This is Jeff Greenbaum. I'm a partner at Frankfurt, Kurnit, Klein and Selz, and I'm the managing partner of the firm. And I'm here to talk to you today about hot topics in advertising and marketing law for 2023. This presentation is really intended to not give you the basics about how to advise your clients about advertising law compliance, but instead to really try to focus on, you know, what are some of the hot issues that marketers need to be thinking about today? Um, you know, there's a lot of different ways to approach an advertising law presentation. You know, some of it is just sort of go through what the basic standards are. Some of it to talk about kind of what the old cases have been for the last year or so to try to give you some insight into what, um, is coming up in the coming year. But what's really interesting about what's going on in advertising law right now is how much things are changing. And that's really what I want to talk about today. Look, advertising law in the United States, as you may know, is governed by a patchwork of federal and state laws. There's general federal consumer protection law. There's federal law protecting essentially claims against competitor claims. There's state unfair, deceptive practices, statutes. There's local consumer protection statutes. There's lots of specific rules, both under federal and state law governing advertising practices. So you got a lot of laws out there that can that can impact the way in which you advertise to consumers. And then you've got a lot of enforcement. You got private litigation. You've got self-regulation as well. So there's a lot of different things out there that are going to impact the decisions you make when advising clients about false advertising issues. But what I really want to focus on today is what's going on at the Federal Trade Commission. The Federal Trade Commission is the main federal agency charged with protecting consumers in the United States. The FTC has jurisdiction over most but not all advertising practices in the United States. And the FTC in many ways really drives a lot of the thinking about policy, you know, related to false advertising and sort of unfair, deceptive practices. So what I want to do is really focus on sort of what's been going on at the FTC lately and how sort of the way in which the FTC has been rethinking its standards is really impacting the way we're all going to have to rethink advertising compliance in the coming years. A kind of another important piece of context that I think is worth talking about for a second is that the the FTC. The vertices approach to advertising, the way in which it looks at cases, the ways it brings cases, the kinds of cases it brings, the way that it settles cases. It has been remarkably consistent over many, many years. You know, yes, I would say that you can you can see differences between when the FTC is controlled by a Republican administration or a Democratic administration. But ultimately, the kinds of things that the FTC cared about, the ways in which it approached enforcement there was really remarkable continuity. And if you look at the differences between, say, you know, the Obama administration, the Trump administration in, you know, at the FTC, what you wouldn't see was a big shifting of gears. In fact, you know, the kinds of cases they brought were remarkably similar. The ways in which they settled them were remarkably similar. There was a real continuity. In other words, the professional staff, the FTC who was there, kept doing their jobs in the way that they were had been doing them in the past. Sure. Are there differences? Absolutely. Are there changes of priority? Absolutely. But for the most part, things were there was this sort of sense of continuity that the FTC really just had an agenda. And yes, while there may be certain areas of focus or not, you know, ultimately it was it was it was fairly consistent. So what's happening? Well, you know, we've got a new FTC. You know, the FTC is in a strange place right now. The FTC has five commissioners. Only three can be from one party. At the moment, there are only three Democrats on the commission. And we're waiting for the two Republicans to get appointed. Um, but so right now we've got we've got a commission that is. That is really looking at FTC enforcement through a different lens. And that's really going to be what the focus of this of this presentation is today. You know, the FTC has has applied standards across a wide range of topics. And what we're going to see is that the current commission is really rethinking those standards there at a moment where they're taking guidance that has been around for literally decades and saying, hey, let's focus on on, on, you know, whether we've been approaching things in the right way. The FTC has also really shied away from engaging in rulemakings and for very complicated reasons about the ways in which the FTC is required to to issue rules. And what we're seeing is, is that, you know, even though there's been decades of resistance to issuing rules, the FTC has really started to engage in, you know, a whole host of rulemakings on a wide variety of topics. Another thing that is really different that's happening right now is that the way in which the FTC is approaching enforcement has gotten much more aggressive. The FTC, let's take a step back again. A couple of years ago, the Supreme Court limited the FTC's ability to get financial relief in many cases in ways that it hadn't been able to get for many, many years before. And so the FTC kind of has been entering has entered into the last couple of years, really hamstrung in the way in which it can go after advertisers because it doesn't have this ability to get that same sort of financial relief. So really what this current commission and some prior commissioners have been doing as well, have been doing as well, is looking for ways to make up for that. In other words, if we can't seek the big penalties and get the big money damages that we thought we'd been able to get in the past, you know, how can we make up for that by coming up with new ways to to bring enforcement actions. And we're going to see some examples of the ways in which they're doing that. The other thing is, is that, you know, so the FTC primarily enforces the FTC Act, which Section five of the FTC Act prohibits unfair or deceptive acts or practices. A deceptive act or practice is a. Misrepresentation or omission. It's likely to mislead a consumer acting reasonably under the circumstances. And an unfair practice is a practice that can cause substantial consumer harm, that is not reasonably avoidable by consumers themselves, and that there aren't other benefits that would allow it to go on. Well, you know, in a in a typical false advertising case, the FTC, the FTC is entitled to get equitable relief, meaning they make you stop doing it. And, you know, historically, the FTC would also seek in certain cases, restitution. That pretty much has gone away, uh, in order to get damages in an FTC case, for the most part, what the FTC would have to do is find that you had violated an FTC rule like the mail order rule, for example, or the Children's Online privacy protection rule, or if you'd violated the consent order. So in most false advertising cases the FTC has brought over the years, there were many, many damages in the cases the FTC would enter into a consent order. You're assuming the case wasn't litigated and then the FTC would make you promise not to do it again, and they'd issue a press release and they'd move on. Uh, the the provisions of the consent orders with the FTC was looking for