Ad Law News And Views – April 17 – Advertising, Marketing & Branding

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April is here! Springtime. Flowers blooming. Long walks
outdoors. And…National Pet Parents Day! Cheers to all of you pet
parents out there. Here are some of our furry family members that
bring so much joy to our lives.

The Expansion of Health Data Privacy Regulation:
Washington’s My Health My Data Act and Beyond

Thursday, April 18 | 12:00 p.m. – 1:00 p.m.
ET

The development of health data privacy regulation is
accelerating. With all eyes on Washington’s My Health My Data
Act (MHMDA), retailers, advertisers, and adtech companies are
looking at the broad implications of regulating consumer health
data. As MHMDA ramps up, and other regulators are focusing on the
collection, use, and sharing of health data, all stages of health
data governance warrant a closer look.

Join Kelley Drye’s Privacy & Information Security
practice chair Alysa Hutnik, partner Aaron Burstein, and special counsel Chris Tarbell for a discussion of practical
strategies to address some of the key challenges under health data
privacy laws:

Table of Contents

IN THE NEWS AND LATEST UPDATES

Get these and other stories in real time when you subscribe to
the Ad Law Access blog here or visit the Advertising and Privacy Law
Resource Center here.

NAD Recommends More Prominent Disclosures on
Influencer Posts

Crème Fatale is a drag artist who is famous for her
baby-doll looks and pastel-colored skin. See the picture below. I
tend to go for a more natural look myself, so I can’t imagine
how long it takes to apply that makeup or how long it takes to
remove it, but I bet the numbers are high on both sides of the
project. Luckily, Fenty Skin makes a product that makes the removal
phase a little easier.

10th Circuit Decision at Odds with FTC over
“American Made” Claims

I Dig Texas and Creager Services both sell construction
equipment called skid steer attachments. I Dig Texas urged
customers to buy its products instead of Creager Services’
products by appealing to their sense of patriotism. I Dig Texas
claimed that its products are “American Made” while its
competitor’s products are “110% Made in China.”
Creager Services didn’t dig those claims and filed a lawsuit
alleging, among other things, that the “American Made”
claims were literally false. (It missed an opportunity to argue
that a product can’t be “110%” made in any
location.)

Courts and NAD Come to Different Conclusions on
Package Disclosures

Federal courts and NAD are coming to different conclusions on
whether disclosures on the back of packages can effectively qualify
claims that appear on the fronts of the packages. Some courts
– such as courts in the Ninth Circuit – have held that
disclosures on the back of a package can help to qualify a claim on
the front, as long as that claim is ambiguous, as opposed to false.
NAD, on the other hand, tends to think those disclosures are too
far-removed to be effective.

What We Learned From … NAAG’s Director of
the Center for Consumer Protection

What trends are shaping consumer protection in 2024?

From kids on social media to fake reviews and junk fees, state
AGs are working across state (and partisan) lines on initiatives
that promise to mold the consumer protection landscape for years to
come. In this post, we reflect on our conversation with Todd
Leatherman, who works at the forefront of these issues as Director
of the National Association of Attorneys General (NAAG) Center for
Consumer Protection.

Federal Court Unpacks Challenge to Fishy
Environmental Claims

Breaded fish fillets were the latest target of an ESG class
action lawsuit examining sustainable certifications, traceability
claims, and broad environmental benefit claims for ConAgra’s
fish fillets and similar seafood products. The Northern District of
Illinois decided on a motion to dismiss that although
“certified sustainable seafood” claims may be permissible
in this case, general “good for the environment” claims
require further review and so the Court partially denied
ConAgra’s motion to dismiss.

Attorney General Alliance Meeting Recap: Focus on
Director Chopra’s Remarks

Last week, state attorneys general (AGs) gathered to discuss
Nevada Attorney General and Attorney General Alliance Chair Aaron
Ford’s Initiative, focusing on consumer protection education.
Attendees heard from many panels discussing topics ranging from
consumer financial literacy, digital literacy, and cybersecurity,
to the continued hot topic of AI. We are highlighting the fireside
chat between AG Ford and CFPB Director Rohit Chopra, as they
discussed a variety of important topics and collaboration with
State AGs.

NAD Decision Addresses Expert
Recommendations

Does Hyaluronic Acid Help to Fight Signs of Aging? At Ad Law
Access, we are known just as much for the naturally youthful
appearance of our writers as we are known for the quality of our
content, so we don’t have any personal experience in this area.
But this very question prompted a new NAD decision that involves a
number of areas where we do have relevant experience.

