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Jurisdiction

FTC Act: Unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful 15 U.S.C. § 45. Jurisdiction. Scope. All media. All products & services. Deception Analysis. What representation does the ad convey to reasonable consumers?

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Jurisdiction

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  1. FTC Act: Unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful 15 U.S.C. § 45 Jurisdiction

  2. Scope All media All products & services

  3. Deception Analysis • What representation does the ad convey to reasonable consumers? • Is the representation material to purchase or use decisions? • Is the representation false or misleading?

  4. Advertisers must possessa reasonable basis supporting all claims, express and implied, that reasonable consumers take from the ad. Health and safety claims must be supported by competent and reliable scientific evidence. Substantiation Requirement

  5. Early ads:explicit claims, e.g., “finally, a cure for the common cold” FTC v. Airborne

  6. Later ads: implied claims to protect against or help fight germs The Airborne consent order requires defendants to pay up to $30 million for consumer redress.

  7. FTC v. Chinery FTC alleged that ads failed to disclose: • Consumers engaged in rigorous diet and exercise (some received a personal trainer) • Consumers were paid between $1,000 and $20,000 for their endorsements Defendants agreed to pay between $8 to $12.8 million

  8. Word-of-Mouth Marketing • do not misrepresent the source of a message • disclose material connections

  9. Word-of-Mouth Marketing

  10. Unfairness An act or practice that causes, or is likely to cause, substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition 15 U.S.C. § 45(n)

  11. Unfairness Examples • unfair collection of unauthorized fees unfair installation of adware on computers without consumer knowledge, authorization unfair collection and disclosure of consumer information using spyware

  12. Use of consumer’s activities online to provide targeted ads Behavioral Advertising Preferred Approach = Self-Regulation Proposed Principles of Self-Regulation: • Transparency and consumer control • Reasonable security and limited data retention • Affirmative express consent from the consumer for materially different use of collected data • Affirmative express consent for use of sensitive data

  13. Thank you! Questions?

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