Last week, leading lawyers, regulators and marketers attended the 38th Annual Brand Activation Association (BAA) Marketing Law Conference in Chicago. At BAA, I gave a presentation on the interplay of marketing and advertising law to activate brands. Over the next few days, I will share with you three posts from my presentation. Let’s dive into the first one…
Every day, in-house attorneys make risk decisions when advising clients. It would probably be helpful for them to know what is on the regulators’ minds. But how do they find out?
Think about the mindset of the regulators that may be scrutinizing your industry. Remember that Attorney Generals are political animals who will track publicity; that the “reasonable person” standard invoked by the FTC may not be what is considered reasonable at the state level; and that consumer complaints can drive AG actions. Remember too that settlement of an AG action will likely involve substantial sums, made up of attorneys’ fees, consumer restitution and/or penalties.
And, don’t forget about other regulatory bodies that may be scrutinizing your industry, including federal agencies. Some local governments take pride in challenging national advertising and marketing. And, of course, there is self-regulation, such as that practiced at or by the NAD. Depending on the media, the targeted demographic, and the type of products implicated, additional rules may apply. The FTC, in particular, is focused on the future of our industry. Regulators know that we are in the middle of a technological revolution, a transformed advertising and marketing ecosphere where brands are collecting and using ever more data to target and profile consumers. We see marketing and advertising flowing on interconnected devices, and the rise of influencers. For this reason, alongside its traditional areas of ongoing focus – such as health and safety, weight loss, and “all natural” representations – the FTC has been increasingly focused on the area of endorsements and testimonials and the differentiation between paid advertising and editorial content. In addition, in today’s online world, both consumers and regulators are focused on free trials, negative option billing and auto-renewal plans. States are also watching. Julep recently settled with the Washington AG on challenges to its free trial offer and negative option marketing. The AG claimed that there was no “express informed consent”; consumers did not know how to cancel; and once consumers tried to cancel, there was insufficient staff to process the cancellations. Julep refunded $1.5 million to consumers plus paid a hefty fine.
Remember: enforcement follows guidance.