Regulatory

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Advertising Week has always been an important week to those in the industry, and last week I sat down with Advertising Week’s Executive Director, Matt Scheckner, to talk about this year’s Advertising Week and how it reflects the changing face of the industry.  When discussing Advertising Week’s mission – Matt named education as one…

They had the Beatles, we’ve got the Eagles. They have Big Ben, we have the Washington Monument. There are endless comparisons to make between British institutions and those born in the United States, and things are no different the advertising field. Today, we’re talking specifically about advertising industry self-regulation, which both the United States and United Kingdom got serious about in the latter half of the twentieth century. In 1962, the United Kingdom advertising industry established its Advertising Standards Authority (ASA), which adjudicates claims of non-compliance with the British Code of Advertising Practice. Nine years later, the National Advertising Review Council – now known as the Advertising Self-Regulatory Council (ASRC) – was formed in the United States.

Both are non-governmental, industry-funded bodies that self-regulate advertising. And over their similar timelines, they have both matured into respected forces with broadened mandates (both, for instance, are tackling online behavioral advertising) that enjoy near-total industry compliance with their decisions. Of course, they are not identical. While the ASA is something of a “one-stop shop,” the ASRC has established a number of subject-specific investigatory and adjudicatory departments such as the Children’s Advertising Review Unit and the Electronic Retailing Self-Regulation Program. Also, the appellate process is substantially different in the United Kingdom, where appeals cannot go forward until an Independent Reviewer agrees to accept them.

But what fun would it be if we did things the same? That would be like tuning in to Breaking Bad and getting Downton Abbey: Albuquerque.

The Way I See It

• I see advertising industry self-regulation since the 1960s as an almost unqualified success, with enormous benefits to the public (in the form of more honest advertisements), advertisers (in access to efficient dispute resolution), and the image of the advertising industry as a whole
• The success of self-regulation has undoubtedly staved off more restrictive legislation that would have been enacted in its absence, giving the industry both here and in the United Kingdom a greater chance to define its own path.
• I see a critical moment on the horizon with the emergence of concerns around mobile advertising and food marketing to children, giving the industry a chance to again prove the value of self-regulation in those areas.

The Way the Industry Sees It

I sat down with Tim Lefroy, CEO of the Advertising Association, an industry forum critical to shaping the self-regulatory scheme in the United Kingdom, to explore the topic further.

What are the biggest differences you see between the self-regulatory system in the United Kingdom and United States?

We are two nations, divided by different principles and legal systems. You have the First Amendment. In Europe we have the Human Rights Act. In the United Kingdom, where the free exchange of ideas remains highly valued, the reality is somewhere between the two. United States self-regulation ultimately has the Federal Trade Commission as its backstop, but it is administered state-by-state by the Better Business Bureau. Our Advertising Standards Authority (ASA) – the investigator and judge – is completely independent and has been for fifty years. The codes are written and updated by industry and are often enshrined in United Kingdom and European legislation. In part due to the lack of a First Amendment, the United Kingdom is more exposed to the whims of politicians where threats to bans or restrict advertising freedoms in lieu of social policy are commonplace.

Is it important for the public to understand that the advertising industry is policing itself, and if so what’s the best way to get that message out?

Let’s be honest. Whether it’s Fred Bloggs or John Q. Public, advertising is low-priority for most. Our industries and their output pass most people by, most of the time. But if we want politicians to appreciate how self-regulation in advertising works – for industry and for consumers – we must advertise that fact. The ASA has a mission that advertising in all media is legal, decent, honest, and truthful. Those four words have, over the years, been reinforced through advertising. There is a strong correlation in the United Kingdom between trust and confidence in our system and the ASA being active in promoting legal, decent, honest and truthful advertising. A little advertising for advertising can go a long way.