Proposed New York Restrictions on Food and
Beverage Advertising Threaten to Open Litigation
Floodgates

On March 12, the New York State Senate voted to include food and
beverage advertising restrictions in its proposed budget, NY S8308-B. These restrictions were originally
introduced as NY S213-B, which characterizes advertising
unhealthy foods as “inherently misleading.” S213-B aims
to protect children from the “disastrous health outcomes that
follow the overconsumption of” unhealthy foods, but instead
carries far-reaching implications that will impact nearly all food
and beverage advertising.

Company Complies with NARB Decision on Review
Disclosures After FTC Intervenes

Smile Prep operates a website that provides reviews of clear
aligners (or “invisible braces”) based on an
“extensive five-point analysis.” Because Smile Prep’s
sole source of revenue consists of commissions from some of the
companies it reviews, Smile Direct Club (or “SDC”) filed
an NAD challenge suggesting that the company “slants its
rankings and reviews to favor those companies that make payments to
it at the relative expense of those companies that
don’t.”

Washington State Poised to Launch Artificial
Intelligence Task Force

As we have previously reported, state attorneys general
(AGs) have great interest in artificial intelligence (AI) and we do not see
this stopping anytime soon. This time, our focus is on a bipartisan
legislative proposal from Washington Attorney General Bob Ferguson to
create an AI task force, which the Washington State Legislature
passed (Senate Bill 5838) and now awaits the
governor’s signature.

Court Holds Reasonable Consumers Won’t be
Misled by Sephora’s “Clean” Claims

Last week, we posted about an NAD decision that provides
some helpful guidance for advertisers who want to use the word
“clean” to describe their products. One day later, a New
York federal court issued a decision in another case involving the
same word. Luckily, the court’s analysis is generally
consistent with NAD’s analysis and bolsters the tips we
outlined last week.

New York Weight Loss Supplement Law Has
Stakeholders Scrambling But Faces Legal Challenges

On October 25, 2023, New York enacted GBL 391-oo, which bans the
sale of over-the-counter diet pills and dietary supplements
intended for weight loss and muscle building to individuals under
the age of 18. Covered products include diet pills and dietary
supplements that are “labeled, marketed or otherwise
represented for the purpose of achieving weight loss or muscle
building.” The law requires retailers, both physical stores
and online vendors, to verify the age of individuals prior to sale
or at the point of delivery. At present, the law is set to take
effect on April 22, 2024.

FTC Staff Doubles Down on Rejected Koscot Standard
for Pyramiding Claims, Challenges DSSRC IDS Guidance

Over the past two years, we have seen FTC staff express its
opinions on the state of the law in multiple ways. In December
2022, for example, staff issued its Health Products Compliance
Guidance, intended to supersede the FTC’s 1998 guidance,
“Dietary Supplements: An Advertising Guide for Industry,”
as we covered here. We also have seen a slew of proposed
guides and rules on endorsements and testimonials, junk fees,
earnings claims, negative option and automatic renewal plans, and
environmental marketing, among many others – all intended to
explain FTC staff’s view of the law as it currently sees
it.

NAD Decision Addresses Influencer
Disclosures

Last week, NAD announced a decision involving a challenge that a
competitor brought against Wonderbelly involving (among other
things) an influencer campaign.

NAD Provides Guidance on “Sustainable”
Claims

Yesterday, we looked at an NAD case involving claims by Amyris Clean
Beauty that it used “clean ingredients and clean
formulas” and considered what lessons other advertisers who
want to make “clean” claims should take away from the
decision. As part of that same case, NAD also looked at various
“sustainable” claims made by the advertiser. Today,
we’ll consider what lessons advertisers should take away from
that part of the decision.

NAD Provides Guidance on “Clean”
Claims

In a recent decision, NAD notes that “clean” claims
are “ubiquitous in the beauty industry.” Despite that,
the term doesn’t have a clear definition and reasonable minds
can disagree over exactly what it means. That creates a challenge
for advertisers who are generally required to be able to
substantiate all reasonable interpretations of their claims.
Although NAD doesn’t take a position on what “clean”
should mean, the decision provides some helpful guidance for
advertisers who want to use the term.

Health Data Privacy: What We’re
Hearing

U.S. privacy developments are moving quickly, but
health data privacy is racing forward. Companies that come
into contact with consumers’ health data need to track and
respond to a variety of developments. Most notably, these include
Washington’s My Health My Data (MHMD) Act, a similar law in
Nevada, “sensitive data” and
“sensitive personal information” requirements under
comprehensive state privacy laws, and FTC enforcement actions and guidance that assert that a broad range of
health data is sensitive. How a company responds to these
developments is likely to be iterative given the lack of clarity or
harmonization with these requirements, and substantial resources
required to implement changes.