the kinds of relief that the FTC was looking for. You know, was, was pretty typical in terms of that on that front. What we've seen in this most recent administration is that the FTC is looking for tougher orders, orders where there are whether one where they can find damages in places where they may not have been able to get them before, let alone trying to make up for the type of restitution they were able to get in the past. That's number one. But two, looking for ways in which that advertisers can be punished to make it less about the cost of doing business, less about a slap on the wrist and more about, hey, what can we do here to make to give these settlement agreements more teeth? And so we're going to look at that, too. So the first topic that I want to talk about today, sort of substantive advertising law compliance topic is dark patterns. Now, dark patterns is something that we only started talking about in the last couple of years. So what's a dark pattern? Well, the FTC defines dark patterns, and it's similar to the way the others others have defined it as well, is a design practice that tricks or manipulates users into making choices they would not have otherwise made, and that may cause harm. So a design practice it's mostly online design practice that tricks or manipulates users into making choices they would not have otherwise made. And that may cause harm. So what are we talking about here? We're talking about dark patterns. Well, the FTC actually published a staff report called Bringing Dark Patterns to Light, which was a very detailed. Sort of explanation about what they believed were the types of practices that fit within the category of what they called our patterns. Now, dark patterns isn't some new law or regulation that was issued. Dark patterns is simply dark patterns simply represents a range of practices that the Federal Trade Commission would say would constitute either an unfair or deceptive practice under Section five, which we already talked about. We've also seen other self-regulatory organizations, as well as other governments, also, you know, making similar statements about what they see as a dark practice. So what I'm going to do first is I'm going to take you through some of the examples from the guide, the guidance that the FTC issued about what they consider to be dark practices. And we'll talk about how this fits within sort of thinking through advertising compliance. But what's significant here, right, is we're talking about now a whole new lens that we're looking at advertising practices through that we hadn't previously looked at. Um, another thing I want to say, just by way of background, the FTC tends to operate in a fairly predictable way. And what I mean by that is, is that the FTC doesn't usually bring cases out of the blue. Like they don't they, they don't, you know, out of the blue, bring a dark, dark patterns case and say, hey, you engage in dark patterns and we're going to punish you for that. The FTC isn't really and hasn't really historically been a gotcha type agency. Instead, what the FTC does is they issue guidance, they issue guides, they do workshops, they issue press releases, they do blog posts. They do things to signal the kinds of concerns that they have, making it very, very clear to advertisers in advance that, hey, this is something we're concerned about and this is something we want you to pay attention to. So when the FTC issues a report like the Dark Patterns Report, you know, it is a very, very big red flag, a big warning bell that is saying to advertisers, you better understand what this is. You better look at your advertising practices because enforcement is coming. Okay. The FTC's Dark Patterns report defines dark patterns into kind of four categories. Others can do it differently. But this gives you a good sense of what we're talking about when we're talking about dark patterns. So the first dark pattern that the FTC identified was what it called design elements that induce false beliefs. So this, on the one hand, is really just basic false advertising, which is, you know, making a false claim to consumers. That creates a misleading impression. Right? That's just false advertising. You don't need to call it. Dark patterns necessarily. But what they're saying is, is that, you know, there are false claims that specifically, you know, or along with design elements, there are false claims that cause you to behave in a certain way that you would not ordinarily have behaved. It's kind of it's beyond just simply a false statement in an ad, It's really part of a whole design element that's causing you to take action the way you wouldn't have done before. So and I think that the way that this comes up, you know, for advertisers today is stuff that maybe, you know, historically has felt like traditional advertising speak these little kinds of exaggerations, these little ways in which advertisers may encourage consumers to act. That may not be technically true, but, you know, people kind of think of it as well, just a typical advertising technique. So here's an example of a fake ad for a fitness trainer program, and it says Hurry, sale ends in 14 minutes and 58 seconds. Well, the false claim there is the sale doesn't really end in 14 minutes and 58 seconds. The sale continues on. This is simply this is simply trying to create a sense of false urgency to get people to buy now, but because they're thinking that the offer might go away. So I think that, you know, on the one hand, while it's just simply a false claim, you know, this is a little bit of a it's a good example of all of the different types of things that an advertiser might say to try to get consumers to buy something online that may not be necessarily true. Right. And so, you know this. So what you want to think about when you're thinking about the ways in which products are promoted, including online, is, you know, if you're making a claim that is going to encourage someone to buy, you know, is that claim, you know, is a claim technically accurate? Because what the FTC is saying is, is these kinds of techniques that you're using, you know, if they're not really true, you know, are, in fact, a deceptive practice that we specifically are identifying as a dark practice. Um, the another. Practice that the FTC would consider to be a design element that induces false beliefs, or when advertisers use misleading formats. The the law has been this way for many years. The FTC and the FTC's issued lots of guidance on this, which is that advertisers have the right to know that they're being advertised to. Meaning you look at a magazine, you turn the page, you see something that looks like an article, and you read about this great new product. What you don't realize is, in fact, that that's a paid advertising placement and that comes up in lots of different ways and come up in search results and come up with in any way in which you're seeing content where advertising is integrated into that content. You know, and what the FTC is saying here is, look, you know, advertising, you should not use deceptive formats to essentially trick people into doing things that they would not have ordinarily done. And so so our first category here is false claims. Often it's going to be false claims to create either false urgency or false excitement for buying a product. And second, any kind of, you know, deceptive formats that mislead you about what you're actually saying seeing. Okay. The second type of dark practice that the FTC identified were dark were design elements that hide or delay the disclosure of material information. Now, this is a very, very important