Is It Just a Puff?

By Randal M. Shaheen on January 26, 2023 Posted in Advertising

My family knows that I get grumpy if we get to the theater after the previews have started, as previews are among my favorite parts of the in-theater versus stream-from-home experience. Yet many moviegoers may feel that the trailer didn’t accurately reflect the movie as a whole. But does such a feeling of disappointment rise to the level of a legal violation? A recent court decision involving a class action over the trailer for the movie “Yesterday” provides a good example regarding the difficult line between a claim and a puff.

As we all know, a puff is a statement about a product or service that doesn’t have to be substantiated because it is not capable of objective proof or is so over the top or in some other way not the sort of claim for which consumers would expect actual support. Most movie trailers are full of puffs, from the review that pops on screen proclaiming “Another Masterpiece,” to the nonstop humorous vignettes that after we’ve watched the movie itself might leave some of us believing that every actually funny scene from the movie had been compressed into a 60-second trailer. However, some plaintiffs’ lawyers in California have succeeded at least initially in identifying a movie trailer claim that may not be a puff.

The movie “Yesterday” was released in 2019 and revolves around a person who wakes up one day to find out that he is the only person in the world who remembers the Beatles. The cast at the time was relatively unknown with the exception of one actress, Ana de Armas, who had roles in movies such as “Knives Out” and “No Time to Die.” In the movie, de Armas was a secondary love interest to the main character. Alas, three was a crowd when it came to love interests, and de Armas’ scenes were cut from the film. The trailer, however, was created before the final edits were made to the movie and so included de Armas’ character.

Enter now the aggrieved plaintiff, who purports to be a big de Armas fan, saw her in the movie trailer, and paid $3.99 to watch the movie only to discover, sadly, that de Armas was nowhere to be seen. Fortunately, a class action firm rode to the rescue to help plaintiff in his distress by filing a lawsuit against the movie’s distributor, Universal City Studios.

The studio sought to have the case dismissed, arguing that a movie trailer was an “artistic, expressive work that tells a story and is “non-commercial speech. The judge, however, rejected this argument, finding that while the creation of a movie trailer involves some creativity, “at its core, a trailer is an advertisement designed to sell a movie by providing consumers with a preview.” The studio also argued that permitting the case to proceed would open the door to an endless stream of litigation anytime a moviegoer thought that a trailer misrepresented the genre of the film or that there were any other multiple other purported “mismatches” between the trailer and the film itself. The judge, however, differentiated between disappointments that might be subjective in nature, such as the genre of a movie, and objective criteria such as whether an actress or scene that is in a trailer appears in the movie itself.

The studio also attempted to defend its actions by arguing that movie trailers contain scenes that don’t make it to the finished product all the time, citing the movie “Jurassic Park,” which had a trailer made up entirely of footage that was not in the movie. (I tried to find that trailer so I could link to it but couldn’t. If you find it, send it and we’ll add it.) That argument also fell flat, at least on a motion to dismiss, but perhaps down the road could lead to an argument that no reasonable consumer would believe that everything in a movie trailer would be in the final version of the movie, given how early trailers need to be made and the editing schedule for many movie releases.

There is likely a lot more plot and character development to come in this story, but no doubt studios will be eyeing their movie trailers a bit more critically as a result of this decision.

The 18th Public Commission Meeting – Highlighting the Awesomeness of FTC Staff

By Daniel Kaufman, Randal M. Shaheen and John P. Ferry on January 20, 2023 Posted in FTC

The days are short and the nights are long, but at least we have the monthly public Federal Trade Commission (FTC) meeting to keep us entertained and informed during these cold months. And we had a bit of an unusual agenda yesterday. First up were some congratulations to Chair Lina Khan on the birth of her son and what was described as a “brief” maternity leave. Commissioner Rebecca Slaughter, in a throwback to the early days of the Biden Administration, led the meeting in Chair Khan’s absence. Next was a presentation on “age-related fraud reporting trends,” and the final agenda item was “recognizing the extraordinary contributions of FTC staff.”

