Tag Archive | "FTC Defense Lawyer"

GDRP Impact on Digital Marketing

GDRP Impact on Digital Marketing

The General Data Protection Regulation is a regulation that is intended to strengthen data protection for individuals within European Union countries.  At its core, the GDPR is intended to provide individuals more control over and additional safeguards with respect to their personal data, including the right to be forgotten and the right to know when their data has been hacked.

The GDPR is also intended to unify privacy and data requirements across the European Union.  However, countries will be permitted to regulate specific types of data, like health data.

In short, companies that conduct business in the European Union may need to reassess their privacy protocols as they may not pass must under the new GDPR regulations which set a higher standard for consent.

It is widely anticipated that the GDRP will have a significant impact on the digital marketing industry, particularly with respect to how personal data is collected, used and stored for commercial purposes, consent management and what companies must do to bring themselves into compliance.

The new law affects every company that uses personal data from European Union citizens.  It provides data localization, data encryption and anti-SPAM.

If you send email in the European Union, regardless of where you are based, you will have to comply with the GDPR.  Affirmative, opt-in consent for commercial communications will be required.  The new law specifies the nature of such consent, including what constitutes “affirmative” consent (e.g., checking a box, etc.).

Consumers must be informed about the brand that is collecting the consent and information pertaining to how data will be used, including the maintenance of data in a CRM database.

Importantly, GDPR also applies to existing data.  So, if presently existing email lists do not meet GDPR standards, they will be off limits when the new law takes effect.

In-line with U.S. Federal Trade Commission best practice guidance, data should never be retained for longer than needed and should only be used for intended purposes – those which a consumer would reasonably and legitimately expect.  Avoid colleting unnecessary data.

Additionally, the new law provides for the appointment of a data protection officer to oversee compliance,  including responding to consumer inquiries.

The new privacy and data protection rules come into force on May 25, 2018.  GDPR will impact any organization – including those in the US and Canada – that does business in the European Union.

Penalties for non-compliance will be steep.  Up to €20 million or 4% of total annual revenue, whichever is greater.  Compliance is also critical from the standpoint of securing a competitive advantage.

This article should be of interest to social media influencers and marketers.  Consult with an experienced FTC defense lawyer for assisting designing and implementing preventative compliance controls, or if you are being threatened with civil litigation or a regulatory investigation.

Follow the author on Twitter.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.

ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.

Please contact advertising law attorney Richard B. Newman if you are interested in discussing the design and implementation of GDRP compliance protocols, or if you are the subject of a regulatory investigation or enforcement action.

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U.S. Federal Trade Commission Investigating the Equifax Data Breach

Last month, reports surfaced that Equifax, Inc., one of the nation’s leading credit reporting services, was the subject of a historic cyberattack that compromised the security of financial and other personal information of more than 143 million U.S. consumers.  The data breach involved names, social security numbers, birth dates, addresses, driver’s license numbers and credit card numbers.

Not surprisingly, given the breadth of the breach and criticism that Equifax dragged its feet on alerting consumers, the Federal Trade Commission has now opened an investigation into the unprecedented data hack.

“The FTC typically does not comment on ongoing investigations.  However, in light of the intense public interest and the potential impact of this matter, I can confirm that FTC staff is investigating the Equifax data breach,” said Peter Kaplan, the FTC’s acting director of public affairs, in a statement.

Reports indicate that the breach was due to an open-source software vulnerability that the company used to create Java web applications.  The FTC will no doubt be investigating when cybersecurity professionals discovered the vulnerability, when Equifax was put on alert, whether it took proper measures to install security updates and what representations were made to consumers.

For years, the FTC has investigated and taken action against numerous companies for violation of the FTC Act due to inadequate privacy and data security protocols.  For example, in the recent case of FTC v. Wyndham Worldwide Corp., 799 F. 3d 236 (3rd Cir. 2015) hackers accessed the personal and financial information of hundreds of thousands of consumers, resulting in millions of dollars in fraudulent credit card charges.

Consequently, the FTC filed suit against Wyndham, alleging that it made deceptive claims regarding its cybersecurity practices and that its failure to protect the privacy of customer information amounted to an unfair practice.  In support

The FTC cited several facts to supports its allegations against Wyndham, including that it: stored payment card information in clear readable text; allowed the use of easily guessed passwords for remote access; did not use firewalls; did not properly restrict third-party vendor access; failed to conduct security investigations when vulnerabilities were raised; failed to follow industry standard incident response procedures; and failed to monitor its network for malware and harmful software.

Most likely, the FTC will be assessing the foregoing factors during the Equifax investigation, as well as those unique to the company.

The agency’s top Democrat, Terrell McSweeny, stated that she is “very concerned” about the size of the breach, as well as Equifax’s response.

Given the FTC’s public acknowledgement of the investigation, it is probably safe to assume that Equifax will be subject to a permanent injunction and restitutionary remedies designed to compensate consumers that are harmed by the massive data breach.