topic because it really captures a lot of advertising practices that the FTC has been concerned about for a long period of time. So first, let's talk about disclosures, and I'm actually going to talk more about disclosures in this presentation. But the first thing that the FTC is identifying is a dark practice is where there are relevant terms and conditions that apply, but that they're hidden and that you're just not going to be exposed to them. That's number one. But the second here, and this is one that's getting a lot of attention recently, is kind of the concept of junk fees, right? Which is this idea that you see how a product is being advertised, the price that what it's being advertised for. And then only later on do you find out that there are additional costs that are included. Now think that advertisers have felt, you know, for a long time that, well, this is the price. But then there are other subsidiary costs like handling fees or, you know, other kinds of fees that we want to include. And as long as we disclose those fees before consumers actually buy the product during the purchase, sort of during the purchase through the purchase process, that's going to be sufficient. And what the FTC is saying, that's not the case. You know that consumers have the right to know up front, you know, what something costs And why is that? Well, part of it is, is that the FTC's view here is that, you know, consumers are going to make their initial decision to purchase based on that price. If they're going to comparison shop, they're going to comparison shop based on that initial price. But once consumer has decided to buy and then they start to exert effort to go through the purchase process and share information and agree to terms and do all this stuff, if you're several minutes in. And then finally, you learn that your $17 program actually costs another $5. Well, you know, at this point, you kind of go, well, I've already gone this far. I just want to buy it, you know, so I'm just going to buy it. Even though I really was surprised by that price when the FTC is saying, no, it's not enough to disclose it before the person actually agrees to the purchase. If there are relevant fees that consumers need to know about, that needs to be disclosed up front. I mean, the junk fees issue is something that is getting attention at the highest levels of the government. President Biden has talked about eliminating junk fees. And recently, in fact, there was just an announcement by the administration that a bunch of big companies had agreed to essentially really change their pricing practices, ticket companies, other kinds of companies, and really include when they advertised prices, all the related prices incorporated in that price itself. The third kind of dark practice that the FTC had identified were design elements that could lead to unauthorized charges. So there's a bunch of different things that can fit in here. I think that the first is, is if someone is actually buying something, you know, did they affirmatively choose to buy it? So, for example, you imagine you put something in your cart and something else automatically appears in your cart and you have to delete it to to get rid of it. Or, you know, you think you're agreeing to one thing, but you're really agreeing to something else. That's another way. Another possibility is where you choose to participate in a free trial, but you don't really understand that you're going to continue to be trial. You're going to continue to be charged after that free trial is over. So those are all different ways in which you could be charged for something that you didn't expect to be charged for. But I would say that the thing that's gotten even more and we've seen that in FTC has brought some cases where. There was a concern that, you know, when people made purchases like in game and online, that they really didn't fully understand what they were buying. So that's one potential one, one potential area. But the other one which is getting getting a lot of attention, the FTC is this whole idea that not only should you not be charged for something, you have an affirmatively chosen and agreed to buy, but that when you when you sign up for some sort of subscription continuity plan, negative option plan, that you have an easy method to cancel. Now, there's specific federal law on this, and there's a rulemaking going on about right to cancel as well. But what they have to see is saying here ultimately is that they want it. They if if consumers can subscribe to something that easily, they should also have the same ability to cancel. And the FTC considers it to be a dark practice where you make it real easy for someone to sign up for a product. But then you make them jump through all kinds of hoops in order to cancel. Okay. The last. Oh, just to go back to this one for a second. Another. Another. No. All right. The last the last the last dark practice the FTC talked about in its four categories are design elements that subvert privacy choices. This could be anything from a failure to properly disclose what relevant privacy and what information is being collected or shared and how it's being used to kind of the choices that consumers are made when they're being asked questions about privacy choices. Now, and this can happen in a couple of different ways. Like the example on the screen is intended to show when the question you're being asked is confusing. Do you oppose not allowing fitness trainer to share your personal information? It's like you don't know whether you're supposed to answer no or yes because of the double negative. So part of what the FTC is saying here is, is, look, when people are making choices about privacy, but really it could be any kind of purchase choices like this, you need to make sure that the questions are ones that consumers can easily understand. Another practice the FTC identified as being a dark practice was this idea that you can't definitively make a decision. You know, sometimes, you know, you'll you'll you'll be presented with a choice that says, you know, share your email, ask me later. Right. Like you never can say share my email or no or yes or no. But it's like you always have to keep you always have to keep putting off that decision. You can never definitively make a choice. That's another one where the FTC has identified as a deceptive practice. Um, and you know, related to this in a number of different ways, is this idea of the ways in which choices are presented to consumers, both when making privacy choices, but also when making any other kinds of choices that you're trying to make online? One of the concerns that the FTC has raised and others have raised as well is when those choices are not presented in a parallel manner, in other words. Let's say you want to get someone to sign up for a discount plan and they have to provide their email, you know, give us your email for 10% off and then you can say, yes, I want the discount. And then the no is like in fine print and says, no, I'd rather pay full price. Right. The FTC is concerned about this. When the when when these choices are designed in a way to emphasize one choice and de-emphasize another choice. A related issue, there is kind of shaming, which is where the marketers try to push you in one direction by making one choice seem worse or by sort of almost criticizing the choice that you're making. So let me let me give you two quick examples of enforcement actions in the dark practice area. Ftc brought a case against Credit Karma as part of the allegations in the case. The FTC charged the company with engaging in dark patterns. What were the