For many years the FTC mantra has been that it is a bit of a myth that seniors are more susceptible to fraud, but – and it’s a big but – when seniors do fall victim to scams, they generally lose more money. And of course, there are some scams, like grandchildren scams, that will logically target older people.

And with that we turn to the staff presentation. The staff report, based on data reported to the FTC, appeared to confirm that seniors are not more likely to fall victim to fraud, but when they do, they do so in a bigger way. Not surprisingly, although online and by telephone are the first and second most common ways fraudsters target all of us, regardless of age, the telephone is a closer number two for seniors. The types of fraud also reflect generational differences. Seniors are more likely to be targeted by fraud involving things such as tech support scams or the aforementioned friends and family scams. Younger adults are more often targeted by online shopping scams, investment scams and job scams. Finally, seniors are more likely to pay fraudsters via gift cards, while younger adults are more likely to use payment apps or crypto (maybe not so much anymore). After the report, each Commissioner took the opportunity to thank staff and comment. Commissioner Christine Wilson stirred the pot a bit with her comments, reflecting on the Commission’s long and successful history of combating fraud but noting that statements by former Commissioner Rohit Chopra and current Chair Khan may reflect a shifting of Commission priorities and resources away from fraud toward other priorities such as rule-making, which in her view will harm consumers.

Next up on the agenda: the awesomeness of FTC staff. So for those who may be scratching their heads and wondering why we are having a discussion on the awesomeness of FTC staff, the answer is twofold. First, well, FTC staff is generally pretty awesome. One of us was there for 23 years and would gladly sign an affidavit to that effect regarding most FTC staff, and the others strongly agree. The second reason is that all reports indicate that there is a very real and very significant staff morale problem at the agency. We highlighted that in a blog back in April 2022, and in a recent tweet, Commission Wilson indicated that the latest survey results do not reflect improved perception of the agency, particularly with respect to staff views of agency senior leadership. (The formal results of the latest survey have not yet been produced.)

There is a lot underlying the staff morale issue, and although we tend to be people of the highly cynical variety, certainly part of the solution is more frequently and more publicly acknowledging the hard work and accomplishments of the staff. It is of course far from a full solution to the morale problems raised, but it is at least a start, and we were glad to see this agenda item. And what we heard from the three Commissioners present for the meeting did remind us about the often unrecognized and underpraised efforts of our hardworking agency staff.

It felt a bit like we were watching the Academy Awards. Each year the Commission has an awards ceremony, recognizing over 100 staff for various types of exceptional service. Much like the Academy Awards, some of the awards were given off camera, but at yesterday’s meeting the Commission reacknowledged the three recipients of the Bob Pitofsky Lifetime Service Award, named for the former commissioner, chair and BCP Director, Bob Pitofsky. There were separate presenters for each award recipient, teleprompters with glitches (the last names of the recipients were omitted, but the Commissioners ad-libbed them) but no speeches and no bad jokes. The three honorees reminded all of us of the longevity and mission dedication of so many on the Commission staff.

And finally, we turn to the public participation part of the meeting. At yesterday’s event, two issues predominated: comments for and against the Commission’s proposed rule regarding non-competes, and comments by numerous grocery workers in opposition to a proposed grocery store merger. These two-minute pleas to the Commission to block the merger are unlikely to supplant the number crunching and poring over emails and documents that are the bedrock of the Commission’s merger review process, but Commissioner Slaughter described these “human” stories as “thought-provoking” and “compelling.”

FTC Updates Long-Standing Health Advertising Guidance with Lessons Learned from the 21st Century

By Daniel Kaufman and Randal M. Shaheen on January 9, 2023 Posted in FTC

In 1998, the Federal Trade Commission (FTC) issued “Dietary Supplements: An Advertising Guide for Industry,” and for years that document served as an important starting point for analyzing health claims for dietary supplements. Of course, since that document was issued, the FTC has announced hundreds of cases challenging claims that companies have made for health products, and many of those cases contributed important information to the overall understanding of how the agency staff analyzes different health claims. For some time, the FTC has hinted that an update was coming and that such an update was likely to tighten requirements around health claims substantiation. As all of us were collectively turning the calendar to 2023, the FTC announced a new and broader 42-page guidance document, now called – accurately, if somewhat uninspiringly – “Health Products Compliance Guidance.”

