Regulatory Rumblings

Protecting One’s Brand and One’s Name

Posted: May 19, 2015 10:58am ET

The old adage goes, “sticks and stones may break my bones but names will never hurt me.” Well actually they can, as many major brandholders are increasingly learning. Imagine a company, celebrity or politician investing millions of dollars to create and promote a product or personal image, only to have an outsider attach a derogatory web suffix to that brandname and significantly damage that investment. No imagination, however, is needed; that’s just what is happening, despite the fact that ANA and others have been warning for years about the dangers of permitting this misuse of domain names.

Since the development of the Internet, the US Department of Commerce has had an agreement with the Internet Corporation for Assigned Names and Numbers (ICANN) to manage the use of domain names. Many of them are familiar to us all – .com, .net, .org. But a few years ago ICANN decided to permit the use of multiple domain names that are becoming more and more familiar – like .sucks, .xxx, .porn, .adult, .wtf and others. Incomprehensibly, at this very important juncture, the Department appears to be deciding to give up its major role in overseeing ICANN’s management of the domain process, which could occur sometime next year.

Meanwhile, ICANN has set up procedures to award domain names, and it has given the “.sucks” top-level domain to a company called Vox Populi, which is charging $249 for “.sucks” registrations. But if you want to defend yourself against someone else obtaining your brandname and registering it attached to “.sucks,” that will cost you $2,499 for what is known as a “defensive” registration. Protecting against all variations of those derogatory uses can add up.  At a hearing last week before the House Judiciary Committee, it was made clear that this is just the tip of the iceberg. Defensive registrations may have to be obtained in multiple languages in order to prevent global brand name harm.

Just ask Taylor Swift, who reportedly has purchased lots of variations for porn domains associated with her name. She wanted to get ahead of them becoming available in June, when others will be able to purchase these domain names and either cause her harm by using it or potentially attempt to extort payments from her to safeguard her image. And she’s not alone, as Kevin Spacey, Oprah Winfrey, and Microsoft (among others) also are reported to have bought their names in the “.sucks” domain. In 2011, the University of Kansas and other colleges including Michigan, Penn State, Missouri, Purdue, Pittsburgh, Carnegie Mellon and Indiana bought variations of the “.xxx” name. None of them are likely to use any of these names themselves, but they’re incurring huge expenses just to keep others from doing them harm.

At the House hearing, Rep. Blake Fahrenthold (R-Tex.) wondered about a politician’s exposure when he asked, “If I have to register blake.com, blake.net, blake.org, blake.biz, blake.us, blake.sucks, you know, where does it stop?” Clearly, the ever-growing list of potential Presidential aspirants also will be faced with these issues. Indeed, brandowners and others increasingly will be asking that question unless U.S. plans to surrender involvement in ICANN oversight are slowed and adequate safeguards are put in place to prevent just such financial hold-ups.

Shakespeare’s Romeo and Juliet asks, “What’s in a name?” Brandholders are learning that hundreds of thousands of wasted dollars in defensive registrations are the price to avoid harm when some offensive domain names are approved by ICANN. It is critical that you join with ANA and others in communicating your concerns to the Congress, the Department of Commerce and ICANN itself before the transition occurs. 

New Study Ignores Major Strides Made under the Children’s Food and Beverage Advertising Initiative

Posted: May 13, 2015 9:00am ET

A new report by Dale Kunkel at the University of Arizona in the American Journal of Preventative Medicine totally dismisses and blatantly ignores the multi-billions of dollars spent and the multitude of proactive steps that the food and advertising community have taken to address child obesity in the U.S.

The research used in this report is inaccurate and the categories used to define healthy food for children are overly simplistic. The report’s “Go, Slow, Whoa” model to categorize food is inconsistent with the U.S. government’s standards on nutrition laid out in the Dietary Guidelines for Americans and its standard for food served to children in the School Breakfast and School Lunch programs.

Unfortunately, Kunkel’s report thoroughly disregards the important strides the Children's Food and Beverage Advertising Initiative (CFBAI) has made to combat childhood obesity over the past nine years. The CFBAI Initiative was launched in November 2006 by the Council of Better Business Bureaus to provide companies that advertise foods and beverages to children with a transparent and accountable advertising self-regulation mechanism. CFBAI is aimed at shifting the mix of advertising messages directed to children under 12 to encourage healthier dietary choices and healthy lifestyles and is the most extensive self-regulatory program ever undertaken within the food and beverage industry.  Kunkel, in assessing the program, states “How much has been accomplished?  Virtually nothing.”  In fact, there has been enormous progress with thousands of new and reformulated products that are lower in salt, fat and lower calories. Furthermore, advertising to children has been transformed with the vast majority of products advertised to kids 12 and under for healthier products.

