FTC’s Privacy Initiatives Pose a Threat to Online Behavioral Advertising

The Digital Media Lawyer Blog:  “The FTC has been working on Internet privacy policy since at least 1995.  It is currently engaged in a series of roundtables focusing on privacy and behavioral advertising.  However, the shape of any new regulations is very fuzzy. This may be because the data is conflicting on the public’s true interest in the issue, as well as the lack of a clear Congressional mandate.  At the FTC’s December 2009 privacy roundtable, panelists raised concerns that collection and third party use of browsing data invades private space by: (1) revealing a user’s innermost thoughts, such as a search history that reflect a user’s explorations of his sexual identity, (2) taking away a user’s control over her identity, such as by broadcasting compromising photos of a user at a Cancun Spring Break party to a potential employer, (3) revealing sensitive identity or financial information that can be misused by third parties to perpetrate fraud, or (4) intruding on a user’s seclusion by serving targeted ads during a browsing session that reveal that outsiders are listening in.”

New Guide to FTC Disclosure Requirements for Product Endorsements

Citizen Media Law Project:  “As part of our legal guide series on Risks Associated with Publication, today CMLP published a guide to Publishing Product or Service Endorsements.   The new legal guide section takes on the Federal Trade Commission‘s controversial “Guides Concerning the Use of Endorsements and Testimonials in Advertising” (the ‘Guidelines’) that took effect on December 1, 2009.   The FTC Guidelines call for bloggers, Tweeters, Facebook users, and other online publishers to disclose ‘material connections’ they have with companies whose products or services they endorse.  The Guidelines also say that bloggers may be held liable for making misleading or unsubstantiated claims about a product or service.”

Another Federal Bludgeon – More Powerful FTC Proposed

Wall St. Journal:  “In every poll and town hall meeting, Americans are demanding . . . a stronger Federal Trade Commission.  Just kidding.  But you’re about to get a more powerful FTC anyway, so look out.   Buried in the House financial reform is a provision that would muscle up the FTC and radically expand its mission. Pushed by liberal barons Henry Waxman and Barney Frank, the language would empower the FTC to impose civil penalties on companies that are first-time offenders and make it easier for the agency to concoct new rules. The law, supported by FTC Chairman Jon Liebowitz, would also invest the agency with the power to independently litigate civil penalty cases rather than going through the Department of Justice.”

Panel on the FTC’s New Endorsement and Testimonial Guides

Rebecca Tushnet’s 43(B)log:  “Today’s the effective date of the Revised Guides.  Emphasizes that the Guides themselves don’t provide for fines, though practices inconsistent with the Guides can result in FTC investigation and possible resulting fines.  Big rule: deceptiveness of endorsement/testimonial depends on the facts.   An endorsement is anything that consumers are likely to believe reflects speaker’s personal views, whether or not identical with the manufacturer’s, whether or not the speaker reads from a script.  Fictional dramatizations and statements by company spokespersons are not endorsements because they’re apparent to the audience.  Endorsements must reflect endorser’s general views and must not contain any express/implied representation that would be misleading if made by the advertiser.  Advertisers can be liable for misrepresentations and for failure to disclose material connections, as can endorsers.”

New FTC Ad Rule Creates “Target Rich Environment”

NutriSupLaw:  “David Vladeck, Director of the Federal Trade Commission Bureau of Consumer Protection said that the FTC’s new Guides Concerning the Use of Endorsements and Testimonials in Advertising creates a “target rich enviornment” in which they intend to pursue violators using all the resources at their disposal.  And when the 1000+ enforcement personnel at the FTC run out, FTC plans to call on the state attorneys’ general. When the AG’s are too busy, Vladeck says that they will do as the FDA does and publish warning letters on the internet in order to ‘bully companies into compliance.'”

Despite the backpeddling FTC has done in the media recently, Vladeck made it clear that he will enforce Section 5 of the Federal Trade Commission Act and the endorsement guides. It was as if Vladeck was drawing imaginary targets on foreheads around the room…