FTC2014 marked a year of significant change in the marketing communications industry.  To help understand these changes, Davis & Gilbert produced our 2014 Lessons Learned/2015 Practical Advice, where our lawyers highlight major developments in the marketing communications industry, and offer tips and best practices for marketers and their agencies in 2015.

Over the next few weeks, I will share with you a few pieces I authored on the topics of: FTC – Regulatory and State, Emerging Hardware – Robots, Drones and Connected Devices, and the NAD. To view the full 2014 Lessons Learned/2015 Practical Advice document, click here.

 FTC – Regulatory and State:

The regulatory landscape in 2014 was marked by a continued focus on the importance of clear, conspicuous and transparent disclosures, whether relating to sweepstakes and promotions, endorsements and testimonials, advertising claims or privacy practices, with a particular emphasis on making appropriate disclosures in social media and across mobile applications and platforms.

The Federal Trade Commission (FTC) has been closely monitoring the use of endorsements and testimonials in advertising.  Home Security Company ADT settled FTC claims that the company misrepresented paid endorsements from safety and technology experts as independent reviews.

As part of the settlement, ADT agreed to clearly and prominently disclose any paid endorser’s “material connections” to the brand in its future advertising.  As part of “Operation Steer Clear” – a nationwide crackdown on deceptive automobile advertising – the FTC entered into settlement agreements with ten automobile dealerships.  According to the FTC’s complaints, the dealerships made a variety of misrepresentations in their advertisements with respect to material terms such as automobile purchase prices, monthly financing requirements, up-front lease payments and credit-related terms.  The settlement agreements reiterated the requirement that all automobile advertisements must include the federally mandated lease and financing advertising disclosures.

The FTC has also been keeping a close eye on digital and mobile media companies’ disclosure and privacy practices.  For instance, the FTC recently settled a case with a mobile application development company over allegations that the company misled consumers by providing a privacy policy that did not accurately reflect its app’s use of personal data and geolocation data.  Similarly, the Attorney General of Maryland entered into a settlement agreement with Snapchat, Inc., over allegations that Snapchat misled consumers by representing that messages sent through its app were temporary when Snapchat users actually could save and take screenshots of the messages they received, which had not been disclosed to consumers.

 The Way I See It:

  • As online and digital technologies continue to expand and diversify, agencies, brands and publishers will need to be cognizant of the FTC’s guidance regarding disclosures and the agency’s recent enforcement history.
  • Marketers and their agencies should ensure that social media influencers and contest entrants disclose material connections when endorsing company products.  Moreover, companies should make certain that clear and prominent disclosures accompany all paid endorsements.
  • Companies also should ensure that their data security promises are backed up by strong data security practices – especially across mobile platforms – and that applications have privacy policies in place that clearly describe how they collect, use and share consumer data.