There is a lot to discuss about this new document but for starters, if you are at all involved in analyzing or substantiating any health claims, or just want to better understand the issues involved, this is a must-read and must-retain document. And you may find that in some places it changes your understanding of what is or is not acceptable to the Commission when it comes to substantiating health claims. There may be unique cases and facts and issues that raise concerns about the breadth or applicability of the guidance, but this guidance does come with receipts. It is filled with real-life examples and hypotheticals, and the appendix makes it quite clear that most of these are based on real-life cases that the FTC has brought in the past. In fact, anyone who has been working in this area will recognize specific cases throughout the examples and hypotheticals.

At the outset, what is fundamentally different here? Well, the biggest difference is clear from the title. The prior version focused solely on dietary supplements and the new version makes it clear that it much more broadly addresses all health claims, not just those made by supplement companies. So pay attention, marketers of foods and over-the-counter drugs and device manufacturers. The second-biggest change is that the new guidance more directly incorporates a lot from other areas of advertising law – how to properly use testimonials and disclosures. And third, there is a far more extensive discussion on the science and what the agency expects to see. Not particularly familiar with the concept of p-hacking? Check out page 18. (Spoiler alert: The FTC isn’t a fan of this practice, which is a form of post-hoc analysis of study data to uncover statistically significant differences that may not appear from the study as a whole.)

So the guidance starts out with the necessary setup and background information, describing the agency’s primary legal authority in this area (the FTC Act) and how the agency interacts with the Food and Drug Administration (FDA) (they talk and defer a lot but approach things quite differently). The next section of the guidance is more setup, explaining how the FTC approaches claims analysis – figuring out which claims are reasonably interpreted by consumers and how companies are on the hook for all such claims, regardless of whether they intended to make them; for example, reminding advertisers that images of people wearing snazzy white coats will convey claims of clinical proof and that before-and-after shots can be quite effective at making strong efficacy claims. The next section focuses on when and how to use disclosures properly and effectively and reminds us about using disclosures to provide key qualifying information that can prevent an ad from being misleading; for example, marketers should disclose whether a weight-loss product study also required diet and exercise or whether a claim has limited applicability to the general population, such as a mineral deficiency that affects only 2 percent of the population. A lot of this – particularly the how-to-make-effective-disclosures part – comes from related FTC documents, such as the currently-being-reviewed Dot Com disclosure guidance document

And then we get to the bulk – and probably most compelling part – of the document: how to substantiate health claims. For those who have not been part of an FTC investigation that involved health claims, this discussion will give you a good sense of just how in depth the FTC staff get when analyzing studies and research. Often, they are reviewing underlying study data as well as the formal study report, and the Guidance makes it clear that yeah, they just might be doing that in your matter. And this part of the document is far more prescriptive than the prior guidance.

Over the years, there has been a lot of back-and-forth as to whether one study was enough, and for now, the answer appears to be that one good study will suffice but another helpful one isn’t a bad idea – and make sure that your one good study isn’t at odds with what other studies have shown. (A good study will take the form of a randomized, controlled human clinical trial.) And when it comes to studies, quality is more important than quantity. The FTC will consider other studies, such as animal or in vitro studies – or epidemiological studies – but animal and in vitro studies will not be adequate substantiation (except for claims about animals and test tubes) and epidemiological studies may just be adequate substantiation in quite limited cases. This represents perhaps a slight walk back from the previous dietary supplement guidance which stated that “animal and in vitro studies will also be examined,” not only when human research is infeasible, but also “where they are widely considered to be acceptable substitutes.”

