The evolution of social media in business from “occasional accessory” to “integral component” has in turn forced the law itself to evolve in an attempt to address social media’s increasing relevance. Recent developments in two different areas of law show a newly evidenced recognition of social media’s importance in business.
In late July, we posted our client alert titled FCC Expands Reach of Telephone Consumer Protection Act. The Alert discusses the FCC’s July 10, 2015 long-awaited omnibus Declaratory Ruling and Order. The Ruling focuses largely on providing guidance, particularly for new and emerging technologies, regarding what an automated telephone dialing system (aka ATDS or autodialer) is and when consent to use one to place a call or send a text message is required under the Telephone Consumer Protection Act and its implementing regulation, 47 C.F.R. § 64.1200. All businesses should immediately reevaluate their calling and text messaging practices to ensure compliance with the new Ruling, as it is likely to escalate the continued upward trend in TCPA class action filings.
A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.
Microsoft Points Retired
The latest Xbox 360 system update has retired Microsoft points and now all transactions on the platform will make use of local currency.
Software Patent Mess Hits High Court with WildTangent Case
In what attorneys hope will be the first step toward clearing up the muddled legal standard for when software is patent-eligible, WildTangent Inc. asked the U.S. Supreme Court on Friday to address a question it said the Federal Circuit had left in “complete disarray.”
9th Circ. Weighs in on Player Likeness in Video Games
On Wednesday, July 31, 2013, the Ninth Circuit issued two opinions assessing the parameters of use of individual player likenesses in video games in two highly watched cases.
Foursquare deal could be a goldmine for Yahoo
Yahoo and Foursquare are in talks for a data partnership.
‘Candy Crush’ Maker Accuses Rival of Cloning its Games
Facebook game developer King.com Ltd., creator of the popular “Candy Crush Saga,” launched a suit in California federal court Tuesday accusing rival 6 Waves LLC of infringing its copyright on two online games.
Facebook wins final approval for ‘Sponsored Stories’ settlement
The social network pays out $20 million and adds more controls to settle a lawsuit over a feature that publicized users’ “likes” on advertisements without permission or compensation.
Facebook: Actually, here’s how we’re using your data for ads
In proposed terms of service, the social network illustrates how member data is used as a part of Sponsored Stories – because a court ordered it to do so.
On March 12th, the Federal Trade Commission issued a report updating its mobile and online advertising guidelines. The recently issued report was a follow-up to the year 2000 “Dot Com Disclosures” to address the marked technical and legal changes that have occurred in the past 13 years. The FTC guidelines emphasize that no matter how technology changes the delivery of content, consumer protection laws continue to apply equally “across all mediums, whether delivered on a desktop computer, a mobile device, or more traditional media such as television, radio, or print.” The intent of the report is to assist advertisers to better identify when a disclosure is needed in connection with social media ads and how best to ensure that any disclosures are conspicuous and not deceptive. In order to maximize its usefulness, the report used more than 20 mock ads to illustrate the updated principles.
The FTC report advises that advertisers should ensure that clear and conspicuous disclosures are made on all devices and platforms that an advertisement can be accessed on and if the disclosure cannot be made clearly and conspicuously on a particular device or platform, then that device or platform should not be used. Not only does the new report take into account the space limitations inherent in certain social media sites, like Twitter, but also the growing user viewing habits of content make available on small screen smartphones. “The new guidance points out that advertisers using space-constrained ads, such as on some social media platforms, must still provide disclosures necessary to prevent an ad from being deceptive, and it advises marketers to avoid conveying such disclosures through pop-ups, because they are often blocked,” the FTC said. In order to accomplish this in a better form the report suggests that an advertiser can include “Ad” or “Sponsored” before the message itself. Additionally, the report admonished advertisers to consider whether a consumer will be able to view any disclaimers if it is required to “zoom-in” to read any part of the ad. However, the new report is slightly more flexible when dealing with smaller screens by, allowing advertisers to make sure disclosures are “as close as possible” to the ad claim instead of the original guidelines which discussed having disclaimers “near or on the same page” as the advertisement.
If you have any questions about the new FTC guidelines and how they may affect your business Pillsbury would be happy to speak with you about them.
Thank you to everyone who joined us in both New York and Washington, DC for our Social Media Week events – Game On!
Special thank you to all of our panelists: Randy Leibowitz, Mike Scafidi, Tim Ettus, Lou Kerner, Peter Corbett, Jim Gatto, Sean Kane, Lauren Lynch Flick and Tina Kearns (many featured in the picture and video below).