dark patterns here? The dark patterns were were were advertising that consumers were pre-approved for credit cards. The issue was, of course, they were not pre-approved. And what was the what was the harm here? The harm here of the FTC alleged was that it was just a waste of consumers time to have to go through an approval process or to go through an application process when, in fact, you know, they hadn't been pre-approved. And it also caused them to be subjected to credit checks when in fact, which could damage your credit scores when in fact they were never going to get approved to begin with or they certainly hadn't been pre-approved. What's also really interesting about this case is that Credit Karma, according to the FTC, had actually done a testing of the advertising before it was launched more broadly to see whether the pre-approval language was more effective and what the what the testing showed was that it was more effective. So the FTC knew that the advertiser had already figured out which of its ads was more effective and that the more effective one was the one that was more misleading. So that's that's an example of where the FTC brought a case based on what it alleged was a dark practice. And as you can see, $3 million settlement. The FTC looks for big damages when it when when it raises these concerns. Just stepping away from the FTC for a second, here's a great example of an enforcement action from a year or two ago from the New York attorney general. The New York AG charged a travel website with engaging in dark patterns by doing the the false urgency thing that we talked about earlier. So here, you know, you're you're doing a search for some airline tickets and they tell you that, oh, my God, these tickets are going to be gone in 18 minutes when in fact they're not going to be gone in 18 minutes. But also, there's this language on there that says 33 people are looking at this flight. In other words, they're actually making you think that you're competing for these tickets with other people, which in fact, was not the case. These were things that were automatically appearing when you saw the ads. At the end of the day, you know, dark practices are not really creating much new law. Maybe cancellation, unequal choices, you know, is taking things a step forward. But really what it is about is it's about the FTC asking, you know, if you're creating a. Advertising purchase process where you're engaging with consumers, you know, are you presenting things in a way where consumers really are able to exercise their free will and make choices based on proper information, or whether are they being or whether they're being manipulated by the types of claims that are being made, by the ways in which information is being presented or by the choices that they're given in the way that they're supposed to exercise those choices. So the second big topic that I want to talk about, which is closely related to dark patterns, is online disclosures. So the general rule that applies to so if we take a big step back, you know, advertisers are responsible for ensuring that their claims are truthful or not misleading. And the FTC requires you to have substantiation for all claims in hand before you make those claims. If you've got a claim that is going to be misleading without the disclosure of qualifying information, and the reason you would need that qualifying information is to limit the claim that is being made, Then what you need to do is you need to include a qualification. But in order for that qualification to be effective, it has to be clearly and conspicuously disclosed. What the clear and conspicuous standard means is that the disclosure should be easily seen, read and understood by consumers. It's very, very important to understand that when you think about what the law is in disclaimers in the United States, is that the obligation, almost the entire obligation is on the advertiser to make sure that consumers are misled. Consumers don't have any obligation other than to behave like consumers behave. And what I mean by that is, is, you know, if a consumer looks at an ad online, whether it's a video or a banner ad or a pop up or a text or anything, you know, consumers don't have any don't have any obligation other than to look at an ad the way they would, which is quickly while they're doing something else, maybe not look at the whole thing, maybe be distracted, maybe the dog is barking, whatever. So just because you've included information in an ad doesn't mean that, well, you've done your job. It's not enough that the information is there. It has to be presented in a manner that consumers will actually understand what those disclosures are and how they qualify. The ad mean the law could be very, very different, right? The law could be. You just need to include the information in the ad, and consumers have the obligation to review the ad carefully. That's not the standard. The standard here is it has to be easily seen, read and understood by consumers. Essentially, disclosures are judged by our performance standard. Do they work? Now the FTC's, although the FTC's disclosure standard is a long, decades old standard. You know, in recent time, the FTC has really been interpreting that disclosure standard much more strictly. The FTC talks about clear and conspicuous now for most disclosures as disclosures that are difficult to miss. And so it's not enough that it's presented in a way that it's easily seen, read and understood, but they also really want you to put it in a place where it would be hard for consumer to avoid looking at that disclosure. Now, with online disclosures, the FTC has taken it a step further and said that online disclosures should be unavoidable. What is unavoidable mean? Unavoidable means that no matter what you're. No matter the way in which you're engaging with the advertising or the experience online, that you're going to be exposed to those disclosures. And you don't need to do anything to get them. In other words, if you have to scroll down to see the disclosure, if you have to click on a hyperlink to disclosure, if you have to go somewhere else to see those disclosures, that's not going to be sufficient. The FTC wants to make sure that if there is information that is presented online, that it has to be presented in a way that consumers can't help but look at it. Now. You know. This is this is a far cry from what many advertisers are doing right now. So it's important that advertisers focus on the ways in which the FTC is talking about these things, because the FTC really does believe that advertisers need to shift how they're approaching their advertising and the way in which they're using disclosures. So as we talked about online, the idea is the disclaimer should be immediately visible without clicking, scrolling or taking other action. And then with respect to non online media, you know, difficult to miss in the FTC's view, is really taking every step you reasonably can to ensure that consumers will actually see and understand the disclosure on. For example, the FTC is saying that its preference is that disclosure should be presented simultaneously in the audio and the video. We'll see where that goes. We'll see how widely that gets adopted and how FTC starts to bring enforcement action based on that. I think we're all pretty used to disclosures that are just appearing on screen during a TV commercial and in a video. You know, I think it'd be pretty hard to get advertisers to also put those disclosures in the voiceover. But we'll see how that develops. So the FTC's just guidance for online disclosures has for years really come