Welcome to the June 2022 edition of our Digest, covering legal and regulatory developments from the last few weeks relevant to advertising, marketing and brand-owning businesses. As usual, for each item we provide a succinct summary accompanied by a link to the full text of the relevant official source or our own report.
In this edition we report on the new targeting rules for cosmetics interventions advertising which came into force on 25 May, the ASA's recent update about its work on environmental claims, CAP guidance on free trials, a joint ASA and CAP statement about their approach to HFSS advertising, CAP guidance on price comparison advertising, a CAP statement about the use of live facial recognition technology in advertising, a CMA investigation into the digital advertising market, the ASA''s intermediary and platform pilot, and a case about trade marks and website liability.
In this edition:
Advertising & marketing
New targeting rules for cosmetic interventions advertising come into force on 25 May 2022
In November 2021, CAP announced new targeting restrictions that prohibit cosmetic interventions advertising from being directed at under-18s. After a six month grace period, the restrictions came into force on 25 May 2022.
The CAP Advertising Guidance on Cosmetic Interventions sets out the principles relating to the targeting restrictions which the ASA will apply. It also contains a non-exhaustive list of examples of treatments and procedures that are likely to fall within the scope of "cosmetic interventions" to which the new restrictions would apply.
Section 12 of the CAP Code now states that marketing communications for cosmetic interventions must not be directed at those aged below 18 years through the selection of media or context in which they appear. Cosmetic interventions mean any intervention, procedure or treatment carried out with the primary objective of changing an aspect of a consumer's physical appearance. This includes surgical and non-surgical interventions, both invasive and non-invasive, but it does not include cosmetic products as defined in Regulation (EC) No 1223/2009.
Under the BCAP Code they may not be advertised in or adjacent to programmes commissioned for, principally directed at or likely to appeal particularly to audiences below the age of 18.
ASA issues statement on environmental claims
The ASA has published an update on its work relating to environmental claims. It had previously committed to delivering three major outputs: CAP published dedicated Advertising Guidance; the ASA commenced detailed reviews into the issues identified as priority areas by the Climate Change Committee for carbon reduction and consumer behaviour change; and it was to commission research into consumer understanding of 'carbon neutral' and 'net zero' claims, as well as claims about 'hybrid' products in the electric vehicle market.
It has carried out its planned reviews of environmental claims in the heating/energy and transport sectors, which have identified a number of issues in ads for products and services in these sectors:
- Aspirational claims about advertisers' intentions to transition to net zero by particular dates (for example, 2030 or 2050), and the appropriate evidence needed to back up such claims
- Claims by high-emitting companies, which focus on narrow environmentally beneficial aspects of their businesses but may not provide a complete picture of their overall environmental impact
- Descriptions of energy tariffs as "green" or "renewable", and the evidence base for these claims
- The evidence base for "Carbon neutral" and "zero carbon" claims
- Claims in the hybrid and electric vehicle sectors to be reviewed following our research outcomes (see below), especially zero emissions and self-charging claims
- Ads in the air travel sector, with particular interest in 'carbon neutral' or similar claims
- Targeted advice to identified brands to help them comply with the Advertising Codes on environmental claims.
The research about consumer understanding is almost finished and the outcomes will be published in summer 2022. The ASA also plans to commission more research into consumer understanding of "sustainable" and "eco-friendly" claims.
CAP issues guidance on advertising free trials
CAP has issued guidance on free trials. It says that free trials can be a great incentive to draw in new customers and are offered in a wide range of sectors, from food and entertainment to beauty and leisure. Marketers must always make very clear to potential customers exactly what it is they are entering into.
Rule 3.26 of the CAP Code states that ads must not use the term "free trial" to describe "satisfaction or your money back" offers, or offers for which a non-refundable purchase is required.
To use the phrase "free trial", whatever is being offered must be genuinely 'free' to the consumer. If there is an additional 'delivery' element to a free trial, it is acceptable to charge the genuine, uninflated cost of postage – but you cannot charge for packing, packaging, handling or admin fees if you want to claim that it's 'free'.
