Jurisdiction

FTC Act:

Unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful

15 U.S.C. § 45

Scope

All media

All products & services

Deception Analysis

• What representation does the ad convey to reasonable consumers?

• Is the representation material to purchase or use decisions?

• Is the representation false or misleading?

Substantiation Requirement

Advertisers must possess a reasonable basis supporting all claims, express and implied, that reasonable consumers take from the ad.

Health and safety claims must be supported by competent and reliable scientific evidence.

FTC v. Airborne

• Early ads: explicit claims, e.g., “finally, a cure for the common cold”

The Airborne consent order requires defendants to pay up to $30 million for consumer redress.

• Later ads: implied claims to protect against or help fight germs

FTC v. Chinery

FTC alleged that ads failed to disclose:• Consumers engaged in rigorous

diet and exercise (some received a personal trainer)

• Consumers were paid between $1,000 and $20,000 for their endorsements

Defendants agreed to pay between $8 to

$12.8 million

Word-of-Mouth Marketing

• do not misrepresent the source of a message

• disclose material connections

Word-of-Mouth Marketing

Unfairness

An act or practice that causes, or is likely to cause, substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition

15 U.S.C. § 45(n)

Unfairness Examples

unfair collection of unauthorized fees

unfair collection and disclosure of consumer information using spyware

unfair installation of adware on computers without consumer knowledge, authorization

Behavioral Advertising Use of consumer’s activities online to provide

targeted ads

Preferred Approach = Self-Regulation

Proposed Principles of Self-Regulation:

• Transparency and consumer control

• Reasonable security and limited data retention

• Affirmative express consent from the consumer for materially different use of collected data

• Affirmative express consent for use of sensitive data

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Questions?

Thank you!