The CFBAI program’s director, Elaine Kolish, has written a very thoughtful detailed response demonstrating how completely off target and inaccurate the Kunkel study is.

The success of CFBAI and the food and advertising community cannot be dismissed. Often in consultation with First Lady Michelle Obama, the industry has cut more than 6.4 trillion calories out of foods in just the last four years. More than 20,000 food products have been reformulated to provide healthier food options. The Federal Trade Commission, which has extensively studied food marketing to children, has commended the progress of this important initiative.

Obesity is a major problem and the food and advertising communities have been proactive in responding to help people lead healthier lives. The advertising community pledges its continued support and will work to expand the strength and momentum of the CFBAI program, which has proven so successful to date.

ANA and Broad Coalition of Groups Oppose Onerous Data Breach Bill in Illinois

Posted: May 11, 2015 4:30pm ET

Today, the ANA and a broad coalition of other groups sent a letter to the Illinois House Judiciary-Civil Committee strongly opposing the extraordinarily broad Illinois data breach bill, SB 1833. That bill will be heard by the committee on Wednesday. The bill, which has already passed the Illinois Senate, is of major concern because it includes consumer marketing information as a category for breach notification. It is particularly bad for advertisers since it would expand security breach notice obligations far beyond the notice obligations that exist in any other state, which will set an onerous precedent.

This bill could have serious, negative implications to the economic stability and success of the state of Illinois. SB 1833 would negatively impact Illinois businesses and residents. According to a recent study, the Illinois Data-Driven Marketing Economy (DDME) is responsible for over $7 billion in revenues and more than 30,000 jobs annually to the state. Creating unnecessary compliance burdens on the businesses, marketers, advertisers, nonprofits and associations that drive Illinois’s data-driven economy absent a commensurate benefit to Illinois residents is not sound public policy.

The proposal is a significant overreach because it includes language that specifically targets advertisers but also including breaches of strictly marketing data as well as a number of other categories, including geolocation data. Even greater concern arises from the bill containing no risk of harm trigger, meaning that even information that is publicly available or that creates no risk to people whose information has been breached would be cause for notification. Consumers will therefore almost certainly be bombarded with breach notifications that will not serve any valid purpose because they would not be facing any threat of harm. ANA already sent an opposition letter to the Illinois Senate focusing on these areas of concern, and we intend to send one to Illinois House members to highlight the unnecessary burdens this would place on constituencies and consumers.

The prevalence of the introduction of these sorts of proposals in state legislatures is especially disturbing because it only adds complexities to the current patchwork of 47 different and inconsistent state laws regarding data security and data breach, and steers us further away from a solid piece of federal legislation. These inconsistencies yield a very difficult and constantly shifting regulatory environment in which businesses are unable to operate successfully and impose onerous and unnecessary costs.  

The movement of this Illinois breach proposal, and the damage that it could do to an already challenging system of various rules and regulations, is why the ANA and numerous other organizations are urging Congress to pass a federal data breach law that preempts the various state rules. Otherwise, we will continue to face individual proposals for unreasonable standards, and business will continue to struggle to abide by inconsistent rules. Until federal preemption is put into place, advertisers will continue to fall victim to attacks seriously burdening companies while not providing reasonable protection for consumers.

The full letter sent to the Illinois House Judiciary-Civil Committee can be viewed here.

Attention Advertisers: Companies are Required to Comply with New DAA Mobile Guidance Starting September

Posted: May 7, 2015 3:30pm ET

Today, the Digital Advertising Alliance (DAA) announced that mobile privacy enforcement, including compliance with new guidance specific to cross-app data, precise location data and personal directory data, will begin September 1, 2015. This is especially important for major advertisers who collect and use data across sites or apps for interest-based advertising.

The DAA with the support of ANA was created to implement cross-industry, independently enforced self-regulation of online interest-based advertising and data collection across digital platforms. This past February, the DAA launched two new mobile tools for consumers: AppChoices and the DAA Consumer Choice Page for Mobile Web, which mirror the programs currently available on desktop browsers that provide mechanisms for consumer choice and enhanced privacy controls.

This evolution in the DAA's choice platforms adapts consumer-friendly, independently enforceable privacy controls to the fast-growing mobile medium. DAA Consumer Choice Page for Mobile Web is an updated, mobile-optimized version of the desktop Consumer Choice Page already used by millions of consumers that allows consumers to set their own preferences for data collection and ensures that they can confidently manage how they receive interest-based ads across the Internet.

ANA will continue to support the innovative developments of the DAA and the overarching goal to protect the privacy of consumers. These efforts improve the quality and trustworthiness of our self-regulatory system and extend important privacy safeguards for consumers.