Significant conditions must be advertised upfront and not hidden away.
ASA issues guidance on its approach to HFSS advertising
Now that the government has delayed restrictions on advertising of HFSS products, the ASA has confirmed that it will continue to regulate HFSS advertising within its own rules and competencies.
It will continue to ban 'less healthy' food and soft drink product ads in children's media. Such ads may only be shown exclusively or predominantly to adult audiences, in which adults comprise at least three quarters of the audience.
It says that evidence suggests advertising is one of many factors that affect children's food preferences, albeit modestly. Therefore, it says that the advertising codes remain an important part of a wide range of measures that balance public health interventions with personal responsibilities, with the objective of tackling obesity and its multifactorial causes.
The ASA also continues to use technology to proactively monitor the media landscape for any breaches of the rules, taking compliance action as necessary. While marketers may be relieved that the rules were not made even stricter (for the moment at least), they need to remember that the existing rules are robust.
CAP issues guidance on price comparison advertising
CAP has issued a reminder about price comparison advertising. Price comparisons are a fast way to communicate value to consumers or stand out amongst competitors. It is important that any comparisons used in ads are based on correct and verifiable information, and do not mislead consumers. The guidance sets out several areas to consider:
- When and for how long was the item sold at the reference price?
- Have you sold many items at the reference price?
- Pricing history.
- Comparing with competitors.
CAP issues guidance on using live facial recognition technology in advertising
CAP has issued guidance on the use of live facial recognition technology in advertising. It refers to an ICO opinion which considered the data protection requirements surrounding the use of live facial recognition (LFR) for various purposes, including for advertising.
The ICO opinion explains that facial recognition is the process through which a person can be identified or otherwise recognised from a digital facial image. This technology can be used in a variety of contexts from unlocking mobile phones, to setting up a bank account online, or passing through passport control. The Opinion notes that LFR can also be used for marketing, to gain marketing insights or to deliver products. Where LFR is used in this context, it tends to be used for categorisation, usually in the digital out-of-home sector. This enables organisations to:
- estimate footfall for advertising space (audience measurement);
- measure engagement with advertising space (dwell time at a particular location or other attention measurement);
- provide interactive experiences (for example, turning on media or inviting customers to respond to it); or
- serve targeted ads to passing individuals (demographic analytics).
Data protection law requires that the data protection principles be adhered to when processing personal data of individuals. In this context, organisations must ensure first and foremost, that the processing is lawful, fair and transparent. Where biometric data is processed to uniquely identify someone, further safeguards will have to be in place.
The ICO advises that there is a high legal threshold to meet for the use of LFR and organisations will have to justify the use of this technology. They should also be able to demonstrate accountability, such as ensuring governance is in place through the undertaking of data protection impact assessments.
Some of the advertising purposes fall beyond the remit of the CAP Code, but where the technology involves the processing of personal data to serve ads to consumers, in addition to data protection obligations, this processing would fall within Section 10 of the CAP Code and would be subject to rules relating to the legal basis for processing data for ads and transparency about the use of data. Any ads served via LFR would also have to comply with the rest of the CAP Code.
CAP and the ASA say that they will keep an eye on the emerging use of LFR for marketing purposes, and issue further guidance if needed.
CMA investigates digital advertising technology market
LaThe CMA is investigating the digital advertising technology market and Google's role within it.
It is examining three key parts of the adtech chain:
- Demand-side platforms (DSPs) allow advertisers and media agencies to buy publishers' advertising inventory (i.e. the space they have for advertising) from many sources.
- Ad exchanges provide the technology to automate the sale of publishers' inventory. They allow real-time auctions by connecting to multiple DSPs, collecting bids from them.
- Publisher ad servers manage the publisher's inventory and decide which ad to show, based on the bids received from different exchanges and/or direct deals between publishers and advertisers.
This case follows on from the CMA's market study into online platforms and digital advertising which identified significant issues and assessed possible solutions to address market power in ad tech.
