A recent state court decision in California could prove a major headache for online retailers that engage in comparative price advertising. Although the decision — People of the State of California v. Overstock.com — is not binding precedent and its future on appeal is far from clear, the decision suggests that retailers may be forced to adopt more rigorous internal standards when engaging in comparative price advertising.
Opt-In or Else: Maryland Introduces Negative Option Bill
Maryland is considering a ban on negative option plans after a bill restricting its use to Maryland consumers was recently introduced. If approved to become law, the bill will require merchants to obtain express consent before billing consumers using a negative option feature. Therefore, marketers would be required to obtain express affirmative consent prior to beginning to bill a consumer for consecutive periods until the consumer cancels. A similar bill was introduced last year, but did not progress. Arent Fox will continue to monitor the progress of this legislation.
The Council of Better Business Bureaus (BBB) recently announced that it will be increasing its enforcement efforts for website operators that participate in online behavioral advertising (OBA), which is targeted advertising to consumers based upon their interests. The BBB is responsible for enforcing the self-regulatory code created by the Digital Advertising Alliance (DAA), which requires website operators to provide additional information regarding their OBA activity. Although the DAA code has been in force for some time now, the BBB has noted that many website operators are failing to comply. Therefore, beginning this year, the BBB intends to increase its efforts to require compliance.
The Federal Trade Commission (FTC) has recently approved the kidSAFE Seal Program’s kidSAFE+ seal as a safe harbor program through which companies can demonstrate compliance with the Children’s Online Privacy Protection Act (COPPA) Rule.
A company that is approved under the FTC’s safe harbor program is deemed to be in compliance with the COPPA Rule. This means that the FTC has sanctioned the practices of the website with respect to its collection of data from children under the age of 13. As it was approved, the kidSAFE Seal Program’s kidSAFE+ seal will now serve as a safe harbor option. It is available to websites and applications, including mobile apps, tablet devices, and other interactive technologies.
According to a recent ruling in the US District Court for the Northern District of California, CrossFit may have violated the Digital Millennium Copyright Act (DMCA) by submitting a DMCA takedown request to Facebook based on trademark rights instead of copyrights. The case is a reminder that there are consequences under the DMCA for companies that fail to exercise caution when policing their trademark rights and copyrights on the internet.
FTC Calls Unreasonable Security an Unfair Trade Practice
A lawsuit filed by the Federal Trade Commission (FTC) against Accretive Health, Inc. reminds employers to ensure they have a policy in place to manage employee use, access and control over personal data. The FTC investigation began when an Accretive employee’s laptop, storing the sensitive health information of 23,000 patients, was stolen.
While the loss of a laptop alone may not have been viewed as a large problem, the fact that the employee had that much information on the laptop when the information was not necessary for the employee to do his job was viewed as a larger issue. Additionally, the FTC determined that the company created unnecessary risk to consumer information by permitting the transport of sensitive information in unsecure manners, failing to limit access to information, and failing to have proper data removal or destruction processes.
The Federal Trade Commission (FTC) recently approved a new method for obtaining verifiable parental consent that could make it easier for companies to comply with the Children’s Online Privacy Protection Act (COPPA) Rule. The COPPA Rule applies to websites that are “targeted” at children under the age of 13 and websites that have “actual knowledge” that they are collecting personal information directly from users of another website or online service directed to children (covered websites). Primarily, the Rule requires a covered website to provide notice to parents about its information collection practices, as well as obtain verifiable parental consent prior to collecting personal information from children. To assist companies in complying with the verifiable parental consent requirement of the COPPA Rule, a technology services company called Imperium LLC developed the new method, which it hopes will streamline the consent process for parents and website operators.
The US Supreme Court has agreed to consider a dispute between Pom Wonderful (Pom) and The Coca-Cola Company related to whether a drink label can be considered deceptive under federal false advertising laws, but permissible under regulations of the Food & Drug Administration (FDA). A decision in the case could have a significant impact on federal false advertising litigation and potentially force some companies to reexamine their food labeling practices.
According to the US District Court for the Northern District of California, Google’s co-mingling of the personal identification information (PII) it collects from users across multiple product platforms does not create an injury sufficient to grant standing to sue in federal court. Merely alleging that Google profited off users’ data is not enough. Rather, plaintiffs must allege some specific economic deprivation resulting from the use of the data. As stated by the Court: “a plaintiff must do more than point to the dollars in a defendant’s pocket; he must sufficient allege [sic] that in the process he lost dollars of his own.”
By now, most consumers are familiar with those sponsored links that appear on Yahoo!, Google, or Bing after they search for something on the Internet. Those “keyword” advertisements are a significant source of revenue for the online search engines, appearing on consumers’ computer screens next to the “organic” search results when consumers type in relevant phrases or terms. The ads work because they are designed to mirror the consumer’s search and ideally to provide the consumer with exactly what they were looking for. But some companies are crying foul – arguing that the keyword ads are so close to consumer searches that they violate the companies’ intellectual property rights.
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