Advertising online and on social media is easy, but making sure ads are legal is serious business. Mark S. VanderBroek, partner with Nelson Mullins in Atlanta, looks at recent cases involving social media and online ads and offers best practices for advertisers to ensure they adhere to advertising laws and regulations.
The growth of the internet, social media, and digital marketing has dramatically expanded methods available to advertise and promote goods and services and reach potential and existing customers. But with these expanded opportunities come expanded legal risks.
It’s easier than ever to “advertise”—by posting an ad, photograph, or social media message online or sending an email advertisement. As a result, these forms of advertising tend not to get the same level of business and legal review that more traditional advertising does.
The same laws and regulations apply to digital marketing as to traditional advertising. These include federal and state laws that prohibit false, misleading, and deceptive advertising and regulate consumer email marketing; and Federal Trade Commission regulations which not only prohibit unfair and deceptive advertising but also regulate specific types of advertising—including endorsements, environmental (green) marketing claims and health claims.
Advertisers can implement several best practices to seek to comply with these laws and avoid unreasonable risks of consumer deception, frustration, or claims.
Claims for False, Misleading, or Deceptive Advertising
Both federal and state laws provide private causes of action for false and misleading advertising, and for other advertising practices which are likely to cause confusion or deception. These include the following.
1. Federal Claims for False or Misleading Advertising. The federal Lanham (Trademark) Act prohibits an advertiser from use of any “false or misleading description of fact, or misleading representation of fact which, ... in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities.” (15 U.S.C. § 1125(a)). A false advertising claim can be asserted for advertising statements that are literally false, and for those that are literally true but misleading in the context of the ad.
Also, statements that should be substantiated by testing or studies will be considered false if the underlying test or study doesn’t support the proposition or is not sufficiently reliable. Competitors can bring federal false advertising claims; consumers cannot.
2. State Law False Advertising and Consumer Protection Act Claims, Including Class Actions. State deceptive trade practices and consumer protection acts, and state common law, provide a basis for both consumers and competitors to pursue claims for false, misleading or deceptive advertising—including consumer class actions. The number of consumer class action lawsuits brought for product advertising and marketing practices has skyrocketed in recent years. For example, pending federal class action lawsuits challenging food and beverage marketing increased from about 20 in 2008 to over 425 in 2015 and 2016.
The substance of these food marketing claims vary but include assertions that a product marketed as “natural” or “no preservatives” does not qualify; that a product’s health benefits are overstated, or that a product labelled as “healthy” includes ingredients that aren’t sufficiently nutritious. Class action lawsuits also frequently arise in the “green advertising” space, particularly if an advertiser does not comply with FTC regulations governing “green” marketing.
3. Right of Publicity and False Endorsement Claims. An advertiser’s unauthorized use of a celebrity’s (or non-celebrity’s) name, image, or likeness in commercial advertising (including social media posts to Facebook, Instagram, or Twitter) can give rise to lawsuits for violation of rights of publicity under state law, and for “false endorsement” under federal law. (15 U.S.C. § 1125(a)).
For example, actress Sofia Vergara filed a $15 million lawsuit against Venus Concept for misappropriation of her right of publicity, based on Venus’ unauthorized reposting and promotional use of a selfie that Vergara posted to her social media site while using a Venus skin-tightening product during a massage. Vergara alleged that this misappropriation of her image created the false impression that she endorsed the brand and its products.
Actress Katherine Heigl filed a similar lawsuit against Duane Reade after the drug store chain posted on its Twitter and Facebook sites a paparazzi-style photo of her carrying a Duane Reade shopping bag.
It is crucially important for advertisers to obtain express or implied permission to use images of or references to recognizable people (celebrities or not) in their advertisements or social media posts.
4. Trademark Infringement Claims from Keyword Search Engine Advertising. Advertisers engaged in keyword search engine advertising (also known as “pay per click” advertising, exemplified by Google’s AdWords program) frequently will include their competitors’ trademarks among the keywords that they bid on and purchase to generate search engine ad results.
For example, a Volkswagen dealer may wish to have its ad displayed in the results page when a consumer searches Google for Toyota, and thus may include “Toyota” among the keywords that will generate the dealer’s ads. This has led to trademark infringement lawsuits under 15 U.S.C. §§ 1114 and1125(a). Courts have concluded that an advertiser’s mere purchase of a competitor’s mark as a keyword term, on its own, generally is insufficient to establish the required element of a likelihood of consumer confusion.