Intermediary and platform principles pilot begins
The ASA has started a year-long Intermediary and Platform Principles pilot, which it announced earlier this year. The pilot will extend the ASA's role online. It explores bringing more accountability and transparency to the ASA's regulation of paid online ads.
The pilot revolves around key Principles, which establish broad objectives around awareness-raising, advertiser compliance and ASA enforcement online.
Participating companies - including Adform, Amazon Ads, Google, Index Exchange, Meta, Snap Inc., TikTok, Twitter and Yahoo - volunteer to provide information to the ASA to demonstrate how they operate in accordance with the Principles. The ASA has issued a guidance note to support this.
The ASA intends to publish an interim and aggregated account of how the participating companies have given effect to the Principles at the end of the year. It will highlight examples of best practice and identify areas for improvement for the second half of the pilot. The ASA will publish a final report in quarter three, 2023.
The information gathered through the Pilot should help the ASA, the industry and other stakeholders to collectively consider whether and where further action could be taken to enhance the ASA's ability to enforce the CAP Code online that could be appropriately addressed by working with these and other online intermediary businesses.
Trade Marks and Website Liability
Trade Marks and Website Liability
This Court of Appeal ruling gives helpful clarification of the circumstances in which promoting and selling branded goods on a website without the UK trade mark proprietor's permission can be deemed to be "targeted" at UK consumers, and thus infringing.
Given the potentially global reach of websites used to market and sell goods or services online, the courts have developed case-law to help decide whether use of UK trade marks in the process of such marketing and selling will be infringing. In broad terms, liability will only arise if it can be shown that unauthorised website usage amounted to use of the marks within the UK, and this in turn is tested by assessing whether the website had targeted consumers in the UK with its use of the marks.
The Court of Appeal has in this case found Amazon liable for infringing UK (and EU) trade marks by using its Amazon.com website to advertise, offer for sale and sell to consumers in the UK goods branded with the Beverly Hills Polo Club mark. These had been authorised for sale in the US by the US trade mark proprietor, but the Beverly Hills Polo Club marks have a different proprietor in the UK/EU, which had not consented to parallel importation of such US-marketed goods into the UK/EU. Although the Amazon.com website was mainly targeted at and used by US-based consumers, and there were other Amazon sites more explicitly targeted at consumers in the UK and EU, the Court highlighted a number of ways in which Amazon.com's use of the marks nevertheless also targeted UK/EU consumers, and thus infringed the UK and EU marks.
Three aspects of the Court of Appeal's analysis of "targeting" in this case are of particular interest. First, the Court emphasised the need to analyse in detail the use of the marks at each stage of the consumer journey on the website. It was not sufficient just to look at the website in general and decide whether that was "targeted" at consumers in the UK, one had to ask that question in respect of each specific page that a consumer would be presented with. Thus the trade marks were used on product pages and in search results which included indications of targeting such as "Deliver to the United Kingdom" and "Ship(s) to the United Kingdom"; while the "Review your order" page effectively made a specific offer for sale to a particular customer using the mark alongside targeting indicators such as a shipping and billing address in the UK plus a payment currency of GBP.
Secondly, the Court placed emphasis upon the fact that the Amazon.com offer included making all of the necessary arrangements to ship, import and deliver the goods to the consumer in the UK, which again clearly pointed towards targeting the UK. Thirdly, even if all of the advertising of the goods and offers of sale discussed above were not enough, the Court emphasised that the actual selling of the branded goods to UK customers without the UK proprietor's consent would itself amount to infringing use of the UK trade mark.
The ruling will be useful in future cases where an analysis of website targeting is required, to decide whether there has been the necessary use of the mark in the UK in order to establish infringement. Businesses operating websites may need to consider using geo-blocking to ensure that only their intended target customers are reached; or they will need to be more careful in their dealings with suppliers to ensure that the goods can be sold to all relevant territories and that they have suitable indemnities should it turn out that IP rights have not be properly cleared.
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