
  3. the names of any domestic producers of the article, if available;
  4. a certification of completeness and correctness; and
  5. an acknowledgement of the petitioner’s awareness that the information submitted is subject to ITC audit and verification.

The ITC has also indicated that there will be a clearer way to renew current MTBs. However, that information is not yet available.

On Sept. 13, Ann Marie Buerkle, the outgoing acting chairman of the U.S. Consumer Product Safety Commission and a staunch Republican, sided with Democratic commissioners Robert Adler and Elliot Kaye to elect Adler as the incoming vice-chairman of the commission. In this week’s Law360 publication, Matt Cohen provided his insights into the implications of this development.

Click here to read the full article.