Tag Archives: promotions

ILN Today Post

‘All Natural’ Claims Challenged by FTC; Four Companies Settle and One Is Charged

Four companies have agreed to settle Federal Trade Commission (FTC) allegations that they falsely marketed personal care products online as “all natural” or “100% natural” although they contain artificial ingredients. The FTC charged a fifth company with making similar claims.

The FTC’s Allegations According to the FTC’s complaints against the companies and a statement it released announcing the proposed settlements:

  • Trans-India Products, Inc., doing business as ShiKai, based in Santa Rosa, Calif., markets “All Natural Hand and Body Lotion” and “All Natural Moisturizing Shower Gel,” both directly and through third-party websites including walgreens.com and vitacoast.com, although the lotion contains the synthetic ingredients Dimethicone, Ethyhexyl Glycerin and Phenoxyethanol and the gel contains Ethylhexyl Glycerin and Phenoxyethanol.

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Spotlight on Big Data and Connected Devices

As the number of connected devices grew (the so-called “Internet of Things”), so, too, did the risk of data hacking and unauthorized access to sensitive personal information. After the Federal Trade Commission (FTC) action against, and its settlement with, in-store beacon tracking company Nomi Technologies, other companies — especially the makers of data-connected devices and apps — spent time and money on ensuring that they provided consumers with transparency and choice with respect to how and when their data was collected.

The continued collection, sale, and use of vast amounts of consumer data in the Big Data industry regularly was raised as a primary concern of the FTC due to the perceived lack of transparency and consumer control.

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The Rise of Ad Blocking

2015 saw the continued rise of programmatic buying and cross-device tracking, as well as the continued focus on related concerns such as ad fraud and privacy compliance. These trends will remain pertinent in the coming year, and marketers and their agencies should continue to be mindful of transparency and privacy issues when conducting media buys.

The big issue to grab the spotlight in 2015 was ad blocking. Ad blocking is not a new phenomenon; it has long been a concern of agencies, marketers, and publishers. Recent developments, however, significantly broadened the potential for the use of ad blocking technology.

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Political Advertisers Campaign to Avoid Transparency and Disclosures

Political candidates and their supporters have been projected to spend a record $11.4 billion on advertising during the election cycle ending on Tuesday, November 8, 2016. As a result of legal and media developments that occurred in 2015, much of this advertising will withhold from voters the identity of the people paying for it. 2015 should be remembered as the year that political advertisers rejected transparency and disclosure in their campaign communications, and received support in that effort from the government and the press.

Reformist politicians and public interest groups pushed the Federal Election Commission (FEC) to require advertisements placed by political action committees (PACs) to more clearly identify the individuals paying the bills, but the FEC did not act. As a result, ads nominally sponsored by PACs with indistinguishable patriotic names continue to proliferate, and voters continue to have little knowledge of who actually is funding those ads.

 

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Regulators Scrutinize Social Media Campaigns

2015 saw greater regulatory scrutiny of social media marketing campaigns. Specifically, the Federal Trade Commission (FTC) advised on social media promotions, online influencers, and online reviews.

In an update to Frequently Asked Questions (FAQs) about its Guides Concerning the Use of Endorsements and Testimonials in Advertising (the FTC Endorsement Guides), the FTC reiterated that entries into a contest in return for an endorsement required a clear and conspicuous disclosure that the post was incentivized.

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Regulators Seek to Protect Users’ Information in an Ever Increasing Mobile Universe

In the mobile world, regulators grappled with how best to protect the privacy and security of user information as new technologies continued to emerge, with the Federal Trade Commission (FTC) and Digital Advertising Alliance (DAA) issuing reports, convening workshops, and signaling their intention to increase enforcement.

The FTC’s report on the “Internet of Things” (IoT) recommended steps companies should take to protect users’ security and privacy. The report defined IoT as devices or sensors — other than computers, smartphones, or tablets — that connect, store, or transmit information with or between each other via the Internet.

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FDA Scrutinizes Cosmetics Claims, Continues to Evaluate Imports

The Food and Drug Administration (FDA) continued to exercise its increasingly conservative approach to cosmetics claims by issuing numerous warning letters to cosmetics companies and continuing to carefully scrutinize imported products. The FDA’s agenda demonstrates that regulating cosmetics has become an increasingly important priority for the agency.

The FDA was particularly concerned with claims for cosmetic products that indicated that the product could affect a structure or function of the human body or treat, prevent, or mitigate a disease or its symptoms, as these types of claims indicated that the product was a drug rather than a cosmetic. The FDA issued several warning letters to major cosmetics manufacturers for claims that products could “reduce visible redness,” “treat dark spots and discolorations,” “change the anatomy of a wrinkle,” “provid[e] noticeable lift,” and “stimulate collagen production.”

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Green Marketing Still Needs Support

Environmental concerns dominated the headlines throughout 2015. For marketers, this meant an increase in the development and supply of environmentally conscious products and services and a renewed focus on “green” attributes in their marketing. Not surprisingly, consumers and regulators responded by increasing their scrutiny of “green marketing” and their willingness to take legal action based on perceived “green washing.”

As in years past, the Federal Trade Commission (FTC) remained the most active regulator of environmental benefit marketing claims, seeking to ensure that all “green marketing,” regardless of media, complied with its Guides for the Use of Environmental Marketing Claims (Guides). It sent warning letters to manufacturers and retail sellers of certain “green” products and services, reminding them that it monitored the marketplace and would challenge advertising it deemed inconsistent with the Guides.

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Daily Fantasy Sports Poses Challenges for Players and Regulators

A new industry burst into the mainstream in 2015. At the beginning of 2015, daily fantasy sports was a nascent business taking advantage of gaps in federal regulation to find deep-pocketed backers among major media companies, professional leagues, and their owners. Flush with new investment, the major competitors in this business, FanDuel and DraftKings, blanketed sports media with advertising and discovered an audience aching for an opportunity to spend money. In one weekend in October of 2015 alone, FanDuel and DraftKings collected more than $45 million in entry fees. Daily fantasy sports had become a multi-billion dollar industry.

By the end of 2015, however, the industry seemingly faced every type of legal challenge imaginable. The State of Nevada ruled that daily fantasy sports was unlicensed and, therefore illegal, gambling. In the months that followed, states including Texas, Illinois, and Hawaii made similar rulings.

 

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Children’s Privacy at the Heart of Regulatory Action

Regulators and industry members continued to focus attention on children’s privacy, particularly in response to the rush of technology involving child-directed toys and child-directed apps.

Last year, Google launched YouTube Kids, which uses algorithms to filter and select age-appropriate content from YouTube. After the launch, consumer groups complained to the Federal Trade Commission (FTC) about blurred lines between advertising and content for children and the possibility of children discovering inappropriate content using the app’s search mechanism.

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