from the FTC's dot com disclosures guidance. This is not again a regulation it's just simply the FTC's view about the types of disclosures that would comply with Section five. So just by way of background, the.com disclosure guidance was issued, I don't know, maybe 20 years ago and sort of know early Internet. And at the time the guidance was issued, the FTC really there was a lot of excitement, I would say. I mean, lawyer excitement, but it was excitement. And it was this idea that, wow, you know, we've been limited, so limited in the way in which we can use disclosures and ensure that disclosures were effective. Now that we're online, you know, there are all these opportunities through scrolling and hyperlinks and disclosure techniques that we can use that we can. You know, really come up with ways in which disclosures can be done differently. There was this incredible sense of excitement that we can do it differently in the online environment. It's going to let us do it differently. The dot.com disclosure guidance was revised about a decade ago, and at that time, I would say the FTC largely took a lot of the guidance back. And they basically felt like, you know, all of those disclosure techniques we were talking about, like using hyperlinks and scrolling and other kinds of visual cues. Well, we were concerned that those kinds of techniques weren't really working. So then ten years later and the reason it's ten years later is, is the FTC has a general process where it reviews its rules and guidance every ten years. So ten years later, we're now involved in another review of the FTC endorsement guides. And the FTC is now going at taking another step further back and saying, not only do we think that these techniques not work are not working, but we actually think that this dot.com disclosure guidance is affirmatively is affirmatively causing a problem because they think that advertisers are using these guides to justify disclosure practices that they believe are affirmatively misleading. So. You know what's happened in the online disclosure review? Not a ton. So far, the FTC has asked some questions and asked for public comment, but we haven't seen any proposed revisions to the guide yet. What are some of the things that the FTC is looking at in connection with the review? Well, one is, you know, how are hyperlinks going to be used for disclosure purposes? I think in the beginning I think we thought, oh, you can put your disclosures a click away. You know, 20 years ago, lots of people were talking about the one click away rule. I think that the FTC has made it very, very clear that one click away is not the standard today. You know, in the last in the last guidance related to the.com disclosure guides. You know, the FTC talked a lot about that. If you're going to use a hyperlink to disclose important information, just having a hyperlink available is not going to be sufficient to communicate to consumers that this is a hyperlink that they need to click on. They felt that, you know, if you were going to use a hyperlink, that hyperlink needed to be labeled to convey the relevance, importance and subject matter of the disclaimer. So, for example, if you had a price and the price didn't include a shipping charge, you know, a hyperlink that said shipping charges apply, you know, would probably do a pretty good job of communicating to consumers that their shipping charges that apply, but that if the hyperlink just said, you know, terms or more information, you know, that probably wouldn't lead consumers to click on that link thinking that there's information there about additional charges. Another issue that advertisers have really struggled with for years since the beginning of the Internet is what do you do about small space ads? What do you do about tweets? What do you do about a, you know, Instagram post? You know, when you only got limited space, how do you include all the disclosures you need to include? I mean, the FTC's view about that has been, look, it's your obligation to disclose the information clearly and conspicuously in close proximity to the ad itself. And if you can't do that, then maybe that that kind of ad or that media is not appropriate for the type of claims that you want to make. All right. So from the FTC's perspective, if you believe that you can't get all your disclosures in a tweet, the answer from the FTC's perspective is, well, you don't need the disclosures. The FTC's perspective is you don't need to tweet at all. Um, another really interesting issue that marketers need to focus on and that we're going to get, you know, will likely get more guidance from the FTC on. Is that often advertising is created thinking about one platform, even though in fact we know that the advertising is going to be viewed on different platforms. So an example of that would be a TV commercial. You might have a TV, you know, a TV commercial typically obviously would be seen on TV. But plenty of people watch television or watch videos on their mobile phones. So imagine a TV commercial that is on YouTube or that is posted on any other online channel or social channel that someone's watching on their mobile phone. You know, the disclaimer that might have been clear and conspicuous when you're watching it on your big TV in your living room, it's suddenly going to be a minuscule size when we're talking about something viewed on the mobile phone. So, you know, one of the things the FTC has said in the past and one of the things that I expect we're going to see more guidance from the FTC on is really paying attention to this idea that you can't ignore the fact that, you know, these big these disclosures might be big enough in one format, but you have to consider them in all the formats in which they've been seen. You know, the FTC is also concerned about other kinds of disclosures, other ways in which in emerging technologies, disclosures are going to be effective. This could be sponsored content, right? When an advertiser sponsors sort of an article or entertainment content, you know, how how should disclosures be communicated to ensure that consumers understand that there was sponsor involvement in that content? And then, you know, you know, lots of lots of thinking lately about the metaverse and, you know, the idea being that if you're in some sort of metaverse experience where you're encountering other people, you're encountering other types of content, you know, how are the ways in which advertisers can effectively communicate to consumers that they're being exposed to advertising content which might, when it may not, when it may not be obvious to them? So let me give you two quick examples of FTC disclosure cases. The first here is a case that the FTC brought against Lending Club. It was essentially a, you know, a website that allowed you to, you know, get a loan and, you know, find out about loan offers. What was interesting here was, yes, there were. Advertising claims about no hidden fees. But really, when you sort of applied for the loan and you got a loan offer advertised to you, you know, what you would see is you would see an offer and then you would see a question mark. And the problem is, is that question mark behind the fee actually disclosed additional fees that would be charged to you? The point being that, you know, yes, you'd advertise no hidden fees. And from the FTC's perspective, there were, in fact hidden fees. But kind of and you know, that that presents an issue itself. What the FTC, I think the core piece this is really the core learning that is worth focusing on here is it's not enough to have something where there's a question mark, a