Hot Advertising Law Issues: Summer 2020 Recap and Predictions

The summer of 2020 was challenging for many reasons. Brands scrambled to launch in e-commerce, to attract and retain customers, and to differentiate their products and services. The last thing any brand needs is a competitor lawsuit, regulatory investigation, or a class action claim. Below (in no particular order) are ten hot advertising law issues that emerged from the Summer of 2020.

Health and Wellness claims: Not surprisingly, these claims are in the limelight. Claims that in the past seemed benign (e.g. support your health or immunity) are suddenly riskier. The FTC has been aggressive in taking action on these kinds of claims. The class action bar is also active. In one recent  lawsuit, a class of plaintiffs challenged Wet Ones’ claim that its hand wipes product  “kills 99.99% of germs.” If you are making any health and wellness claims, they need a thorough review in light of the pandemic, enhanced regulatory enforcement, and an active class action bar.

Influencer Marketing: The NAD issued a case report suggesting the need for enhanced disclosures in influencer videos. If you are working with influencers in video, now is the time to review your disclosure mandates with them and your agreements. In addition, the sticky issue of “CGI influencers” (i.e. computer generated influencer) is becoming more problematic legally.

Auto-renewal/Free Trials/Subscription/Loyalty programs: Earlier this month, we saw a $10 million settlement with the FTC regarding renewal of online subscription services and violations of the Restore Online Shoppers Confidence Act. The case delved into necessary disclosures and how to make the disclosures. The problems were regarding the details of the auto-renewal and the cancellation options. With the pandemic’s emphasis on e-commerce, auto-renewal, subscriptions, and loyalty programs are squarely in regulators’ line of vision. Now is the time to review your online procedures, customer acquisition details, and your disclosure practices.

#1 Recommended or Other Ranking Claims: These claims are difficult to substantiate. New case law delves into how to conduct a survey to support such a claim and avoid a false advertising claim. Similarly, if you are making claims based on third-party ratings and rankings of any kind, case law from this summer indicates caution is needed. If your marketing team is interested in using ranking claims, you should pause to evaluate your substantiation, your disclosures, and your use of the rankings.

Cause Marketing: As brands look to reach their customers’ emotionally, they are increasingly making donations to social justice, health, and climate relief causes. In so doing, they are often running afoul of the maze of commercial co-venture laws in the USA. Regulators are taking notice. If your brand is promoting any charitable connections, this type of marketing has increased risk during these difficult times. A quick check in with legal counsel can help you determine your level of risk in this area.

Sweepstakes/Contests/Giveaways: Reese Witherspoon’s efforts to give away dresses to teachers quickly turned into a legal morass for her brand. No good deed goes unpunished. The brand is now the subject of a class action lawsuit because she could not meet demand. The brand’s efforts to recast the giveaway as a sweepstakes with limited prizes may be problematic. The case highlights the importance of vetting giveaways, no matter how simple or small they may seem to be. In another case, the FTC challenged an auto marketer for deceptive “prize” mailers that allegedly falsely implied everybody had won a prize. In addition, as the year continues with travel restrictions in place, your existing sweepstakes may be offering prizes that you can no longer distribute. Before making any decisions about altering trip or other in-person prizes or extending or canceling sweepstakes, you will need to look at the legal implications.

Force Majeure/Dispute Resolution Contract Clauses: Companies often gloss over these contractual provisions, assuming boilerplate will be sufficient. The pandemic, however, has created an urgent need to review these clauses in all contracts. Your force majeure clauses are likely out of date. Your dispute resolution clauses may not sufficiently consider the possibilities of mediation and arbitration, particularly in the consumer context. With the courts overcrowded and trials delayed, you may want to consider the efficiency and confidentiality that alternate dispute resolution affords. Now is the time to dust off your forms and prepare for the future.

 Privacy: California’s statute is a moving target for enforcement. In addition, other states have laws percolating. With the pandemic pushing more commerce online, this issue is only going to become more problematic for brands who have not attended to their data maps, contracts, and consumer-facing policies.

Made in USA: This origin claim and related ones remains in high scrutiny under the Trump administration. The FTC is now pursuing the right to seek civil penalties. Made in USA and similar claims are distinguishable from US Customs marking requirements. If you use these attributes in marketing, now is the time for substantiation review.

Unlicensed Music: Social media platforms are becoming more serious about music piracy. Do you have licenses for the use of music featured in your on-line content?

If you would like a free consult with Hilfer Law on any of the above issues, please contact us.