As for the quality of the studies, they should be controlled, randomized and double-blinded to the fullest extent possible, and results should be both statistically significant and clinically meaningful. It is not uncommon to encounter a situation where a study may achieve statistical significance but the actual difference that is shown by the study may be too small to “provide real consequences for consumer health.” And there is more. Now, the FTC isn’t saying that every study has to have the following, but it doesn’t hurt and will be assessed as a factor: At the outset, the FTC is looking to see a clear and detailed protocol, with inclusion and exclusion criteria, that has been submitted for review to an Institutional Review Board. Also important are the size and duration of the study, how dropouts and noncompliance are handled, and – when applicable – the peer review process.

And of course, it’s all about the totality of the evidence; studies are not reviewed in isolation. One decent study that shows a modest effect will often be outweighed if there are multiple studies reaching a contrary conclusion. As the Guidance notes, “[w]ide variations in outcomes of studies and inconsistent or conflicting results raise serious questions about the adequacy of an advertiser’s substantiation.”

The guidance also has something important to say about “qualified claims” – claims where there is some preliminary but not yet definitive evidence regarding the efficacy of an ingredient or a product. FTC historians may recall that way back in 1984, the then-Bureau of Consumer Protection Director praised a cereal high in fiber for the qualified claim that “there is growing evidence that may link a high-fiber, low-fat diet to lower incidence of some kind[s] of cancer.” She stated that “this advertisement and other advertisements like it can serve a valuable function in the marketplace.” But what about today? The new guidance suggests that it is “very difficult” to adequately qualify a claim based on limited and still emerging science” and suggests that words such as “may,” “helps,” “promising,” and “preliminary” likely don’t do the trick in part because they sound too “positive” and fail to convey the significant limitations of the science.

Finally, we have a bit of a catchall at the end. The FTC reminds folks about using testimonials and expert endorsements properly and that the well-known Dietary Supplement Health and Education Act disclaimer won’t cure a deceptive ad. The new guidance may also signal the death knell for traditional use claims for things such as herbal medicines, which have a long history of use but no definitive scientific support. The original Dietary Supplement Guidance permitted such claims without the use of a disclaimer if, in the context of the advertisement as a whole, the ad does not suggest “that there is scientific evidence demonstrating that the product is effective.” While the updated guidance continues to permit traditional use claims, it advises that such claims must be accompanied – likely in the claim itself – by a statement such as “There is no scientific evidence that it works.” We wonder how many marketers will still find such traditional use claims attractive. Finally, the guidance emphasizes the importance of not mischaracterizing the extent to which a product has been approved or reviewed by the FDA. (We have seen a number of cases raising this last concern in particular.)

Another important point raised in the document – and this is an issue that comes up frequently – is making sure that the claim you are making actually matches what the science is saying about the product. We have seen many a company get into trouble because it might have a really solid study but the claims either go beyond what the study supports or the study involves either a different combination of ingredients or perhaps a different dosage or formulation or the inclusion of an ingredient that isn’t in the company’s product. All these concerns will be analyzed and critiqued when your claims are being investigated.

There is quite simply a huge amount to digest from this Guidance, and we have done only a bit more than scratch the surface. So once you have recovered from your post-New Year’s malaise, get comfortable and set aside a bit of time to review the full document. And for the administrative law folks among us, this is a guidance document and not binding on anyone – but ignore it at your peril. Unlike other guidance documents, such as the Green Guides (also under review), this guidance document is not voted on by the Commissioners. Again, this should not detract from the significance of this document – it is helpful information to know. And of course, unlike the Green Guides, the public was not asked to comment on changes to this guidance document.

Is a Data Clean Room the Answer to Your Privacy Woes?

By Aaron Goodman and R. Bisi Adeyemo on December 22, 2022 Posted in Advertising

As we head into 2023, advertisers, publishers, ad tech companies and others involved in the digital advertising ecosystem are facing significant challenges when it comes to data. It can be overwhelming: five new U.S. state data privacy laws to contend with; a continued regulatory focus in Europe, including a new suite of proposed legislation relating to the digital data ecosystem; and the deprecation of third-party cookies. Facing so many challenges, everyone is looking for solutions to help them continue to engage with consumers in a compliant way. One potential solution you’ve likely heard about – and will continue to hear about in the coming year – is a data clean room.

