• Recent Federal and State Regulatory Action and Governmental Legislation - Advertising Industry Urged to Oppose Governmental Regulations
  • June 3, 2009 | Author: Richard M. Goehler
  • Law Firm: Frost Brown Todd LLC - Office
  • There has been a recent surge of regulatory action and governmental legislation directed at advertising, which has been occurring at both the federal and state levels.

    At the federal level, there is presently a hot debate over the Federal Trade Commission’s proposed wholesale changes to the use of endorsements and testimonials in advertising. The American Advertising Federation and American Association of Advertising Agencies recently filed joint comments with the FTC arguing against these proposed changes. The FTC’s new proposed guidelines would virtually do away with the commonly used and understood “results not typical” disclaimer often used by individual endorsers of a product and would mandate a burdensome disclaimer of generally expected results. According to the AAF, the proposed guidelines would also place an unfair burden on bloggers and other viral marketers by requiring unreasonable disclosure of material connections. For example, a blogger reviewing a video game system could be subject to liability by not disclosing that he or she was sent a complimentary copy to review.

    The U.S. House of Representatives Oversight and Government Reform Committee recently approved a bill that would transfer authority of tobacco advertising from the FTC to the Food and Drug Administration. Known as the “Family Smoking and Tobacco Control Act,” this legislation would also direct the Secretary of the Department of Health & Human Services to publish an interim rule enacting unprecedented advertising restrictions, including requiring many tobacco ads to be black text on a white background, mandating a government-dictated “brief statement” warning about possible dangers and banning all outdoor advertising for tobacco products within 1,000 feet of any elementary or secondary school or playground. The AAF has strongly opposed these proposals and has argued that advertising authority should remain with the FTC, the agency with the most experience and expertise in the regulation of consumer advertising. The AAF is particularly concerned that these advertising restrictions could be seen next in the next attacks on other forms of advertising, including alcohol, lotteries, food, and pharmaceuticals.

    The FTC has also issued revised online behavioral advertising principles, focusing their efforts on personally identifiable information. The guidelines state that the FTC expects websites to provide clear notice about behavioral targeting and to offer ways and to offer ways for consumers to opt out of the data collection. In addition, the revised guidelines offer further guidance on clear privacy policies, separate disclosures for mobile users, express consent for sensitive data, and further consideration companies should give for the length of time they keep data records. The AAF and other industry groups have filed comments stating that any self- regulatory principles should be careful not to unnecessarily limit the tremendous benefits that behavioral advertising provides to consumers.

    In addition to these current regulatory initiatives at the federal level, there have been a number of state restrictions, including a recent New York Assembly bill to regulate online behavioral marketing in the state of New York. The New York legislation would establish strict guidelines regarding the collection of non-personally identifiable information, including disclosure and prior consent. The AAF has also argued in opposition to such a bill, asserting that behavioral marketing benefits consumers by making online content and services free to charge to end users. Consumers and marketers both benefit from receiving advertisements that are appropriately targeted.

    The Minnesota House of Representatives is considering legislation that would extend the sales tax to the sale and purchase of “products that are transmitted digitally” in the state. This potential Minnesota bill would create new taxes on music, videos, audio books, games and ringtones. Of significant concern to advertisers is a clause in the bill that would tax the digital transmission of finished artwork, periodicals, and greeting cards.

    In New Mexico, a bill has been introduced that would prohibit outdoor alcohol advertising within 500 feet of any playground, school or childcare facility. This legislation, known as the “Limiting Alcohol Near Youth Act,” would also direct the alcohol and gaming division of the advertising regulation department to appoint a youth alcohol advertising monitor. Actions have been undertaken to alert New Mexico members of the AAF urging them to contact members of the New Mexico legislation and asking them to oppose the bill.

    With all of this recent federal and state government regulatory action and legislation, advertisers are being urged to take the initiative to fight for self-regulation and to be responsible in their advertising campaigns, rather than waiting passively for regulatory mandates to be imposed upon them.