Antitrust Law Daily Wrap Up, ADVERTISING NEWS: Commissioner Brill discusses FTC advertising initiatives, (Sep 28, 2015)

By Linda O’Brien, J.D., LL.M.

With the rapid rise of social media and constant connectivity through more and more devices swapping information, society is entering the age of the democratization of truth, which means if it is trending, it must be true, said FTC Commissioner Julie Brill today in a speech at the Better Business Bureau’s National Advertising Division Annual Conference in New York City.

Brill began her keynote address by stating that endorsement disclosures, data use and disclosures in ad technology, health claims for mobile apps, and dietary supplements are several advertising issues of special interest to the FTC. While swirling the cyber-atmosphere is reshaping the world for advertisers and the FTC, the basic principles remain unchanged. The fundamental goal of the advertising industry is the same as it always was: to sell a product or service, said Brill. And the FTC’s interest in advertising is the same as it always has been: to ensure ads provide consumers with the information they need to make meaningful choices about the goods and services they buy.

Endorsement disclosures in new media. In the case of online and video reviews, consumers ought to know connections between endorsers and advertisers, Brill said. The FTC’s Endorsement Guides apply as much to video bloggers, online content creators, and those who pay them, as they do to any other advertiser or endorser. Consumers are turning more and more to YouTube and Twitter for the product information and perhaps a more powerful influence on their choices is online user reviews. Approximately 60 percent of consumers who read online reviews before making a purchase decision trust the assessments of real people more than paid advertising. If there is a connection between an endorser and advertiser that would affect how consumers evaluate the review, that connection must be clearly and conspicuously disclosed, Brill noted.

Data collection and its use in advertising. According to Brill, advertising has become one of the most technologically advanced and data driven industries in the economy. More than ever, advertisers leverage data to reach customers, personalize experiences, and make predictions about consumer behavior. Targeted advertising can be good for business in general and for consumers. But how much data is collected about consumers, how it is stored, and how it is used, raises significant privacy concerns, stated Brill. For example, a newly emerging form of tracking uses sensors to track customers’ mobile phone signals to detect individualized or aggregated traffic patterns about consumers as they travel through stores and malls. At a bare minimum, where device-level data is collected or stored, it is critical that consumers are aware of retail mobile location tracking when it is happening and are able to exercise some control over its use.

For over fifteen years now, the FTC has pushed for more consumer control over third-party data collection online. In 2010, the agency called for the establishment of a universal “Do Not Track” tool where consumers could opt out of cross-site data collection in their browsers. Yet, in 2015, consumers still do not have an adequate means to opt-out of data collection. It is more clear than ever that self-regulation needs to keep up with the times: after all these years, consumers still don’t understand what’s happening with their personal information, and they continue to struggle to control targeted advertising and data collection, in Brill’s view.

Health claims. Over the past year, Brill continued, the FTC has taken noteworthy actions in the area of online games and mobile apps that purport to treat health or cognitive conditions. Advertising substantiation issues in more traditional advertising media were also on the Commission’s radar screen. The agency’s focus on unsubstantiated health claims also includes homeopathic drugs. Homeopathy, a centuries’ old alternative practice, originally involved the creation of niche products formulated for an individual user. Today, it has grown into a multibillion-dollar over-the-counter industry. Unlike other over-the-counter drugs and dietary supplements, the Food and Drug Administration currently does not require that over-the-counter homeopathic drugs demonstrate efficacy if they satisfy certain conditions. In contrast, the FTC’s advertising substantiation standard clearly requires that efficacy claims of all over-the-counter drugs, whether homeopathic or not, are supported by competent and reliable scientific evidence, Brill noted.

The explosion of social media, connected devices, mobile apps, data, and methods of data analysis has brought benefits and threats to consumers that were unimaginable even three years ago. But the principles of truth in advertising, consumer control over their data, and privacy protection behind which the FTC has always stood can and do still apply. In these times, keeping what has “served us so well in the past is perhaps the best way to ensure we can adequately protect consumers in what will certainly continue to be a challenging future,” Brill concluded.

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