Online Marketing & Advertising Law

California Prop 65 Warning to be Amended?

January 14, 2021 by David Klein

On January 8, 2021, the California Office of Environmental Health Hazard Assessment (“OEHHA”) proposed to amend the Safe Drinking Water and Toxic Enforcement Act of 1986, commonly known as Proposition 65 (“Prop 65”). In 2016, OEHHA adopted new Article 6 Clear and Reasonable Warnings regulations, providing manufacturers with a “short-form” warning alternative that did not require manufacturers to identify any chemicals on their respective labels. Although it may have been OEHHA’s intention that short-form warnings were to be used only on products with limited label space, Prop 65 allowed manufacturers to use short-form warnings on all products, regardless of label size. The proposed amendments to the Prop 65 warning are an attempt to provide clarification to businesses that have made inquiries concerning the Article 6 labeling requirements, and to explain whether the short-form warnings may be used for food products.

What are the Prop 65 warning amendments?

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Tapjoy Settles FTC Consumer Reward Investigation

January 11, 2021 by David Klein

On January 7, 2021, the Federal Trade Commission (“FTC”) announced that it had settled its consumer reward investigation into the business practices of Tapjoy, Inc. (“Tapjoy”), a mobile advertising company, over allegations that Tapjoy failed to provide users with promised rewards featured in various mobile games and applications. Under the terms of the proposed settlement, Tapjoy will be prohibited from misleading consumers about rewards that they can earn within mobile games. Tapjoy must also monitor and police its third-party advertiser partners to ensure that those partners deliver promised rewards to consumers.

What was alleged by the FTC?

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How Sweepstakes Compliance Can Save Your Reputation

December 29, 2020 by David Klein

The popular TikTok content creator collective, “Not a Content House,” recently received some negative publicity for failing to reveal the winners of a sweepstakes by the promised deadline. Not a Content House is the ironic name of an all-girl team that lives together in Los Angeles where they collaborate on content posted on YouTube, Instagram and TikTok. It is reported that on December 23, 2020, Not a Content House was to announce who the two lucky fans were that had won the sweepstakes and would be flown to Los Angeles to visit the all-female crew. When December 23, 2020 came and went without fans being told of the winners, people took to social media to accuse Not a Content House of running a scam. Not a Content House has since announced the contest winners and apologized for its late announcement.

This sweepstakes promotion is a case study in the role that sweepstakes compliance plays in determining whether a sweepstakes serves as the intended beneficial marketing tool that it is or a promotional blunder that causes reputational harm.

What are some of the key elements of Sweepstakes Compliance?

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Six Companies Settle FTC CBD Marketing Regulation Violations

December 21, 2020 by David Klein

On December 17, 2020, the Federal Trade Commission (“FTC”) announced that it had concluded its first enforcement action against six cannabidiol (“CBD”) companies (the “Sellers”), stemming from allegations that the Sellers had deceptively advertised their CBD-based products. The FTC alleged that the Sellers made a wide range of claims, including that their CBD products could treat serious health conditions, such as cancer, heart disease, hypertension, and Alzheimer’s disease, without providing any clinical support that they could do so. As a result of their FTC CBD marketing settlement, the Sellers are prohibited from making future deceptive advertising claims, are required to provide scientific evidence to support any health claims, and, for some of them, pay a substantial fine. Businesses that sell CBD products must be aware of FTC CBD marketing regulations when advertising, or risk FTC investigation.

What are FTC CBD Marketing Regulations?

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Who Governs Sweepstakes Law?

December 18, 2020 by Klein Moynihan Turco

Sponsoring sweepstakes promotions are one of the most exciting marketing vehicles that a business can use to increase visibility and engage customers. Before starting, it is essential to take detailed consideration of all rules and regulations governing sweepstakes promotions. By now, readers are familiar with the basics of how to conduct a sweepstakes promotion. However, many do not know who implements and oversees compliance with applicable sweepstakes laws, or which governmental entities they should be aware of.

In this blog, we take a look at the various entities which are tasked with enforcing sweepstakes rules and regulations across the country. There are both federal and state agencies that oversee sweepstakes promotions. These agencies work on multiple levels to ensure fair business practices in the advertising and administration of sweepstakes contests.

