Law Librarian Blog

FTC Blogger Rules Unconstitutional?

So says Interactive Advertising Bureau President and CEO Randall Rothenberg.  The text of his (lengthy) statement is here.  An article with some analysis on the issues raised is in Ars Technica.  [MG]

FTC Issues New Endorsement Rules: Bloggers Are Covered As Well

The FTC issued its final guides governing endorsements and testimonials.  The rules change how advertisers can describe product results in their ads.  The old rules allowed an advertiser to  promote unusual results as long as there was a (usually tiny) disclaimer that these were not typical results.  That conduct is now gone.  Advertisers will have to show what results consumers can actually expect.  The new rules also affect bloggers:

The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.

As for celebrity endorsers, they as well as the advertiser may be liable for for false or unsubstantiated claims under the new rules.  This even affects claims made through social media.  The connection between a celebrity and their status as a flack has to be disclosed no matter the medium.  Would these rules be considered unconstitutional because they force advertisers and their paid endorsers to be truthful up front?  Not to worry:

The Guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.

The FTC press release with links to the revised rules is here.  [MG]

What Are "Online-Only Works"? Newspaper Association of America Comments on Copyright Office's Proposed Mandatory Deposit of Published Electronic Works Rule

As reported earlier in LLB, the Copyright Office is proposing to amend its regulations governing mandatory deposit of electronic works published in the United States and available only online. The amendments would establish that such works are exempt from mandatory deposit until a demand for deposit of copies or phonorecords of such works is issued by the Copyright Office. They would also set forth the process for issuing and responding to a demand for deposit, amend the definition of a ‘‘complete copy’’ of a work for purposes of mandatory deposit of online–only works, and establish new best edition criteria for electronic serials available only online.

Submitted comments are now online, including ALA-ARL's cursory comment that supports LC's proposed rule in an obligatory fashion. More interesting is the comment submitted by Newspaper Association of America  because NAA actually put some thought into its response. One snip:

The rule does not define "online-only works." It is not entirely clear whether or at what point, for example, a newspaper website that may be substantially different from the newspaper print edition would constitute an "online-only work" for mandatory deposit purposes, or for purposes of group registration practices such as group registration of serials or online-only newspapers.

See also the Association of American Publishers comments. The final date for receipt of reply comments has been extended to Friday, October 16th. [JH]

FTC Proposes New Constraints on Debt Relief Marketers

The recession has spawned plenty of television and radio ads from companies offering consumer debt relief, affecting credit card and other unsecured debt.  Sometimes the claims seem too good to be true.  The Federal Trade Commission has filed a notice of proposed rulemaking which would add amendments to the Telemarketing Sales Rule that would reign in some of the more questionable marketing practices for these companies.  Specifically, the new rules, if adopted would:

• Prohibit companies from charging fees until they have provided the debt relief services;
• Require disclosures about the debt relief services being offered, including how long it will take to obtain promised debt relief and how much it will cost;
• Prohibit specific misrepresentations about material aspects of debt relief services, including success rates and whether a debt relief company is nonprofit;
• Extend the TSR to cover calls consumers make to debt relief services in response to their advertisements; and
• Define the term “debt relief service” to cover any service to renegotiate, settle, or in any way alter the payment terms or other terms of the debt between a consumer and one or more unsecured creditors or debt collectors, including a reduction in the balance, interest rate, or fees owed.

This detail is at the FTC web site here along with the proposed changes of the rule and the request for comments.  [MG]

Europe Issues New Privacy Rules for Social Networks

The European Union has issued guidelines for how social social networks protect the privacy of their members.  European data collection is governed under the Article 29 Data Working Party.  European privacy rules tend to be stricter than those in the United States.  Google, Microsoft, and Yahoo, among others, had to adjust the retention period for their user search data as a consequence of the policy.  At one point it became a race between the three search giants to see who could process and anonymize data the quickest within the least amount of time.  The selling point is not just to comply with regulations but to promote strong privacy practices to their customers.  Yahoo turned out to be the winner with a three month retention period, though that did not translate into an uptick in their search market share.

Social network information is different from search log data.  Searches may or may not have names associated with them.  They may ultimately be linked with an individual user as the AOL data breach from a few years back showed.  Social networks encourage those with IDs and passwords to open up about themselves as a way of sharing and making friends, which is obviously the basis of the business.  But it is still a business where all kinds of information can be gleaned about individuals with the express purpose of marketing to them.  Facebook and the others have to pay the bills somehow, and that's the method.  The problem is not one simply addressed in Europe by these guidelines.  Facebook tried to institute an advertising program that monitored member shopping habits whether or not the member was logged into Facebook.  Purchase information was sent to friends in some circumstances.  That met with fierce resistance by the user base and Facebook rescinded the program.  Then there was the change of service terms, later reversed, that seemed to imply that member data belonged to Facebook, even after an account was deleted.  Others noted that various social networks kept pictures and other user information even after it was deleted by the member who posted it.  Data is the lifeblood of these networks.  It's the most important thing a person could provide to a social network in return for the services they provide.

The summary highlights of the European Union guidelines quoted from the report are:

Obligations of SNS

• SNS should inform users of their identity, and provide comprehensive and clear information about the purposes and different ways in which they intend to process personal data.

• SNS should offer privacy-friendly default settings.

• SNS should provide information and adequate warning to users about privacy risks when they upload data onto the SNS.

• Users should be advised by SNS that pictures or information about other individuals, should only be uploaded with the individual’s consent.

• At a minimum, the homepage of SNS should contain a link to a complaint facility, covering data protection issues, for both members and non-members.

• Marketing activity must comply with the rules laid down in the Data Protection and ePrivacy Directives.

• SNS must set maximum periods to retain data on inactive users. Abandoned accounts must be deleted.

• With regard to minors, SNS should take appropriate action to limit the risks.

The guidelines will apply to any social network available in Europe irrespective of where that network is headquartered.  More on this from Mashable, the Social Media Guide, and the Wall Street Journal.  [MG]

Bush Administration's Midnight Regulations Agenda

The Hill's Congress Blog is reporting that the Bush administration is rushing to finalize dozens of new regulations, many without normal hearings or comment periods, that will degrade the environment, fail to protect endangered species and expose people to dangerous working conditions and standards.

In Groups sue Bush over last-minute rule changes, CrimProf Blog reports that opposition to some of these new regulations is producing litigation. The Brady Campaign to Prevent Gun Violence sued the Bush administration to stop a new policy that would allow people to carry concealed, loaded guns in most national parks and wildlife refugees. California Attorney General Jerry Brown has announced that his state is suing the Bush administration to block changes in regulations that are intended to allow federal agencies to issue permits for mining, logging and similar activities without a review from federal biologists.  [JH]