link to disclaimer, you know, any kind of inconspicuous thing that tells you that there's more information but doesn't give you any information about why you would need to collect. And the FTC point here simply is like there's no way that consumers seeing a rate are going to think that they need to click on that question mark in order to find out they're being charged more $18 million settlement. Another case the FTC brought along with six states was against Frontier for failing to provide Internet speeds. And again, in this situation, they got the basic Internet speeds and then they had disclaimers for when those speeds would not be provided. The FTC's point here was that the disclaimers didn't work. Why didn't they work? They were in fine print. They weren't in close proximity. If you're going to use a disclaimer, it really has to be in close proximity to the claim, something that the consumers are going to find difficult to miss. Another big settlement. All right. Third topic that I want to talk about is endorsements. So when you think about endorsements in the US, the first place we usually start is the FTC's guides concerning the use of endorsements and testimonials and advertising. The FTC endorsement guides are, again, not regulations. They're not independently enforceable. They're simply the FTC's view about the types of endorsement practices that would violate Section five of the FTC Act. Okay, so there are three core principles under the endorsement guides. The first is, is that if you're if you were using an endorser to speak on your behalf, that endorser should be giving his or her honest opinions, findings, beliefs and experiences. In other words, you have the the endorser needs to be telling the truth. If they say they like something, they need to really like it. If they used it, they need to really have used it. That's number one. Number two is that when a when an endorser talks about the performance of the product, the FTC believes that that will be understood to represent the generally expected performance of the product. In other words, if a consumer comes up in an ad and says, I lost £20, you know. The FTC says that that is communicating, that consumers who see the ad are also going to typically lose £20. So what that means is that you can't use an endorser to make a claim that you could not otherwise substantiate yourself as representing the generally expected performance of the product. If consumer says my car gets 25 miles to the gallon, you better be able to substantiate the consumer's cars. Generally get 25 miles to the gallon. And then finally and this is really been a lot of the focus of the FTC's enforcement efforts over the last decade, is that if there is a material connection between the advertiser and the endorser, that is not reasonably expected by the audience, that material connection should also be clearly and conspicuously disclosed. What does that mean? Well. You know, if you've got a celebrity appearing in a TV commercial endorsing a motorcycle, everyone knows that celebrity was paid to endorse that motorcycle. So no disclosures required. Why? Because it is absolutely obvious that they were paid to give that endorsement. On the other hand, if a celebrity tweets out, I love my new Harley. You have no idea whether that celebrity is tweeting that out because they love their new Harley or because they were paid to be an endorser. So you have to look at the context in which the endorsement is given. Now, you know, for consumer endorsements, it's almost always the case that if a consumer is endorsing the product, you know, you would expect that the consumer wouldn't be paid and that these would be real opinions. And we'll talk a little bit more about that, I think. Okay. So the FTC is engaged in a review of its endorsement guides. The endorsement guides have also not been revised for more than ten years. So they're engaging in their regular ten year review. The FTC sought public comment on the guides, and they also have proposed substantial revisions to the guide at this point. You know what's interesting about the endorsement guides is that you know it. The world of online and social media has changed so much in the last 10 to 12 years that, you know, many of the sites and social media sites that we're using today didn't even exist back when the last version came up. So it's not surprising that the FTC kind of had a lot to say. And there's a lot of there's a lot of things out there that we have to rethink about. So I want to take you through some of the key proposed changes that the FTC So basically where we are in the FTC endorsement guide process is the FTC released a proposed revision to the guide with specific changes that it's proposing and then sought public comment on those proposed changes. The FTC, that comment period is now closed. And now what we're doing is we're waiting for the FTC to review the comments and then issue the final guides. Now. I would expect the final guides will be quite close to what the proposed guides are. So I think that this guidance is worth paying pretty close attention to because even though it's still only in proposed form, you know, it's likely that whatever we end up with is going to be pretty close to that. So the first thing that I wanted to point out and again, this is not really news. The FTC has been saying this for years, but it is sort of increasing. Its emphasis in the guides is that the FTC is saying that you are responsible for your influencers. What does that mean? What that means is that when you engage or incentivize an influencer to speak on your behalf and they make claims on your behalf, you're responsible for those claims. And when you're using an endorser, you're responsible for ensuring that that endorser properly discloses that that endorser has a relationship with you. So if you're responsible for your influencers, you know, what the FTC is saying here is you better have proper procedures in place to ensure the influencers are doing what they're responsible, what they're supposed to be doing. And also just to just to put some emphasis on this, you know, for years and years and years, the FTC was really focused on this idea of disclosure of material connections. That's still the case. But I think the FTC is also kind of widened its focus to say, don't forget about the truth of what the influencer is saying as well. You're responsible for both of those things. One piece of good news that came out of the FTC's proposed revisions is the FTC discussed the question of what do you do about social media posts by influencers that just get old and make their way down the stream? Know do you have an obligation to keep track of those years old posts and make sure that they're still true or and take them down when they're not? And the FTC said no. The FTC said that consumers don't have an expectation that a years old post is somehow still representing the current advertising or feelings of the company. The FTC's view is, is so long as you don't continue to share or boost that post, you don't have to take those down even if the claims in them are no longer true. Another really interesting piece of guidance from the FTC that was a little unexpected was the FTC said that it's okay to use a model to depict an endorser so long as the underlying endorsement is real. In other words, you get an endorsement from somebody, but you know, you don't want to use the actual endorser for any variety of reasons, and instead you want to hire a model to play the endorser. The FTC says that it's perfectly fine to do that if you can substantiate the underlying endorsement, so long as the model you