Continue Reading The United Kingdom’s Take on Self-Regulation

Edith Ramirez, the new chairperson of the Federal Trade Commission (FTC), said that self-regulation can be “an important tool for consumer protection that can respond more quickly and efficiently than government regulation.”  For the advertising industry, that is certainly the case.  When advertising self-regulation was created in 1971, there were plenty of skeptics.  But today, the Advertising Self-Regulatory Council (ASRC) – which establishes the policies and procedures for advertising industry self-regulation, including the National Advertising Division (NAD), Children’s Advertising Review Unit (CARU), National Advertising Review Board (NARB), and Electronic Retailing Self-Regulation Program (ERSP) – remains critical for the industry, providing guidance on new developments and technologies, and implementing real monitoring and enforcement to preserve consumer protection standards.  This fall’s NAD Annual Conference, held in conjunction with both the CARU Annual Conference and ERSP Summit, focused on legal trends and new developments, including digital and mobile trends that are impacting self-regulation.

The Way I See It

  • I see industry self-regulation playing an extremely important role for advertisers and marketers, particularly in defining standards and encouraging transparency when it comes to critical issues including behavioral advertising, app privacy, and advertising to children.
  • In the digital age, with constantly-evolving opportunities for advertisers with new technologies and new media, self-regulation – unlike the government – is able to keep up with the swift pace of change to provide guidance, set benchmarks, and monitor for issues.
  • I see an important moment for self-regulation as it continues to develop and enforce industry best practices and standards for consumer privacy and data protection, especially through the development of apps, new smartphone and tablet capabilities, and new social networks.

The Way The Industry Sees It

I sat down with C. Lee Peeler, President and CEO of the ASRC and Executive Vice President, National Advertising, Council of Better Business Bureaus (CBBB) to discuss industry self-regulation, consumer protection, and this year’s NAD Annual Conference.  Prior to joining the ASRC, he had a 33-year career at the FTC, where he served as Associate Director of the Division of Advertising Practices and Deputy Director, Bureau of Consumer Protection.

This fall’s NAD Annual Conference focused largely on self-regulation, government enforcement, and legal issues surrounding emerging social media and digital marketing.  How critical do you think this is for the industry and how is self-regulation monitoring and addressing it?

The advertising industry has established an extraordinary record of delivering real self-regulatory programs that address the needs of both ethical competitors and consumers.  The NAD’s Annual Conference is the place where the advertising industry can both look back at what it has accomplished and look forward to the challenges facing it. And, like the advertising industry itself, the challenge for self-regulation is going digital. That’s why our first panel was “3-inch screens and 140 characters.” We were so delighted to have representatives from Foursquare, Evidon, General Electric, and LG Electronics, as well as law professor Eric Goldman, Director of the Santa Clara University School of Law High Tech Law Institute. The advertising industry has a real opportunity in the digital space to demonstrate exactly the type of leadership and commitment to high standards and impartial oversight that it has in more traditional media.

In 2012, ASRC units resolved more than 175 cases.  What have been the most prevalent issues and challenges facing the industry over the past year?

One of the great things about self-regulation is the range of issues and products it deals with.  NAD in the past year has handled cases for products as diverse as telecommunications, infant nutrition, over-the-counter medications and dietary supplements, and “green” products.  ERSP’s casework has included the review of claims for work-at-home programs, affiliate marketing companies, and dietary supplements. Our Interest Based Accountability Program released its first compliance guidance to the industry and a decision on certain Facebook exchange privacy practices.  Child-directed marketing in any form is always a flash point and it receives careful and continuous scrutiny by CARU.  Priorities in child-directed advertising include anything having to do with child-directed mobile apps or COPPA compliance. For the adult-focused programs,  the implementation of basic privacy protections for mobile devices, health-related claims, and practices in new media that blur the line between advertising and editorial content are among our priorities.

Continue Reading Understanding Industry Self-Regulation: A Conversation with C. Lee Peeler

When we think about advertising law and regulation, we typically focus on Washington, D.C. and the federal regulatory agencies – for example, the FTC’s guidance, including in many industry-specific areas, the FDA’s regulation of food products and cigarettes, and the Consumer Financial Protection Bureau’s efforts of late in the financial services sector, among others.  But state Attorneys General are also very active in the enforcement of consumer protection and advertising laws and regulations, both independently within their jurisdictions and jointly through multi-state investigations and actions.  The increased presence of many advertisers in digital and social media does not have geographical borders, and state regulators can take issue with the advertising claims and methods used in these new media platforms along with more traditional ones.