However, likelihood of confusion might be found if the content and appearance of the resulting ad misleads, confuses or misdirects a consumer searching for a trademarked brand to the website of the competing advertiser in a manner in which the source of the advertiser’s products or services is unclear (e.g., if the ad does not identify the advertiser as the source of the ad).
FTC and Other Regulation of Unfair or Deceptive Advertising and Other Advertising Practices
1. FTC Regulations Addressing Unfair and Deceptive Advertising. FTC regulations require advertisers to comply with three principal requirements. Advertising claims must:
- not be deceptive, evaluated from the perspective of a “reasonable” consumer;
- not be unfair, in the sense of causing consumer injury that is not outweighed by other benefits; and
- be substantiated, especially when they concern health, safety, or performance.
If a reasonable customer may be confused or misunderstand a particular advertisement without certain qualifying information, the FTC requires the advertiser to provide additional disclaimers containing qualifying information necessary to inform the consumer, which must be clear and conspicuous.
FTC guidelines address use of disclaimers in specific types of online advertising, so that disclaimers will be visible on all platforms as close as possible to the claim made, without excessive scrolling, hyperlinks, pop-ups or other methods of separating these disclaimers from the advertisement itself.
2. FTC Guidelines for Specific Claims. The FTC has issued a number of guidelines for specific types of advertising claims that are particularly likely to mislead consumers. These include, but are not limited to:
- Nutritional and Health Claims. The FTC requires competent and reliable scientific evidence to substantiate claims relating to health or nutrition in advertising. Also, advertisers should not market their products as healthy based on a single nutritional claim, without being able to substantiate the implied impact of the product in its totality. For example, in 2014 the FTC settled an action against KFC based on KFC’s advertisements in which specific truthful and substantiated health claims relating to its fried chicken were used to create a broader picture of healthy eating which the FTC found to be deceptive.
- Environmental and Green Claims. FTC guidelines prohibit advertising use of generic claims such as “green,” “eco-friendly” or “environmentally safe” in advertising, as being too broad to be substantiated. Instead, advertisers must limit environmental advertising to claims of specific objective and substantiated environmental benefits. The guidelines also limit use of specific environmental claims. For example, an advertiser may only claim that a product is “degradable” if the entire product or package will completely break down and return to nature within a reasonably short period of time after disposal (one year for solid products).
- Endorsements. Endorsements are a popular form of social media advertising. If an individual (celebrity or not) is provided with any consideration or value (including free products) for promoting a product or service, FTC guidelines require that the endorsement relationship must be clearly and conspicuously disclosed (e.g., by “#ad”). If the advertisement suggests that the endorser uses the product, the endorser must be a bona fide user and the endorsement must reflect the honest opinions of the endorser. The advertiser cannot use unrepresentative endorsements without disclosing what a typical consumer could expect from the product.
3. Email Advertising/CAN-SPAM. The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or “CAN-SPAM” Act, regulates requirements for the content of email advertising communications to consumers. Among other things, it prohibits the use of deceptive email subject headings and requires consumers to be provided with a method to opt-out of additional email communications.
Best Practices for Complying with Advertising Laws
To minimize legal risks and help ensure compliance with advertising laws and regulations, an advertiser should set up a process for review and clearance of advertising and marketing materials, and a policy and clearance procedure for social media posting and digital marketing content.
Below is a sample checklist that will outline some best practices (Note: this list is not inclusive and does not address all types of advertising impacted by laws and regulations.)
- Are all factual statements in the ad accurate?
- Does the advertiser have a reasonable basis for all advertising claims made, including substantiation or testing to support claims where that would be expected?
- Are any advertising claims potentially deceptive or misleading?
- Are any disclaimers needed to ensure that the statements are not misleading – and if so, are those disclaimers clear, conspicuous, and prominent?
- If endorsements are being used, is the relationship with the endorser being accurately described (such as through “#ad” on endorser tweets or posts)? Is the endorser a bona fide user and is the endorser’s opinion being accurately described?
- Has approval been obtained from persons whose photographs, image or likeness appear in an ad or post (whether they are celebrities or not)?
- Has clearance and approval been obtained for all third-party generated content in an ad or post (which may be subject to copyright or other rights)?
- Are any particular claims being made about health, nutrition, environmental benefits, or origin in the USA, and, if so, are such claims substantiated, truthful and compliant with applicable FTC regulations?
- For email advertising, are consumers being provided the opportunity to opt out from further email advertising?
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.