choose doesn't misrepresent any material characteristics of the endorser. Right. In other words, you know, if you've got a woman endorsing a product, don't have. Don't have a man being the one who's being endorser or whatever. Um, another area that the FTC focused on. And then this gets back to this idea that the FTC is broadening its focus beyond disclosures of material connection is that you should not misrepresent that an endorser uses the product. In other words, remember when I said at the beginning that one of the key principles here is that an endorsement, even a paid endorsement, must reflect the endorsers, honest opinions, findings, beliefs or experiences. What does that mean? It means that you shouldn't misrepresent that an endorser is an actual user of the product. If someone's endorsing a product, they must in most cases, be a bona fide user of the product. I mean, there are some situations where it's obvious that they're not a user of the product, but when you're representing, when you're when an ad is actually representing that someone is a user of the product, they better in fact be either expressly or impliedly. They must in fact be. Um, the FTC also expressed concerns about the way in which experts are being used. The key point here is, is that when you have somebody who is represented as an expert and that therefore you should rely on them and what they're saying because of their expertise, you need to make sure that, in fact, the person is an expert really in the area in which they are giving their opinion. And I think the concern is that, you know, just because somebody is a doctor doesn't mean they have expertise in dermatology. Um, you know, when the first issued its revised endorsement guide sort of in response to the Internet, whatever it is, 20 years ago, there was a lot of discussion about materiality and what connections were material and what connections were not material. I think kind of two decades later, I think right now, pretty much any relationship, any connection, any incentive between an endorser and an advertiser is likely going to be considered immaterial by the FTC and requires disclosure. I mean, the FTC acknowledges that there are connections that are not material, but they just haven't really given us any examples of what they would be. But certainly if you pay someone to speak on your behalf, if you give something for free, if you give them special benefits to speak on your behalf, those are all the kinds of things that are material connection. You know, one connection, one question always comes up is, is like, well, you know, we're incentivizing consumers to write reviews and post them online. We don't care. You know, we're not telling them they have to write something positive. We just want to get the reviews. Why is that payment to do that required disclosure. And the FTC's view is, is that if you've paid someone to write a review, even if they're free to write a negative review, you still have to disclose the fact that they were paid. They were paid to write that review. The FTC believes that the the fact of the payment is so material to people understanding the endorsement that it needs to be disclosed. Well, the FTC has over the last several years and in the revisions to the endorsement guides, uh, talked a lot about the use of consumer reviews. One of the big issues that the FTC focused on is, is that if you host consumer reviews on your site, you must host them in an honest and transparent way. In other words, if you're representing either an express or an implied way that your review site includes all of the reviews posted by consumers, then you better include all of the reviews. Um. The FTC also said that, you know, you can't ask for a positive review. You know, for example, hey, post a positive review or give us five stars and we'll give you this. Right. You can't pay for a specific type of review because, again, as we talked about, even a paid review must be an honest review. Another area, which is something we've been concerned about for quite some time and the FTC has now focused on is that often reviews on a on a product site or on a on a brand's product site. Will be a mix of organic reviews and incentivized reviews like you might hold a sweepstakes. Saying Review our product and you'll be entered into the sweepstakes and then you'll include some sort of disclosure on the review that discloses, in fact, that it's incentivized. The concern there is that although you might disclose the material connection in the review itself, the star rating, the sort of summary star rating that appears at the top or by the product isn't going to communicate. The fact that that star rating was generated by a mix of incentivized and non incentivized reviewers. What's the lesson there? The lesson there is, is that if you've got a star rating, don't include the incentivized reviews in your average star rating and you know, lots of review sites out there, you can't pay for a higher rating. Remember, all endorsements have to be honest. If you pay for a specific ranking or a specific rating, it's not an honest endorsement. So what are some examples of types of cases the FTC's bring? Well, let me just give you two. One disclosure. Right. It's important if you've got a celebrity speaking on your behalf and social media, there better be a clear disclosure that consumers are not going to miss. It's unavoidable. That discloses that they're being paid. What's the concern with these Instagram posts? The concern here is simply that the disclosure appears after the more button. You'd have to click more in order to see what the disclosure is. And a fairly recent case the FTC brought against Google and iHeart. On this situation. Google engaged iHeart to have its DJs across a variety of channels. Promote the Google Pixel phone. And what the Jays did was they gave personal endorsements about how they felt, how great they thought the phone was and how good the pictures were that they took and all that. The problem was, is that the Jays had never in fact used the phone, so they were not bonafide users of the product and as a result $9.4 million settlement. And again, I like finishing off this one in the endorsement section because our focus for so long was on this idea of disclosure of material connection and the fact that the FTC is really broadening its reach to now cover sort of the bona fide user and truth piece of it is important to pay attention to. Um, want to just say a quick word about substantiation. I mentioned to you before that advertisers are responsible for substantiating all express and implied claims that are being communicated. The FTC is not messing around on this topic. The FTC just said notices of penalty offenses on substantiating product claims to nearly 700 marketers. What is this notice of penalty offense? A notice of penalty offense is a little known and little used authority the FTC has, which essentially allows the FTC to put a marketer on notice of a previously litigated topic so that if the new marketer does the same thing, which was just litigated to be and determined to be false, that the FTC then can hold the second. Marketer who had full knowledge, all of this responsible for civil penalties for engaging in the same practice. The FTC is taking a pretty aggressive approach to notice of penalty offenses and sending out a notice of penalty offenses on a variety of topics to hundreds of marketers out there basically putting people on notice about complying with the law. But really, what they're trying to do here is they're trying to create this ecosystem where they're able to get civil penalties and financial