State Attorneys General offices use consumer protection laws and regulations to help shape public policy and improve communications to consumers, but they are also subject to, and driven by, the partisan politics of elections and the complex webs of relationships that operate day-to-day in state governments.  This can mean national advertisers may face state regulation from a number of different angles.

The Way I See It

  • I see state Attorneys General becoming increasingly active in enforcing consumer protection laws, with increased initiatives to regulate online, mobile, and social media.
  • I see state regulators initiating investigations and taking action in response to national advertising campaigns, which have an impact on consumers within their states and which may not comply with the letter of each particular state’s unique laws and regulations.  There is a greater need than ever to carefully consider these nuances when vetting national advertising materials.
  • I see a complicated political structure in each state when it comes to interpreting regulators’ motives and actions, and a symbiosis between the actions and interests of federal regulators and their state counterparts.

The Way The Industry Sees It

I sat down with Al Shelden, Ex-Senior Assistant Attorney General of California who was in charge the state’s Consumer Law Section, to get a state regulator’s perspective on some key consumer protection issues.

As a former state regulator, how important do you think state Attorneys General are for shaping regulation of national advertisers and big brands?  How did you view national advertising campaigns during your tenure in California?

The state Attorneys General have a long history of shaping the regulation of national advertisers and big brands.  Starting in the ’80s and ’90s, the states were the first to challenge “health” advertising by cereal, fast food, and vitamin companies.  We also were the first to challenge the use of deceptive environmental claims in advertising.  The FTC and Congress followed.  Today the states are leading the way in actions against pharmaceutical companies for off label promotion of drugs.  The states’ actions and adoption of legislation against the deceptive use of sweepstakes and other product promotions also preceded federal action in these areas.  Likewise, actions brought by the Attorneys General involving improper telephonic solicitations and advertisers’ improper use of information they obtained from customers lead to the adoption of telephonic seller registration, do not call and privacy protection laws, first on a state level and then on the national level.  Since national advertising in California affects tens of million California residents, we always viewed it, and still do, as “local” advertising, meaning that any advertising which is used to obtain business from California residents must comply with California law.

What has been the historical relationship between the Federal Trade Commission and state Attorneys General?  What is the current relationship like?

Historically, the relationship has been one of benign neglect, conflict, and cooperation.  In the 1960’s, when those states that did not yet have consumer protection laws started to adopt them, a large portion looked to the FTC and the FTC Act.  During the ’60s and ’70s, the FTC and the Attorneys General “got along” but seldom regularly worked together on issues.  Starting in the early ’80s, things between the Attorneys General and the FTC became somewhat “testy” when, under Chairman James Miller III, the FTC adopted its “deception” and “unfairness” policies.  Many states thought these policies incorrectly defined FTC case law requirements for advertisers and argued they should only be viewed as the FTC’s own enforcement guidelines. Because some states’ laws tie the meaning and interpretation of their laws to FTC regulations and decisions, there was great concern.  One state, Missouri, changed its consumer law so that it was no longer tied to FTC law.  Things remained cold until Janet Steiger became FTC Chair in 1989.  She worked tirelessly to reach out to the Attorneys General and convince them that going forward the Attorneys General and the FTC needed to be trusting partners who should be working together toward the same goals.  Her term marked the true beginning of the Attorneys General and the FTC working cases jointly, sharing information and deferring to one another in the proper circumstances.  Improving relations continued under Robert Pitofsky’s tenure and while there have been periods of ebb and flow since then, things again were very harmonious during Jon Leibowitz’s term as Chair and David Vladek’s term as Head of the Bureau of Consumer Protection. There appears to be no reason to think that such cooperation will not continue during the term of Edith Ramirez as Chair.

Continue Reading The Role of State Consumer Protection Regulation and Enforcement in a National Advertising Landscape

2013 is already proving to be another turbulent year for Washington D.C., and many of us can’t help but keep watching with bated breath for the latest action or debate to come out of it.  And there’s no question that the regulatory and enforcement environment today is heightened across all industry sectors, even while Congress seems unable to reach agreement on any much of the legislation before it.  For marketers and advertisers, the moves made by the Obama Administration on a variety of issues will have profound implications, as we saw with the sequestration debate, privacy, tax code reform, new appointees, and more.