TSR Updated to Expand Recordkeeping Obligations;
Cover B2B Telemarketing Representations; May Expand to Inbound Tech
Support Service Calls

The beginning of 2024 has brought with it a decided regulatory
focus on telemarketing. In the past couple of months, we’ve
written about several important FCC actions related to the
Telephone Consumer Protection Act (TCPA), namely the adoption of a
one-to-one consent requirement, a ruling that
calls to consumers using AI technologies are considered
“artificial or prerecorded” messages subject to
regulation under the TCPA, and rule changes intended to expand consumers’ ability to revoke
consent to receive calls and texts.

NY Attorney General Sues JBS Over
Greenwashing

Last year, a trade association challenged aspirational claims
that JBS – the world’s largest producer of beef products
– was making about its commitment “to be net zero by
2040.” NAD determined that although the company had taken
steps that may be helpful towards achieving its goal, those steps
weren’t enough to support the implied claim that JBS was
currently implementing a plan that would achieve that goal. On
appeal, NARB agreed with NAD’s decision.

Senate Confirms New FTC Commissioners Holyoak and
Ferguson; Reconfirms Slaughter

After nearly a year without a Republican Commissioner after Christine Wilson’s resignation, the FTC
will again have a full slate of five Commissioners – with two
new Republican Commissioners in Melissa Holyoak and Andrew Ferguson
confirmed last night. Shortly before the President’s State of
the Union address, the Senate voted unanimously via voice vote to
confirm Holyoak and Ferguson along with reconfirming current
Democratic Commissioner Becca Slaughter to a new term.

PFAS Grease-Proofing Agents Officially Slip Out of
U.S. Market

Rest assured, you can stop worrying about ingesting
“forever chemicals” when you use fast-food wrappers,
microwave popcorn bags, and take-out paperboard containers. Last
week, FDA announced here that so-called
“grease-proofing” food packaging products containing PFAS
will no longer be sold in the U.S. According to FDA, these types of
food-contact paper products are the highest contributors of PFAS
dietary exposure among all FDA authorized uses of food-contact
products containing PFAS.

FCC Adopts Changes to TCPA Consent Revocation
Rules

At its most recent open meeting on February 15, 2024, the
Federal Communications Commission (FCC or Commission) voted
unanimously to adopt yet another round of rule changes related to
the Telephone Consumer Protection Act (TCPA). These rule changes, focused on expanding
consumers’ ability to revoke consent to receive calls and
texts, build on the FCC’s other recent TCPA actions –
namely the adoption of a one-to-one consent requirement, and a ruling
that calls to consumers using artificial intelligence technologies are
considered “artificial or prerecorded” messages subject
to regulation under the TCPA.

What Comes Around…How Chanel’s Win May Help
Brands Protect their Rights in the Resale Market

On February 6, 2024, Chanel emerged victorious in its trademark
infringement and false advertising lawsuit against luxury reseller
What Goes Around Comes Around (“WGACA”). A jury in the
U.S. District Court for the Southern District of New York awarded
Chanel a unanimous verdict on all counts of liability, plus $4
Million in statutory damages for willful trademark infringement in
connection with the sale of counterfeit bags that were never
authorized for sale by Chanel. The case will now proceed for Judge
Louis Stanton to decide what equitable relief Chanel may be
entitled to, including a potential injunction and disgorgement of
WGACA’s profits.

A Group of 19 State AGs Support the FTC’s
Proposed Rule on “Junk Fees”

Another week, another flag on so-called junk fees.

The FTC is in the midst of a months-long rulemaking targeting
“unfair or deceptive fees” that would fundamentally alter
the way businesses can advertise their prices to consumers.
Recently, a bipartisan coalition of 19 state AGs (led by General
Michelle Henry of Pennsylvania and General Josh Stein of North
Carolina) filed a comment letter supporting the FTC’s
efforts.

FCC Declares TCPA Restrictions Apply to
AI-Generated Calls

On February 8, 2024, the Federal Communications Commission (FCC
or Commission) released a Declaratory Ruling to clarify that
telemarketing and other calls made to consumers using certain types
of artificial intelligence are subject to restrictions set forth in
the Telephone Consumer Protection Act (TCPA), and therefore are
unlawful unless the caller has the requisite consent from the
consumer recipient.

New Jersey and New Hampshire Set the Pace with
2024 State Privacy Legislation

New Jersey and New Hampshire are the first states out of the
gate in what promises to be another busy year in state privacy
legislation.

State AGs Focus on Social Media and its Impact on
Youth

As we have discussed, the NAAG President, Oregon Attorney
General Ellen Rosenblum, formally announced her 2024 Presidential
Initiative focusing on America’s youth. As we noted, this was
consistent with a broader priority for 2024 among many state
attorneys general (AGs) across the country.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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