damages from marketers in a way that they hadn't as a result of that Supreme Court case. Um, I know we've only got a couple minutes left, but I do want to talk about a couple more important topics that the FTC is focused on. One is environmental marketing. The FTC also has guides for the use of environmental marketing claims. They're also a decade old at this point. The FTC is engaged in a process right now of reviewing the endorsement of the environmental marketing guides. Again, they've got lots of comments on those guides. I think it's going to be quite some time before we actually see revisions to the guides. But the FTC has certainly expressed a lot of concerns about a lot of different topics in environmental marketing. And I think what we're going to I think we're going to have to expect to see fairly substantial increased guidance in this area. You know, interestingly, there hasn't really been a ton of environmental marketing enforcement at the FTC over the last several years. So I think that as it starts going through the green process, as it starts to issue new guidance, we're going to start to see improved or increased enforcement. I think FTC is going to answer some big questions like what does it mean to sustain, to be sustainable? How do you use carbon offsets? How do you advertise that a product is recyclable? Um, I think we're going to start to see a lot more attention there. We're also starting to see more attention on the state law side. A number of states, including California first, really have been issuing some new laws about recycling and other claims. And so I think that Green Guides compliance is not just about green guides compliance anymore. Environmental marketing is really going to be looking at both FTC guidance as well as now a new patchwork of state law. Ftc has brought some cases in the environmental marketing arena. I'll mention just one. Ftc charged Kohl's with falsely marketing textile products as being made from bamboo. So take some sheets. These sheets are, in fact, made from bamboo. The problem is, is in order to turn bamboo into sheets, you have to chemically process them to turn them essentially into rayon. And then the rayon becomes sheets. And the FTC's point here is, is, look, these sheets aren't made from bamboo. They don't have any of the benefits, the environmental benefits of bamboo. They're really just made from rayon. And that all the processing that goes into them takes away any potential benefits. That would be, um, you know, we've also started to see some litigation already on the use of the word sustainable. I think advertisers have tried to take the position that it's not really a claim, it's just puffery. And the FTC is saying, no, no, you know, sustainable is a real claim. Don't just sort of claim you're sustainable. You'd better have really clear proof to back it up. You know, one of the one of the core principles in the FTC's enforcement guide and the FTC's Green Guides is that in general, environmental benefit claims are deceptive because they're subject to a variety of meanings. They can't they can't necessarily be substantiated. And I think that with respect to sustainable claims, you should treat it like a general environmental benefit claim, which is if you're going to claim your product is sustainable, number one, it'd be better instead of claiming it's sustainable. Just to explain what the benefit is, this is made from 100% recycled content. That's better. But if you absolutely have to talk about sustainability, try to talk about it in the context of explaining what the specific benefit was. On another hot topic that continues to be a hot topic at the FTC and has been for many years. Many years is US origin claims. The FTC has an enforcement policy statement on US origin claims and also in the last year or two issued a rule which is the made in USA labeling rule. The FTC. The FTC standard on Made in USA is if you're going to make an unqualified claim that a product was made in the United States, then you must be able to substantiate the product was all or virtually all made in the United States. That means that essentially almost all cost inputs into the product manufacturing came from the United States and the product was last substantially transformed here. Advertisers get tripped up about this issue all the time. The FTC makes brings lots of cases here. You know, often the way that people get tripped up is that advertisers often have, you know, substantial American operations, employees manufacturing facilities. And it really does feel to them like those products are, in fact, made here. But in fact, in the FTC perspective, because there's so much foreign inputs in those products, it's you really should be making a qualified claim that either the product was made here, but that it was made using imported components. Um, in fact, the FTC just closed a case in the last couple of days where an advertiser actually made a qualified claim. And the FTC said that even the qualified claim was misleading because they didn't feel that the product was actually last substantially transformed here. You know, here's a nice example. Ships from the USA, you know, the FTC raised the question of even though the claim may be literally true that it ships here, you know, is it creating confusion with consumers about whether, in fact was made here? So I want to I want to finish up the presentation with just saying a word about artificial intelligence. There's been a lot of attention lately to ChatGPT and other platforms that are using, you know, creating generative AI. And the FTC is awfully worried about this. Certainly the use of artificial intelligence raises interesting issues like who owns it, Is it infringing? How does it impact contractual obligations between parties who are creating advertising for each other? But the FTC really isn't focused on the side. They're really focused on the truth and advertising concerns. First, in February, the FTC kind of first started talking about, you know, if you're saying that your AI is incorporated in a product or is built using AI, you know, are you accurately describing what's happening and are you taking into account the risks that are posed by the product? The FTC wants you to be wants to be sure that when when you're thinking about when you're talking about the way that AI is engaged with the product, that you're transparent with consumers about that and accurate. The FTC is also concerned about ways in which can be used to cause harm, and the FTC wants advertisers to be forward thinking about the ways in which can harm. And are you taking steps to mitigate that harm? And then finally, you know, back to our dark practices, you know, don't use AI to manipulate consumers into making bad choices. You know, think so. For example, you know, if you ask ChatGPT, where is the best hotel to stay in Maui? And the hotel that pops up is actually sponsored content. You'd better be absolutely clear that that's sponsored content. Another concern would be that when you're you're chatting with customer service online and you don't realize that you're actually talking to a robot. You know, one of the things you have to be warned about is, is that, look, I presents a lot of potential, really great opportunities, but it also presents a lot of risks. And if you're going to really be using AI and be working with AI, you'd better make sure that you've got a team in place that are focused on that is focused on the responsible use of AI to make sure you're not causing unexpected harm. Well, thank you very much for joining. I hope this was interesting and have a great rest of your day. Thanks.