Archive for July, 2009
NY AG Takes Action Over Fake Blog Postings
Posted by Monique Bhargava in Blogging & Podcasting, Marketing Law on July 16th, 2009
The New York Attorney General recently settled with Lifestyle Lift (“Lifestyle”), a cosmetic surgery franchise, over allegations that Lifestyle posted fake customer reviews of its services on its blog and other websites. According to the NY AG, Lifestyle employees were instructed to pose as satisfied consumers and publish positive reviews of Lifestyle’s cosmetic surgery services on various websites, as well as attack posts published by actual consumers that criticized Lifestyle’s services. Lifestyle also created its own websites, which appeared to have been created by independent consumers, to serve as a forum for consumers to share their Lifestyle experiences. In fact, the majority of posts on the website were created by Lifestyle employees and those that were posted by actual consumers were modified by Lifestyle in the company’s favor. In one instance, a fake online journal was created to document a consumer’s experience from first consultation to two-months post-procedure. The journal, which was not created or maintained by one of Lifestyle’s consumers, contained pictures, details such as the names of the consumer’s children and encouraged others to take advantage of Lifestyle’s services.
The AG alleged that publishing consumer reviews without disclosing that the reviews were written and published by Lifestyle and not by consumers constituted deceptive commercial practices, false advertising, and fraudulent and illegal conduct under the New York and federal consumer protection law. Lifestyle’s settlement with the AG’s office includes $300,000.00 in penalties and an agreement that Lifestyle employees will not pose as consumers and Lifestyle will not promote its services online without clearly and conspicuously disclosing that any such comments originate from the company.
Fake blogs and/or blog postings are only appropriate in very limited circumstances, which does not include when a company is making product/service endorsements. Companies should not fictionalize any statements that could be interpreted by the general public as directly representing an actual consumer’s experience with or opinion of the company’s products or services. Companies should either find actual consumers who subscribe to the actual opinion expressed or frame the advertising to clarify that it is the opinion of the company and not any particular consumer.
These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Trademark Protection Period for “.cm” Domain Names Ends – Landrush Period Opens Putting Brands at Risk
Posted by Marc Trachtenberg in Digital Marketing, Marketing Law, Trademarks on July 15th, 2009
“.cm” is the country code top level domain assigned to Cameroon. It is significant to brand owners because Internet users searching for brand owners’ Web sites frequently mistype “.com” as “.cm.” For example, “google.cm” receives approximately 20,000 hits per day. Previously, the Cameroon government restricted access to .cm and redirected every domain name query to a parking page containing pay-per-click advertising.
However the Cameroon government decided to open up registration of .cm domain names to the public. In order to accommodate trademark owners, there was a “sunrise period” wherein trademark owners could apply to get the corresponding .cm domain names before registration is available to the general public. The sunrise ran from June 15, 2009 through yesterday July 14, 2009.
The “Landrush Period” began today, July 15, 2009 and runs through July 31, 2009. If a particular trademark was not registered as a .cm domain name during the Sunrise Period, the Landrush Period may may represent the last opportunity for trademark owners to protect their rights and prevent squatters from registering their brands as .cm domain names. This is because there is no published dispute policy at this time, and to the extent that such a policy is established, it will likely depend on trademark rights in Cameroon, which many brand owners likely do not possess, leaving them with no remedy. It should be noted that during the Landrush Period, unlike the Sunrise Period, if there is more than 1 application for the same domain an auction will be held and the domain will be sold to the highest bidder.
Accordingly, it is highly recommended that brand owners wishing to protect their brands from domain name abuse and avoid the risk of significant internet traffic intended for their websites being diverted to competitors, as well as increased marketing costs, submit an application to register their most important brands as “.cm” domain names during the Landrush Period.
These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Book Review: Tactical Transparency
Posted by Bill Carmody in Books, Digital Marketing, Social Media, Uncategorized on July 14th, 2009
Tactical Transparency: How Leaders Can Leverage Social Media to Maximize Value and Build Their Brand by Shel Holtz and John Havens is one of the best books I’ve read on the topic of Social Media, and I have recommended this book to many of my colleagues, friends and clients. If you enjoyed Search by John Battelle, then you’ll like Tactical Transparency, as it does for Social Media what Search did for SEM & SEO; it explains in a straightforward way how companies need to be thinking about their Web 2.0, blog and Social Media strategies.