The Consumer Financial Protection Bureau has also revealed that it has commenced an investigation into the Equifax incident.

Some believe that the scope of the data breach could prompt Congress to act on data privacy legislation, including a data breach notification law and minimum data security standards for credit reporting agencies.

Please contact the author if you are interested in discussing the design and implementation of preventative data security and privacy protocols, or if you are the subject of a local, state or federal regulatory investigation or enforcement action.

 

This article should be of interest to social media influencers and marketers.  Consult with an experienced FTC compliance lawyer for assisting designing and implementing preventative compliance controls, or if you are being threatened with civil litigation or a regulatory investigation.

Follow the author on Twitter.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.

 

ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.

 

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FTC Defense Attorney Alert: “Influencer” Actions Make News

FTC Defense Attorney Alert:  “Influencer” Actions Make News

The Federal Trade Commission has alerted influencers and those in control of them to three developments, including the FTC’s first law enforcement action against individual online influencers for their role in misleading advertising practices.

According to the FTC, the respondents deceptively endorsed the online gambling site CSGO Lotto without disclosing that they owned the company.

Counter-Strike: Global Offensive (also known as CS: GO) is an online, multiplayer, first-person shooter game.  “Skins” are game collectibles that can be bought, sold, or traded for real money. Skins have another use:  They can be used as virtual currency on certain gambling sites, including CSGOLotto.com.  On that site, players could challenge others to a one-on-one coin flip, wagering their pooled skins. In 2015, one of the respondents posted a video touting CSGO Lotto:

“We found this new site called CSGO Lotto, so I’ll link it down in the description if you guys want to check it out.  But we were betting on it today and I won a pot of like $69 or something like that so it was a pretty small pot but it was like the coolest feeling ever.  And I ended up like following them on Twitter and stuff and they hit me up.  And they’re like talking to me about potentially doing like a skins sponsorship like they’ll give me skins to be able to bet on the site and stuff.  And I’ve been like considering doing it.”

The FTC asserts that the respondent followed up with additional videos on his YouTube channel showing him gambling on the CSGO Lotto site.   In addition, the FTC alleges that he tweeted things like “Made $13k in about 5 minutes on CSGO betting.  Absolutely insane” and posted on Instagram “Unreal!!   Won two back to back CSGOLotto games today on stream – $13,000 in total winnings.”

According to the FTC, one of the respondents sell promoted CSGO Lotto in a similar way, posting videos that were viewed more than five million times.  In addition, he allegedly tweeted a screen shot of himself winning a betting pool worth over $2,100 with the caption “Not a bad way to start the day!”  According to another tweet, “I lied . . . I didn’t turn $200 into $4,000 on @CSGOLotto. . . I turned it into $6,000!!!!”  The FTC also calls attention to: “Bruh. i’ve won like $8,000 worth of CS:GO Skins today on @CSGOLotto. I cannot even believe it!”

The FTC alleges that the respondents failed to clearly disclose that they owned the company – a material connection required under FTC law.

The complaint also challenges how the respondents ran their own influencer program for CSGO Lotto.  Allegedly, they paid other gamers between $2,500 and $55,000 in cash or skins “to post in their social media circles about their experiences in using” the gambling site.  However, the contract made clear that those influencers could not make “statements, claims or representations . . . that would impair the name, reputation and goodwill” of CSGO Lotto.  And, according to the Commission, post they did on YouTube, Twitch, Twitter and Facebook – in many instances, touting winnings worth thousands of dollars.

According to the FTC, the respondents falsely claimed that their videos and social media posts – and the videos and posts of the influencers they hired – reflected the independent opinions of impartial users.  The complaint also charges that the respondents failed to disclose the material connection they had to the company – and the connection their paid influencers had.

The proposed settlement requires the respondents to make those disclosures clearly and conspicuously in the future.

WARNING LETTERS

The next interesting development regarding influencers relates to more than 90 educational letters the FTC sent to influencers and brands in April 2017, reminding them that, if influencers are endorsing a brand and have a “material connection” to the marketer, that relationship must be clearly disclosed, unless the connection is already clear from the context of the endorsement.

A number of influencers who received the April 2017 letter just received a follow-up warning letter, citing specific social media posts the FTC staff is concerned might not be in compliance with the FTC’s Endorsement Guides.

However, the letters are different this time.  The latest round asks the recipients to let the FTC  know if they have material connections to the brands in the identified social media posts.  If they do, the FTC has requested that the recipients spell out the steps they will be taking to make sure they clearly disclose their material connections to brands and businesses.

UPDATED GUIDANCE FOR INFLUENCERS AND MARKETERS

The FTC has also released an updated version of The FTC’s Endorsement Guides: What People are Asking, a staff publication that answers questions about the use of endorsements and disclosures, including in social media.

The principles remain the same, but the updated Guides answer a handful of new questions relevant to influencers and marketers on topics such as tags in pictures, disclosures in Snapchat and Instagram, the use of hashtags, and disclosure tools built into some platforms.

