United States: 10 Marketing Law Takeaways From ANA/BAA 2017

Last Updated: November 20 2017
Article by David A. Kluft and Neil Austin

We just got back from the Association of National Advertising (ANA) and Brand Activation Association (BAA) Marketing Law Conference in Chicago, held earlier this week. With hundreds in attendance, and dozens of speakers presenting over three days, it was a great opportunity to learn about "hot" trends and key issues in the advertising and marketing space from an array of stakeholders – marketers, attorneys, regulators, and, yes, even a Washington D.C. lobbyist. In case you missed it, here are our top ten takeaways from the conference.

#1: Fake News is more than just a political issue. Numerous speakers drew comparisons between the "fake news" allegations emanating from 1600 Pennsylvania Avenue and recent trends in advertising law. Whether phony reviews on websites like Yelp or clickbait ads falsely suggesting a relationship between a celebrity and a product (as alleged by Montel Williams in a recent lawsuit), fake news is infecting the world of advertising – especially online advertising – and eroding the trust between brands and consumers. The increasingly fuzzy line between editorial content and advertising is only making matters worse. Marketers create ads that look like news, and news agencies create content that feels like advertising.

#2: Influencers are influencing everything. A consistent theme of the conference was the Federal Trade Commission's ("FTC's") recently stepped-up concerns regarding social media influencers, who seem to be seeping into every nook and cranny of the internet, and correspondingly into virtually every presentation at marketing law conferences. One speaker stated that 2018 would be the "year of the micro influencer," referring to FTC enforcement efforts against "mommy bloggers" (a term everyone hates but continues to use anyways). You can read more about the FTC's recent enforcement actions and new guidelines on our blog here and here.

#3: "Trust" is the hottest buzzword in marketing these days. Few were the presentations that did not touch on the issue of trust. It comes up in the context of data security, the sharing economy, the role of influencers, brand engagement, and of course claim substantiation. As consumers have become increasingly reliant on technology to improve the quality of our lives, we have placed more and more trust in brands. We trust that they will keep our stored payment card information safe, that they will be good corporate citizens, and that they will not make unsupported claims. As the sharing economy has grown, the trust factor is more important than ever. We trust strangers to drive us home from dinner, to stay in our homes, and to care for our loved ones. While regulators have always been focused on ensuring that brands and advertisers are worthy of that trust, increasingly brands themselves have had to take on that role as the consequences of negative consumer experiences can destroy a brand's value.

#4. Will there be a Trump effect at the FTC? Most who spoke on the topic, including some from the FTC itself, would have us believe that the short answer is "not really." Perhaps unlike circumstances at other federal agencies, the transition at the FTC purportedly has been smooth, and so far there is little to indicate that the FTC will take a radically different approach to regulation and enforcement. That said, the FTC is expected to focus going forward on bringing enforcement cases only where there is concrete evidence of consumer injury, which is in contrast to its approach in recent years. Several speakers predicted that enforcement efforts going forward would look more like they did in the Reagan years, with consumer fraud being the core of the Commission's focus.

#5: FTC attitude shifts. Consistent with the reports above, there was some express indication of FTC attitude shifts. Thomas Pahl, Acting Director of the Federal Trade Commission Bureau of Consumer Protection, articulated the FTC's approach under the current administration as involving a reassessment of that agency's preferred choice of forum and remedies. First, Pahl anticipated a move towards less federal court enforcement, on the ground that Congress intended the development of false adverting case law through the administrative litigation process. Second, Pahl indicated a less aggressive appetite for the agency to seek monetary sanctions from advertisers, for fear of chilling truthful commercial speech.

#6: Negative option programs are a risky proposition. Speakers from both the FTC and state Attorneys General discussed recent enforcement efforts aimed at negative option programs, in which companies charge consumers' credit cards automatically, often after the conclusion of a free trial period (you can read more about this phenomenon on our blog here). Of particular interest are several cases recently brought by the FTC under the Restore Online Shoppers' Confidence Act ("ROSCA"). Enacted in 2010, ROSCA prohibits third party sellers from charging financial accounts in an internet transaction unless all material terms of the transaction are clearly and conspicuously disclosed and the consumer has consented to the charges. ROSCA cases were few and far between prior to 2017, but the last year has seen a surge as regulators seek to crack down on negative option programs. Lesley Fair of the FTC hinted that additional ROSCA cases will be announced soon and left little doubt that this will be an area of significant focus going into next year. Billing consumers' credit cards without express consent, she said, is the "riskiest of risky businesses."

#7. Advertisers are fighting back against efforts to eliminate the ad tax deduction. Under current federal tax law, businesses can deduct much of their advertising costs from taxable income. That deduction is very much on the chopping block, however, as Congress seeks to overhaul the tax system. The ANA has been an outspoken critic of efforts to roll back the ad tax deduction, arguing that it will reduce jobs and hurt the economy. Although the ANA has thus far successfully lobbied lawmakers to retain the deduction, future versions of Senate and House bills could put elimination of the deduction back on the table. In fact, on day two of the ANA/BAA conference, Senator Claire McCaskill filed an amendment to the Senate version of the bill that would eliminate the ad tax deduction for pharmaceutical companies. This issue bears watching as Republicans try to make good on their promise of tax reform.

#8. I wish I could define natural. Although the Food and Drug Administration ("FDA") opened up a public docket to examine whether to define the term "natural" for advertising purposes, that agency has yet to issue any formal guidance (notwithstanding some recent hints the issue is still live) and the FTC still hasn't addressed the issue in its Green Guides, which you can read more about here. When one panelist at the "Natural Advertising Claims session was asked to define what a natural ingredient is, she answered: "I wish I could. I don't know and nobody knows."

#9: Pop Tarts are "Healthy." Even though nobody wants to define natural, the FDA has defined the term "healthy," for purposes of food labeling. "Healthy" means a food that is low in fat and saturated fats, sodium and, cholesterol. See anything missing? What about sugar? The result is that a raw avocado is not "healthy," but a Pop Tart is. And before you ask; yes, the FDA is working on this.

#10: Lesley Fair rocks. Oh, and speaking of the aforementioned FTC's Lesley Fair, she is still the funniest and most engaging speaker in the room, no matter who else is in the room. If you work in this area and don't read her FTC Business Blog, start doing it now

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