This book shares a lot of what I would consider common sense principles. However, it takes only a few case studies such as the dishonesty that brought down Enron, the astroturfing (i.e. lack of disclosure) that gave both Edelman and Wal*Mart such negative PR, or a dismissal of a blogger by Target to realize that what sounds like common sense in hindsight is not always practiced in the day to day operations of a company. That is, if Edelman can make such a huge blunder (and they are considered by many to be one of the premier social media PR companies), anyone can – especially when the values at the top of an organization are not practiced throughout the company.
One of my favorite quotes from the book came from Mike Wing, vice president of strategic communications at IBM, who said:
“We think blogging is a big deal, and we don’t know yet what the real full nature of that big deal is. It goes way beyond diaries or opinion or even marketing or PR. It’s an unprecedented empowerment of individual human expression, a fulfillment of the original promise of the web in which everyone can become a publisher.”
And of course, the question on everyone’s mind is, “What are the implications for my business?” How does a company today evolve from sending out press releases to truly being part of the ongoing conversation about your company and your brand? While this book is not necessarily a “How To” book, it does provide great examples of what leading companies are doing today and the issues that most companies are currently grappling with – especially the really tough ones such as legal and resource implications. The book provides some great suggestions on how to mitigate the risk associated with social media and how to have productive conversation with your lawyers.
I believe that this book is well worth your time to read and that you’ll get some great insights from this book regardless of where you currently are in the Social Media spectrum – from novice to expert.
Bill Carmody is a PMA Board Member & Co-Chair of the PMA’s Digital Center of Excellence
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July ’09 Economic and Consumer Insights from BIGresearch
Posted by Rob Fields in Consumer Insights, Shopper Marketing/Retail on July 14th, 2009
Economy
With trying times marching on and the economic stimulus package yet to affect those on Main Street, consumer outlook for the future economy dwindles…this month, about two in five (44.6%) indicate they believe the post-recession economy will eventually rebound to previous levels, off from the nearly half (49.7%) who indicated the same back in March. One in four (26.0%) say the economy won’t rebound, up from the March reading (21.9%), while 29.4% still aren’t sure (v. 28.4%).
Not surprisingly, those focused on needs over wants increases as well…in July, three in five (59.9%) maintain they zero in on the necessities when shopping, up nearly five points from June (55.0%) and on the rise from a year ago (58.1%) as well.
More evidence that consumer spending will endure long-term restructuring: about nine in ten (88.9%) believe the current economic crisis will impact their lifestyles over the next five years…the majority (52.1%) simply plans to consider each purchase more carefully, while almost as many (48.8%) intend to be more price-conscious when buying food and clothing. Additional plans include sticking to a budget (46.7%), dining out less (45.2%), and not racking up a large amount of credit card debt (42.4%):
Retail/Holiday ’09 Outlook
While the kiddies just begun their summer break, anxious retailers have their sights set on Holiday ’09 – and rightfully so, according to consumers…more than one in three (36.2%) contend that they will spend less this holiday season compared to last, while a paltry 2.7% anticipates spending more and one in four (26.1%) plans to spend the same. (29.1% say it’s too early to know and 5.8% don’t celebrate the season).
Among those planning to spend less for Holiday ’09, how can we expect these consumers to go about doing this? The majority (69.1%) they will just slash their budgets altogether, while other plans of action include only buying gifts on sale (48.3%), doing more comparison shopping (40.4%), buying for fewer relatives (32.4%), and gifting to fewer friends (30.7%)
Personal/Financial
Relatively affordable pump prices haven’t lured consumers into a false sense of security…three in five (59.0%) contend that gas prices will continue to rise through the beginning of August, while 31.7% anticipates they will remain the same…only one in ten (9.3%) is holding out for a decline. Drivers are estimating an average price of $2.98/gal come August 1, about a dime lower than the Independence Day forecast.