User endorsements are becoming a more and more popular form of “advertising” as the use of social media and user-generated content continues to increase. These endorsements often take the form of reviews via blogs or Yelp, but can also include other less conspicuous communications. These endorsements can be quite powerful. As a result some companies will compensate users for giving them. In some cases, the compensation can bias the endorsement. While this is not illegal, it creates issues that need to be considered.
In some cases, user endorsements leverage social media features. For example, a company’s website may include a button that, when clicked by a user, causes a positive message about the company to be posted via the user’s Facebook, LinkedIn, Twitter, or other social media account. When there is compensation for that endorsement–even soft compensation such as through loyalty program points or virtual goods–federal laws may come into play.
The Federal Trade Commission’s endorsement guidelines impose requirements on both the endorser and the advertiser if there is a “material connection” between the two parties. A material connection exists when there is a commercial link that consumers would not expect. A commercial link may arise when an endorser is compensated for the endorsement, for example, by payment, free samples, coupons, or other benefits. Several factors must be considered when determining whether there is such a consumer expectation to trigger the FTC requirements.
One of the requirements identified by the FTC is that any material connection must be “clearly and conspicuously” disclosed. The advertiser has affirmative duties to advise the endorser regarding the disclosure requirement and to have procedures in place to monitor compliance by the endorser. While both the endorser and the advertiser are subject to liability, the FTC has indicated that its enforcement activities will generally focus on advertisers.
Contact us for more information on compliance with the FTC guidelines.
Resolving a conundrum faced by every business that has entered the world of consumer texting, the FCC has ruled that businesses are not violating the federal Telephone Consumer Protection Act (“TCPA”) by sending a confirmation text to consumers who have just opted out of receiving further texts. However, the FCC did impose limitations on the content of such confirmation texts to ensure compliance with the TCPA. The threshold requirement is that the purpose of the reply text be solely to confirm to the consumer that the opt-out request has been received and will be acted on. The FCC then enumerated several additional requirements that businesses must observe when sending confirmation texts to avoid violating the TCPA. For those affected, which is pretty much every business that uses texts to communicate with the public, we have released an FCC Ruling Client Alert on Texting Opt-Outs.
To many, sending a confirmation text to a consumer who has previously opted in to receiving a company’s text messages would appear to be nothing more than good customer service and an extension of the common practice of sending a confirmatory email message when a consumer has chosen to unsubscribe from an email list. Indeed, many wireless carriers and mobile marketing and retail trade associations have adopted codes of conduct for mobile marketers that include sending confirmation texts to consumers opting out of future text messages.
However, the TCPA, among other things, makes it illegal to make a non-emergency “call” to a mobile telephone using an automatic telephone dialing system or recorded voice without the prior express consent of the recipient. The FCC’s rules and a decision in the U.S. Court of Appeals for the Ninth Circuit define a “call” as including text messages. As a result, many businesses have had class action lawsuits filed against them by consumers arguing that, once they send a text message opting out of receiving future texts, their prior consent has been revoked, and the business violates the TCPA by sending ANY further texts, even in reply to the consumer’s opt-out text.
Seeking to avoid facing such lawsuits and the potential for conflicting decisions from different courts, businesses sought the FCC’s intervention. After reviewing the issue, the FCC rejected the fundamental argument raised by the class action suits, noting that the FCC has never received a single complaint from a consumer about receiving a confirmatory text message. The FCC did note, however, that it had received complaints from consumers about not receiving a confirmation of their opt-out request. The Commission therefore held that when consumers consent to receiving text messages from a business, that consent includes their consent to receiving a text message confirming any later decision to opt out of receiving further text messages.
To avoid creating a loophole in the TCPA that might be exploited by a business, the FCC proceeded to set limits on confirmation texts designed to ensure that they are not really marketing messages disguised as confirmation texts. First and foremost, the implied permission to send a confirmation text message only applies where the consumer has consented to receiving the company’s text messages in the first place. Next, the confirmation text message must be sent within five minutes of receiving the consumer’s opt-out request, or the company will have to prove that a longer period of time to respond was reasonable in the circumstances. Finally, the text of the message must be truly confirmatory of the opt-out and not contain additional marketing or an effort to dissuade the consumer from opting out of future texts. You can read more about the FCC’s decision and these specific requirements in the firm’s Client Alert.
By providing clarity on the relationship between confirmation texts and the TCPA, the FCC’s ruling provides marketers and other businesses with some welcome protection from class action TCPA suits. In an accompanying statement, Commissioner Ajit Pai stated that “Hopefully, by making clear that the Act does not prohibit confirmation texts, we will end the litigation that has punished some companies for doing the right thing, as well as the threat of litigation that has deterred others from adopting a sound marketing practice.” Businesses just need to make sure they comply with the FCC’s stated requirements for confirmation texts to avail themselves of these protections.