Given the recent regulatory crackdown on influencer campaigns,

This article should be of interest to social media influencers and marketers.  Consult with an experienced FTC defense lawyer for assisting designing and implementing preventative compliance controls, or if you are being threatened with civil litigation or a regulatory investigation.

Follow the author on Twitter.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.

 

ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.

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What Telemarketer’s Need to Know About the “SCAMS Act”

Shortly after being named the acting chair of the Federal Trade Commission, Maureen Ohlhausen stated that a consumer protection priority during her tenure will be stopping fraudulent schemes targeting vulnerable individuals, including the elderly.

The Commission is making good on that promise.

In May 2017, the FTC announced a broad-sweeping nationwide and international crackdown on tech-support scams that tricked consumers into thinking that their computers were infected, then charged them hundreds of dollars for removal of non-existent viruses and malware.  According to reports, “Operation Tech Trap” included complaints, settlements, indictments and guilty pleas.  Additional cases continue to be filed by the Florida Attorney General.

Most of the defendants in these enforcement actions are alleged to have engaged in telemarketing activities in conjunction with the support services.  In one particular action the telemarketing aspect ultimately served as a vehicle for a referral to the Department of Justice and the imposition of federal criminal fraud charges.

According to the indictments, the conspiracy and scheme to defraud operated from 2013 through at least 2016.  During this period, the defendants allegedly victimized over 40,000 people and defrauded these individuals out of more than $25M.  The victims were located in all fifty of the United States, the District of Columbia, Puerto Rico, several U.S. territories, all ten Canadian provinces, the United Kingdom and several other foreign countries.

The defendants have been charged with conspiracy to commit wire fraud.

The Senior Citizens Against Marketing Scams Act (the “SCAMS Act”) provides that individuals that are convicted of various, specifically enumerated offenses (or conspiring to commit such offenses) in connection with the conduct of telemarketing, such as devising a scheme to defraud or to obtain money by means of false or fraudulent pretenses, are subject to “enhanced penalties.”

The SCAMS Act further provides, in pertinent part, that such individuals:

  • Shall be imprisoned for a term of up to 5 years in addition to any term of imprisonment imposed under the underlying statutory provision; and
  • In the case of an offense under any of the specifically enumerated statutory provisions, that (i) victimized ten or more persons over the age of 55; or (ii) targeted persons over the age of 55, shall be imprisoned for a term of up to 10 years in addition to any term of imprisonment imposed under the underlying statutory provision.

Telemarketers and online lead generators that facilitate inbound and/or outbound telephone calls on behalf of third-parties are well-advised to fully consider the potential consequences of the actions of its marketing partners and to preemptively vet such activities.  Willful blindness is not a defense and referrals to the DoJ, especially when there are telemarketing component to advertising campaigns, are not uncommon.

Contact an FTC defense lawyer if you would like to discuss the Commission’s recent investigations and enforcement actions, or if you are the subject of a local, state attorney general or federal regulatory matter.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements. 

ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35th Floor, New York, NY 10005 | (212) 756-8777.

 

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Congress Sets Sights on Recurring Revenue Marketing Model

 

“The Unsubscribe Act” was recently introduced in Congress.  It is designed to protect consumers from automatic monthly charges via marketing campaigns that fail to clearly and conspicuously disclose material terms prior to the entry of billing information.

Trial offers, automatic subscription renewals and continuity plans are prevalent in the dietary supplement industry.

Many marketers fail to adhere to FTC advertising law compliance requirements by, without limitation, properly disclosing all material terms, such as the length of any trial period, refund/cancellation policies, automatic renewal until cancellation, the amount of the charges, how the charges will appear, the timing/manner of charges, and shipping/handling charges.

The bill looks to the Restore Online Shopper’s Confidence Act as a foundation and contemplates the regulation of additional types of negative option programs.

The Unsubscribe Act proposed requirements for merchants to provide clear and conspicuous disclosures, up-front, and obtain affirmative consent from consumers before prior to the collection of any payment for additional products following a one-time purchase by a consumer or the conclusions of a free-trial period.

The Act would also require merchants to provide notification of all charges or account changes within thirty days before the end of the initial fixed period, and subsequently on a quarterly basis.

As proposed, available cancellation mechanisms must be provided in the same manner as the method consumers used to enroll.

Recurring revenue marketing models will continue to draw significant attention from regulatory agencies.  Interestingly, the bill provides for enforcement authority by the Federal Trade Commission and state Attorneys General.

This bill was assigned to a congressional committee on February 15, 2017, which will consider it before possibly sending it on to the House or Senate as a whole.

If you are the subject of a state Attorney General or FTC investigation or enforcement action, contact an FTC Defense Lawyer to ensure that your matter is handled properly and proactively, from the start.

The text of the bill can be seen, here.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at       Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements. 

HINCH NEWMAN LLP. ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result.

 

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