More details from BIGresearch’s July Executive Briefing are here.
More on our online behavior – the release of industry self-regulatory principles
Posted by Liisa Thomas in Behavioral Advertising, Marketing Law on July 14th, 2009
As I recently reported, in an effort to give greater assistance to companies that engage in online behavioral advertising (“OBA”), many trade groups in the industry were working on creating a set of standards to help companies understand how to provide clear notice, and how to allow consumers a choice about whether their information is used for OBA purposes. Those industry self-regulatory principles have now been released, and provide different levels of notice and choice requirements depending on whether a company
- allows data to be collected on its website for OBA purposes,
- allows ads to be served based on information collected for OBA purposes,
- collects data for behavioral advertising purposes on one site, and passes it to another (unaffiliated) website in order to serve targeted ads, or
- is engaging in OBA and acting as a “Service Provider” (namely if it is a provider of Internet access, toolbars, browsers, or provides other desktop application or software).
Companies in the first group – those that allow data to be collected from users on their site, which data will be used for OBA purposes – must have on the pages where information is collected for OBA purposes a link that takes users to a disclosure about the OBA practices occurring at the site. This link would be separate from the link to the company’s privacy policy.
Companies in the second and third groups – those that allow ads to be served that are based on OBA data, or that pass data from one site to an unaffiliated site for OBA purposes – must provide prominent notice about the OBA activities on the site where the ad is served. This notice can be in a link that is included in or near the advertisement, and can be either a link to a page created by the website where the ad appears, or a link to a page created by the company that has passed data from one site to another. Additionally, for companies in the third group – those that are passing the data – they must have a prominent disclosure on their own websites that they engage in OBA activities. The notice provided by companies in both groups two and three must include information about how consumers can opt out of having their information used for OBA purposes, as well as the types of data collected, the use of such data, and whether data is transferred to any third parties for OBA purposes. The notice needs to be on a link on the both companies in group two and three’s web sites (a link separate from the privacy policy link), as well as in or near the advertisement that is delivered as a result of the OBA activities. The link near the ad that is being served is not necessary, however, if there was a link to the company’s notice on the web page where data was first collected. The principles anticipate that this might happen in instances where the website on which the ad is served has a relationship with the original website where information was collected.
Unlike companies in the first three groups, Service Providers are held to a higher standard, and must get consumers consent before they can engage in behavioral advertising. Service Providers also must have a notice – linked from their web sites – that describes their OBA activities, including information about how a consumer can opt out of having his or her information used for OBA purposes, as well as the types of data collected, the use of such data, and whether data is transferred to any third parties for OBA purposes.
Under the industry self-regulatory principles, different “accountability programs” will be developed, through which additional direction about how to provide notice and choice will presumably be given. Those programs are intended to go into effect in the beginning of next year.
These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
9th Circuit Finds Text Messages Are Calls Subject to the TCPA and Narrows Scope of Express Consent, But Leaves Door Open to Avoid TCPA
Posted by Marc Trachtenberg in Digital Marketing, Marketing Law, Mobile/Wireless on July 13th, 2009
In an important ruling for advertisers and promotional agencies that send promotional text messages or sell lists of mobile numbers, the United States Court of Appeals for the Ninth Circuit recently addressed the issue of whether text messages are subject to the Telephone Consumer Protection Act (“TCPA”) as well as the scope of consent to receive promotional material from “affiliates”. In Satterfield v. Simon & Schuster, Inc., the plaintiff signed up for Nextones.com in order to receive a free ringtone. As part of the registration process, she agreed to receive promotions from “Nextones affiliates and brands.” Simon & Schuster engaged a promotional agency to conduct a text message campaign promote its publication of a new book by Stephen King. The promotional agency obtained a list mobile numbers from Nextones and sent the numbers to an aggregator whose system transmitted the messages to the mobile phone numbers which included the phrase “PwdbyNexton.” When the plaintiff received a text from the Simon & Schuster campaign, she filed a class action lawsuit against Simon & Schuster and the promotional agency for violation of the TCPA.
