Legal Alert: Brands Need to Regroup to Keep up with Flurry of Legislation Changes

This spring brought a flurry of regulatory changes and enforcement of existing laws for advertisers and marketers.  This legislative update identifies several areas on which brands should focus their attention to remain compliant and to maximize their marketing efforts.

• The Telephone Consumer Protection Act will adjust on October 16, 2013 to require express written consent for solicitation calls to phones, including mobile phones, using an automated telephone dialing system. The new laws eliminate the existing business relationship exception for such calls and require clear, conspicuous, and specific consent with a consumer’s signature. Consent runs to the particular company requesting it, and not its subsidiaries or affiliates. Record-keeping requirements have also become more stringent. Not for profit organizations face their own set of restrictions under the new statute. Because of the recent trend towards TCPA class action litigation, statutory damages, and no cap on damages, violations of this statute can result in millions of dollars of exposure for companies engaging in telemarketing. Companies who telemarket should start preparing now for the fall deadline to avoid increased legal risk.

• Vermont recently changed its law to come into line with the majority of states in the country that allow skill contests to have an entry fee. The change came in response to a Vermont resident’s complaints that the state’s entry fee prohibition precluded him from participating in a National Geographic photo contest. After debating whether to cap entry fees at $100, the legislature decided to allow entry fees in skill contests without restriction, like the majority of states. With Vermont’s new law in place, skill contest sponsors should update their contest rules to allow entries from Vermont residents, regardless of whether there is an entry fee.

• Florida adjusted its sweepstakes laws in response to cyber cafes conducting illegal gambling.  Through a series of definition and wording changes, the statute makes it a deceptive and unfair trade practice for a commercial entity to conduct a game of chance on a local or national basis except on a “limited and occasional basis” for marketing and advertising purposes “in connection with an incidental to “the sale of a product or service.”  All previous requirements of the statute still stand. Because the broad wording of the statute is troubling to many industry members, the Florida Department of Agriculture and Consumer Protection is working with industry representatives to clarify the intent of the law so as not to impact legitimate prize promotions.

• Florida announced a settlement with Lifestyle Lift because of its failure to comply with FTC Endorsement and Testimonial Guidelines by not disclosing compensation to models used in its advertising. Florida also took issue with the advertising copy that called the face-lift “revolutionary.” The settlement includes compliance measures and refunds to consumers. With the states jumping in to scrutinize word of mouth marketing practices, companies face increased risk in the social media space.