New Year’s Resolutions for the Federal Trade Commission That No One Asked For

By Daniel Kaufman on December 19, 2022 Posted in FTC

Abstract glowing grid background with particles in the center

New Year’s resolutions are usually quite personal – nobody wants friends telling them how to improve their lives. Knowing this, I nevertheless offer a few resolutions to my former employer, the Federal Trade Commission (FTC). Watching the agency from the outside for the past 14 months, a number of things have jumped out at me as issues that I think the agency should focus on a bit and a few changes that should be considered.

17th Public Commission Meeting – The FTC is Finally Seeing Green?

By Amy Ralph Mudge and Daniel Kaufman on December 15, 2022 Posted in Advertising

Nothing says Holiday Season like the final public Federal Trade Commission meeting of the very long year. The lights are hung, joy is sort of in the air and we turn to our four commissioners for even more holiday cheer. Well actually, this week there were just three – Commissioner Wilson was not in attendance today. We, of course, would never miss joining today’s (or any other month’s) festivities, lest to let down our dear readers who rely on us to report on all the ~~tea~~ events.

Now Is Really the Time to Pay Attention to Dark Patterns – Seriously

By Daniel Kaufman and Randal M. Shaheen on December 7, 2022 Posted in Advertising

For months now we have been talking about dark patterns and all the regulatory chatter associated with them. Many, including us, have been wondering whether it would end up being much ado about nothing, with dark patterns just being a new name for practices such as bait and switch that have long been considered unlawful. But, we warned, dark patterns had the potential to dramatically reshape how we look at marketing and blur if not obliterate the lines between clever marketing and unlawful marketing. For anyone who thought we were simply engaging in a theoretical law school exercise and likely crying wolf, developments over the past few months suggest that dark patterns are more likely to end up in the latter rather than the former category.

16th Public Commission Meeting – All About the Biz Opp Rule

By Amy Ralph Mudge and Daniel Kaufman on November 18, 2022 Posted in FTC

Areal view of dazzling Toronto cityscape during a blue hour using long exposure, zooming in bokeh mode.

So today’s Federal Trade Commission (FTC or Commission) meeting was a bit of a narrowly focused affair – all about the Business Opportunity Rule (Rule), which is a long-standing FTC rule that generally requires “business opportunities” to provide buyers with a one-page Disclosure Document as well as an Earnings Claims Statement if the opportunity makes earnings claims.

The 15th Commission Meeting Brings Us Back to the 1970s with More Rulemaking

By Daniel Kaufman and Amy Ralph Mudge on October 24, 2022 Posted in FTC

a mirror ball in a discotheque with some young people in background

If there were any question whether the current Federal Trade Commission (FTC) was reenacting the 1970s, that question has been put to rest. And unfortunately, it’s not about seeing Grace Jones, Liza Minnelli and Andy Warhol at Studio 54 or wearing our finest velour shirts; the 1970s also saw quite a lot of rulemaking at the FTC.

But before we turn to the meeting, we do have to observe that this was the first public meeting after Commissioner Noah Phillips left the agency for other pursuits. We will miss his monthly insights and thoughtful analysis of the issues facing American consumers. And, of course, we will also miss his expert turn of phrases and seeing his kids’ most recent masterpieces proudly displayed behind him. We wish him the best, and the commissioners all had similar sentiments.

Brought to You by the FTC: Event on Digital Marketing and Blurred Advertising to Kids

By Amy Ralph Mudge and Daniel Kaufman on October 20, 2022 Posted in Advertising, FTC

Amy Mudge and Daniel Kaufman

Yesterday, the Federal Trade Commission (FTC) hosted an event to look at kids’ digital marketing. Here is a rough transcript; and if you have a spare five hours, you can watch the videos, which will soon be posted on the event page. The big question is whether the FTC will update its updated Testimonial & Endorsement Guides (or issue other mandates) with kid-specific requirements based on this event. (As an aside, these things used to be called “workshops.” For reasons that escape us, that term appears to be passe at the current FTC. Wouldn’t it be more festive to call them soirees, galas, thought raves or to dos if you wanted to rebrand?)