As mentioned, at the 39th Association of National Advertisers/Brand Activation Association Marketing Law Conference, “Breakthrough: Legal Strategies for Dynamic Businesses,” I gave a presentation on the key trends and legal developments sweeping the advertising and marketing ecosystem. Today I will share with you final installment of this series…
Let’s take a look at the regulatory landscape today. The Federal Trade Commission (FTC) has a long history of enforcement against false and misleading advertising.
Since the FTC’s 1983 Policy Statement on Deception, the FTC has been continually applying and refining its standard based on case law, guidelines and workshops. But with a new administration in Washington, the question is – are the FTC’s enforcement priorities changing? Since the inauguration, the FTC has been operating at less than a full complement of FTC Commissioners. With the newly announced Commissioner lineup, with Joseph Simons at the helm, we will have to see what changes will occur in our area – advertising and marketing law.
The new FTC is likely to initiate fewer investigations and enforcement actions where there is no real provable injury. So we are likely to see a return to the FTC that followed Reagan’s inauguration – a focus on classic consumer fraud. In addition, state and local authorities, as well as self-regulatory organizations, competitors and consumers, have shown that they are all key players in the advertising enforcement landscape.
Remember that many counties and municipalities implement a web of local consumer protection laws and regulations. Experiential marketing, events, sampling, and street activations all depend on a physical location – and with that, the need for compliance with local rules. And, if you add any regulated activities, like flying drones or serving alcohol (or both), specific approvals are required. Cities and municipalities can quickly shut down a non-complying event – no matter how diligent you’ve been and how much good faith you’ve shown.
Further, local authorities in many states have the power to enforce state consumer protection laws and can police deceptive advertising practices – nationwide or local. This is particularly true in California, where the consumer protection law is enforceable not only by the state attorney general, but also by city and county attorneys.
In particular, false reference pricing, advertising price comparisons, and discount offers are a hot button area. At the end of last year, JCPenney, Kohl’s, Macy’s, and Sears were sued for alleged deceptive pricing practices. This case was filed by the Los Angeles City Attorney’s office– not by the state attorney general or class action counsel.
Consumers are also willing to take direct consumer action against brands that fail to deliver on their promises. Take “The Honest Company,” Jessica Alba’s line of cosmetics and body care products. It was alleged that The Honest Company did not have support for certain claims for certain products – “all natural” and “no harsh chemicals” claims. This led to the settlement of five class actions around the country for a total of almost $9 million. And let’s not forget about the competitors. Advertisers keep each other in line through self-regulatory enforcement actions brought at the Better Business Bureau’s National Advertising Division and the Children’s Advertising Review Unit. Now that both organizations are operating with new directors and additional resources, we expect that they will continue to closely monitor and regulate advertiser claims.
The Way I See It
As we enter a new era of brand activation, we need to recognize that the previously distinct marketing disciplines of Content, Shopper, Promotion, and Experiential campaigns have all converged against a backdrop of growing consumer distrust in advertising and the industry, Big Data, and institutions overall.
So what do we do? We are all on the same ride – it’s only a question as to what choices you make along the way. It’s up to each of you to stand for and do what is right – right for your client, for your profession, and for the industry overall.