The TCPA prohibits “…any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice…to any telephone number assigned to a paging service, cellular telephone service, or other radio common carrier service, or any service for which the called party is charged for the call.” An “automatic telephone dialing system” is defined as “equipment which has the capacity to (A) store or produce telephone numbers to be called using a random or sequential number generator; and (B) to dial such numbers.”
The Ninth Circuit Court of Appeals reversed the District Court, finding that (1) text messages were calls under the TCPA; and (2) that Satterfield did not consent to receiving promotional material from Simon & Schuster because it was not an affiliate or brand of Nextones – affiliates are limited to companies that are owned or controlled by the party that originally obtained consent, and an advertiser cannot become a brand of a list provider by simply claiming to be “powered by” the list provider. With regard to whether an ATDS was used, the Ninth Circuit Court of Appeals held that the critical issue was not whether the system used did store, produce, or call numbers using a random or sequential number generator, but whether the system had the capacity to store, produce, or call numbers using a random or sequential number generator, and remanded the case to the District Court for determination of that issue. This last aspect of the ruling is particularly important for senders of promotional text messages because it may open the door to avoiding the TCPA if the District Court finds that a system designed only to call numbers from a predetermined list did not have the capacity to store, produce, or call numbers using a random or sequential number generator and therefore is not an ATDS.
General Recommendations:
1. Advertisers and promotional agencies that buy lists of mobile numbers should review the list provider’s terms and conditions to ensure that subscribers have consented to receive promotional materials from sources other than the list provider.
2. Advertisers and promotional agencies who buy lists of mobile numbers should ensure that their agreement with the list provider includes an indemnity against liability for violations of the TCPA based on lack of express consent.
3. Companies that sell lists of mobile phone numbers should review their terms and conditions to ensure that they are broad enough to obtain express consent to receive messages from unrelated companies.
These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
How are we behaving ourselves online?
Posted by Liisa Thomas in Behavioral Advertising, Marketing Law on July 2nd, 2009
As those of us on the legal side of the advertising industry are well aware, behavioral advertising has been a large concern for consumers and regulators for the past few years. Not only did the Federal Trade Commission issue a set of guidelines in February about how companies should disclose to consumers that the companies engage in behavioral advertising and give consumers choice over such practices, it also recently settled with a major U.S. retailer over that retailer’s behavioral advertising practices. The question facing the industry now seems to be whether we will see more cases – whether from the FTC or others – or whether self-regulatory guidelines will be developed that limit governmental oversight and enforcement.
But really, what is this thing called behavioral advertising, and why is it so important?
It has been heralded by many to be the wave of the advertising future. With mediums like the Internet and tracking technology, it is possible to “watch” consumers’ behavior over an extended period of time and target advertising that may be of interest to the consumer. As new mediums – like smart phones – develop, behavioral advertising may become even more sophisticated. An advertiser might have the opportunity not only to know what websites a consumer visits, but what physical locations he or she goes to as well. The FTC, in its guidelines, appears to anticipate this departure of behavioral advertising from the online environment, indicating that if data collection for behavioral advertising “occurs outside of the traditional website context, companies should develop alternative methods of disclosure and consumer choice that meet the standards” of clarity, prominence, and ease of use. How can a company provide notice in a way that consumers understand, though, and that isn’t lost among all the other information an advertiser is trying to communicate about its products or services? And, how can that communication occur in a medium like a smart phone, which has limited space (and for many consumers, limited connectivity speeds)?
In an effort to give greater assistance to companies that engage in behavioral advertising, many trade groups in the industry have been working on creating a set of standards that will hopefully address concerns such as how to provide clear notice. According to a recent Wall Street Journal article, the standards may include use of icons to provide notice. In the meantime, some industry guidelines do already exist, which guidelines include requirements for members that engage in behavioral advertising activities. This issue is being looked at closely both in the United States and abroad, and is important to companies and consumers alike. As self-regulatory guides continue to develop and possible new cases continue to be issued, we will all be watching with much interest.
These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
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