Please see the original post on Pillsbury’s CommLaw Center blog.
On September 30, 2011, a new set of digital marketing guidelines went into effect for distilled spirits companies in the United States and Europe.
The self-imposed guidelines,
detailed below, were developed jointly by the Distilled Spirits Council of the United States (DISCUS), the national trade association representing America’s leading distilled spirits companies and nearly 70% of all distilled spirits brands sold in the United States, and the European Forum for Responsible Drinking (EFRD), an alliance of Europe’s leading distilled spirits companies.
The guidelines consist of a set of “basic principles” together with definitions and directions for implementing those principles. They aim to protect consumers’ information while urging responsible marketing practices in the context of digital media such as websites, social networks, blogs and mobile apps. Furthermore, the issuance of these guidelines reflects the fact that digital marketing is increasingly a valuable and appropriate tool for reaching consumers who are legally old enough to purchase distilled spirits.
Per the guidelines, distilled spirits companies should:
1. intend their digital marketing communications for adults of legal purchase age;
2. place their digital marketing communications only in media where at least 71.6% of the audience is reasonably expected to be of the legal purchase age (and DISCUS notes that Nielsen online syndicated data from August 2011 disclosed that 82.22% of the Facebook audience, 86.86% of the Twitter audience, and 80.96% of the YouTube audience,
was 21 years of age or older);
3. require age affirmation (full date of birth to determine if a user is of legal purchase age) when a user first reaches the companies’ interactive webpages;
4. display, on their webpages that permit the posting of user-generated content, a disclaimer stating that all inappropriate user-generated content will be removed;
5. monitor and moderate,
preferably every business day but no less than every five business days,
user-generated content on the companies’ webpages and promptly remove inappropriate material;
6. instruct users that digital marketing communications should not be forwarded to individuals below the legal purchase age;
7. respect user privacy in their digital marketing communications;
8. ensure that their digital marketing communications and product promotions are identified as brand marketing;
9. include social responsibility statements in their digital marketing communications where practicable; and
10. display, follow, and encourage users to read before submitting their information, a privacy policy that provides for the following: age affirmation will be used prior to the collection of any other information; user information can only be collected from people who are of the legal purchase age; an “opt-in” mechanism will be used before the user receives a direct digital marketing communication,
and an “opt-out” mechanism will be available if a user wants to discontinue receiving such communications; clear information must be provided about the collection and use of personal data; information collected shall never be sold or shared with unrelated third parties; and steps will be taken to keep user information secure and protected from loss or theft.
Although the guidelines are self-imposed and do not constitute a legal regulation, law or statute, failure to comply with these guidelines may have adverse consequences. DISCUS, for example, has said that it will (i) investigate U.S. distilled spirits companies that are reported to be not in compliance with the guidelines and (ii) disclose the results of such investigations on its website. Consequently, we recommend that distilled spirits companies in the United States and/or Europe review the new guidelines and seek counsel on how they might impact current company practices.
Time Warner’s recent earnings report shows that a video game helped drive its earnings, according to a recent report by Investor Place.
According to the report, the video game LEGO Star Wars III: The Clone Wars, is based on George Lucas’ long-running science fiction brand, and enables players to control Star Wars characters built out of iconic Lego building blocks. Here is a link to the game site.
This result for Time Warner is another powerful example of how brands are leveraging games for enhanced consumer engagement and to drive revenues.
Social media took a step into the real world with Pepsi’s announcement of a social vending machine. According to the press release, Pepsi will launch its Social Vending System, a state-of-the-art networked
unit that features full touch screen interactive vending technology, enabling
consumers to better connect with PepsiCo brands right at the point of purchase.
A prototype of the Social Vending System will debut at the National Automatic
Merchandising Association’s One Show in Chicago, April 27-29. According to the release:
Using digital technology, PepsiCo’s Social Vending System enables any user to
gift a friend by selecting a beverage and entering the recipient’s name, mobile
number and a personalized text message. There’s also the option to further
personalize the gift with a short video recorded right at the machine. The gift
is delivered with a system code and instructions to redeem it at any PepsiCo
Social Vending system. When the recipient redeems his or her gift, they’re given
the option of either thanking the original sender with a gift of their own or
paying it forward and gifting a beverage to someone else.A promotional video is available.
This innovative approach to integrating social media into everyday activities and to devices and appliances is part of a growing trend that is resulting in social media going well beyond just Facebook and other internet sites.
Judging from the patent filings that we monitor in this area, there is much more to come!. Many companies are filing patents for innovative uses of social media integrated into everyday activities and to use of social media for innovative advertising and brand engagement concepts.
Internet & Social Media Law Blog