Federal Agencies that Govern Sweepstakes Promotions

Federal agencies with jurisdiction over sweepstakes promotions include:

The Federal Trade Commission (“FTC”). Originally established in 1914 to prevent anticompetitive business practices, Congress eventually provided the FTC with authority to police “deceptive acts or practices” and the power to administer and enforce consumer protection laws. According to the FTC, telemarketers that advertise sweepstakes promotions are required to inform consumers of “the nature or value of the prizes, that entering is free, and the terms and conditions to redeem a prize.” In addition, sweepstakes marketing materials that are sent through the U.S. Mail or via the Internet must clearly disclose that consumers do not have to pay to participate.
The Federal Communications Commission (“FCC”). The FCC regulates communications via radio, television, wire, satellite and cable across the United States. This agency was established in 1934 as the country’s primary independent authority over communications and technology. FCC regulations dictate that television and radio broadcast stations that run sweepstakes promotions are required to accurately disclose their respective contest rules and entrance eligibility criteria.
The United States Postal Service (“USPS”). The USPS created the United States Postal Inspection Service (“USPIS”), an agency that is charged with enforcing laws that are meant to protect the nation’s mail system against illegal and dangerous use. Among other responsibilities, the USPIS protects consumers from predatory scams and promotions. For example, sweepstakes promotions that are advertised through use of the USPS could run afoul of mail fraud regulations if sponsors do not comply with applicable contest laws.
The United States Department of Justice (“DOJ”). The Consumer Protection Branch of the DOJ works with the above-mentioned agencies to enforce applicable laws. Resources listed on their website are aimed at protecting consumers from deceptive promotions, such as lottery fraud.

States Govern Sweepstakes

Sweepstakes promotions are also regulated by various state bodies. For example, cash prizes above certain thresholds trigger sweepstakes registration and bonding requirements. These requirements predominantly apply to sweepstakes conducted in the states of Florida, New York and Rhode Island. In Florida and New York, sweepstakes must be registered and bonded if the aggregate prize values exceed $5,000. Comparatively, where the aggregate prize amounts exceed $500, the State of Rhode Island requires such sweepstakes operators to register with the Secretary of State (but no bonding is necessary.) This registration requirement only applies to promotions that are conducted by brick and mortar-businesses in Rhode Island via a retail outlet.

Don’t Leave Your Future to Chance

Sweepstakes laws can be nuanced and confusing, and there are significant costs involved if you do not take the necessary precautions to ensure that your promotional contest matches your budget and goals.

Avoiding possible penalties associated with improperly conducting sweepstakes promotions is a must. An experienced attorney can help guide you through the complexities of federal and state rules and regulations. Klein Moynihan Turco regularly assists businesses with the regulatory compliance issues associated with conducting sweepstakes promotions. Contact us today to get started by emailing us at info@kleinmoynihan.com, or calling us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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Photo by Joshua Sukoff on Unsplash

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The New CCPA has Passed in to Law. Now When Does it Take Effect?

November 25, 2020 by David Klein

Since 2018, businesses have been working diligently to hit the ever-moving target of California Consumer Privacy Act (“CCPA”) compliance. Just as the California Attorney General had begun CCPA enforcement, the State has now voted to approve Proposition 24, the California Privacy Rights Act (“CPRA”), to create what amounts to a new CCPA. Like the CCPA, the CPRA will go through a series of changes before its enforcement date. Notwithstanding the foregoing, businesses should begin to prepare for compliance implementation.

What is the CPRA timeline?

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New York to Implement New Auto-Renewal Law

November 24, 2020 by David Klein

On November 11, 2020, New York Governor Andrew Cuomo signed New York State Senate Bill S01475 into law (the “Law”), which requires marketers to provide clear and conspicuous disclosures in connection with all automatic renewal and continuous service offers presented to New York consumers. This auto-renewal Law will go into effect ninety (90) days after it was signed.

What changes are forthcoming?

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Clarifying the $25 Million Threshold in the Final CCPA Regulations

September 21, 2020 by David Klein

On August 14, 2020, the Office of Administrative Law (“OAL”) approved the California Department of Justice’s final California Consumer Privacy Act (“CCPA”) regulations and filed them with the California Secretary of State. Prior to approval, some businesses were uncertain as to whether the $25 million revenue threshold was related to revenue generated only from California State sales, California residents, or total global revenues. The California Attorney General’s Office has since clarified that limiting the threshold to revenue generated only in California or from California State residents would be inconsistent with the intended broad reach of the CCPA regulations.

What businesses are regulated by CCPA Regulations?

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