This year’s Association of National Advertisers Advertising Law & Public Policy Conference will focus on the major issues that are keeping marketers and advertisers up at night in light of the current realities in the federal and state governments.  For now, I share my excitement for the annual conference; after, I look forward to sharing my thoughts and key takeaways from what promise to be countless insightful and intriguing debates and discussions.

The Way I See It

  • I see many of the topics we’ve been discussing here on Madison Ave Insights under the microscope at the ANA Conference: privacy, tax reform, self-regulation, COPPA, social media, data collection and protection, FTC enforcement actions.  I see the opportunity to engage with and learn from my peers in the advertising and legal professions, discussing these cutting-edge issues of today and implications for the present and future of the industry.
  • I see an annual gathering of the industry leaders including in-house and outside counsel, government officials, agency executives, and public policy experts who are driving the dialogue on the very regulatory issues at hand coming together for a meeting of the minds – who knows what could happen.
  • This year, there are keynote addresses from Senator Mark Pryor, Chairman of the Communications, Technology and Internet Subcommittee; FTC Commissioner Julie Brill, who we interviewed here on Madison Ave Insights a few months ago; Doug Gansler, Attorney General of Maryland and current President of the National Association of Attorneys General; and Fadi Chehadé, President and CEO of ICANN.

The Way the Industry Sees It

I sat down with Dan Jaffe, Group Executive Vice President for Government Relations for the ANA, who is a conference co-chair, featured speaker, and industry and government veteran, to discuss what to expect from this year’s conference and get a preview of his thoughts on some of the main issues.

The program for this year’s conference is exceptional. What are you most looking forward to at this year’s conference?

I certainly agree that we’ve put together an outstanding program for the year.  I’m particularly looking forward to the vast array of issues that will be covered.  From ad tax issues to patent trolls, to privacy, to the expansion of Top Level Domains on the Internet, our conference will feature some of the major issues facing advertisers in 2013.  We will also be covering the treatment of women in advertising nationally and internationally, which is an important issue that I do not think has been covered very often or very well.

You will be presenting the “Report from Washington” with updates on tax reform, food advertising, advertising to children, self-regulation, online piracy, tobacco court cases, and other hot issues that are evolving in Washington as we speak.  Can you give readers a teaser regarding industry implications moving forward on some of the issues you’ll be addressing?

I will be particularly focusing on ad taxes, the efforts of various groups to undermine the ability to carry out Online Behavioral Advertising (OBA), and the effort to explosively expand the Top Level Domain system on the Internet.  Any one of these issues could severely impact the interests of the Internet and the public.  An underlying theme that I try to emphasize in my speech is that there are major fundamental societal forces driving many of the challenges facing our industry.  For example, the controversy over OBA would not exist without serious concerns by the public about hacking, misuse of locational data, and the sensitivity of financial and health information.  Food marketing would not be under fire if not for a genuine obesity epidemic cutting across many demographics.  I argue that the ad community must be proactive in responding to the threats facing us.  Companies must be doing everything possible to ensure they are in compliance with current regulations and laws.  Additionally, we have to commit ourselves to powerful self-regulation.  Self-regulation with teeth is the only sure method for holding back overly restrictive regulations on our industry.

Continue Reading ANA Advertising Law & Public Policy Conference: What Increased Legislation and Regulation Mean for Ad Land

We are in a “perfect storm” fueled by big data, technological change, media transformation (especially mobile), and global competition.  The conventional model of linear digestion of media followed by the linear transaction process is disappearing.  With digital media, consumers have multiple sites and screens open at the same time.  This year the number of Internet users in the U.S. will grow to 239 million, nearly 76% of the total population.  We’re not moving to a digital world, we’re there.

Rapid technological change in mobile devices and wireless service (4G and 4G LTE) fundamentally change how advertisers and consumers interact.  Material information is increasingly delivered to consumers not only at the most relevant touch points, but also – through geo-location – at the most relevant places and times.  Think of it as “just-in-time” marketing.

This means real opportunities, with real questions for advertisers, regulators, and lawmakers – just as the hitchhikers are arguing about in this clip.  Marketers are charged with balancing evolving technological capabilities with consumer protection, including privacy and data regulation, and with adhering to regulatory standards and disclosures.     Continue Reading Settling the Argument: Regulation and Disclosure in the Digital World