Companies with questions regarding their compliance obligations and the enforcement process can contact the Council of Better Business Bureaus at GBarton@council.bbb.org or the Direct Marketing Association at ethics@the-dma.org, the organizations responsible for the ongoing independent oversight of the DAA Principles on browsers and now extended to the mobile space.

Look Out, FCC Privacy Regulation is on the Way

Posted: May 1, 2015 10:00am ET

On Tuesday, the FCC held a workshop to explore its role in protecting the privacy of consumers who use broadband Internet access service. This major foray into the privacy sphere has been accelerated by the FCC’s recent net neutrality rules, which have opened up the door to broadband regulation by the Commission.

At the workshop, much of the discussion revolved around how advertising technologies impact the privacy of consumers using broadband services. Many broadband providers collect data that is used for advertising purposes but also for operational reasons. It was stressed by Robert Quinn, Senior Vice President-Federal Regulatory and Chief Privacy Officer at AT&T, that advertising allows for consumers to receive services at a much lower cost than they would if advertising were taken out of the picture. Furthermore, companies like AT&T use the data collected for network maintenance and to improve the user experience.

While it is clear that broadband providers are collecting data about consumers for many purposes, the question remains; how will the government regulate these activities? Under Section 5 of the Federal Trade Commission Act, the Commission has authority to police unfair or deceptive acts or practices – including advertising. In recent years, this has included how a company handles and maintains the safety of consumer data.

However, with the FCC now becoming more active, we are seeing the potential for substantially greater conflict or regulatory overlap in this area. As was stated in a previous post to this blog, enhanced FCC participation may result in concurrent jurisdiction between the FCC and the FTC, or even total FCC preemption of FTC regulatory authority in some areas.

ANA will continue to actively monitor new developments at the FCC as the developing increased regulation of broadband will clearly have large implications for advertisers. As was seen at this workshop, advertising is in the line of fire when it comes to consumer privacy, and we must work to ensure that misconceptions about the industry are not allowed to adversely influence policy and regulation. While there are major legal and legislative efforts to derail or overturn the FCC’s net neutrality efforts, for the time being at least they have created a substantially altered regulatory landscape for advertisers and the Internet.

Data Breach Bill in Illinois Threatens to Set a Dangerous Precedent

Posted: Apr 23, 2015 12:00am ET

Yesterday, a very troubling data breach bill was passed out of the Illinois State Senate and advanced to the House chamber. The bill, SB 1833, is especially bad for advertisers as it would greatly expand security breach notice obligations in Illinois far beyond notice obligations in any other state and would include breaches of strictly marketing data as well as many other categories, including geolocation data. Furthermore, the bill contains no risk of harm trigger. This means that even information that is already publicly available or that creates no risk to state residents whose information has been breached would be cause for notification. ANA has already sent an opposition letter to the Illinois Senate and will also be sending one to House members. We strongly encourage advertisers with a presence in Illinois to contact the Illinois legislature to let them know what an unnecessary burden this bill creates.

Bills like SB 1833 are becoming more prevalent in state legislatures as the states attempt to create their own powerful privacy regimes in the absence of federal legislation. Currently, the patchwork of 47 (with Alabama slated to institute the 48th) different state laws regarding data security and data breach have created a very difficult, inconsistent, and constantly shifting regulatory environment for businesses throughout the country.

As advertisers, we must work hard to ensure bills such as SB 1833 do not become law, instituting requirements that are overbroad and unnecessarily burdensome for companies. If SB 1833 does become law, it will set a dangerous precedent for other states around the country. Ideas that appear in one state very quickly spread to the others, meaning that one bad bill could be multiplied substantially in just a few years.  

The extraordinarily overbroad Illinois breach proposal is one more poster-child for why ANA is strongly urging Congress to pass a federal data breach law that preempts the expanding patchwork of state breach laws. Without federal preemption, we will continue to need to fight ever-changing attempts to put in place unreasonable standards. Until federal preemption is put into place, advertisers will continue to fall victim to attacks seriously burdening companies while not providing reasonable protection for consumers.

Update: New TLD “.sucks” Creates Further Uproar

Posted: Apr 20, 2015 10:55am ET

By Clark W. Lackert, Reed Smith LLP

In our previous post last month on this hot issue, we urged ANA members to protest this new money-making scheme by ICANN which creates price gouging of brand owners and at the same time price subsidies for so-called protest sites. A new wrinkle in this debate has created additional furor, namely, ICANN would receive up to an additional $1 million for granting the registry agreement to the current registrar, Vox Populi. How was this done? The registry agreement creates a one time “registry access fee” of $100,000, and then a $1 “registry administration fee” for each of the first 900,000 domain names registered. This arrangement is truly unique and creates additional concerns about how ICANN is currently being managed.

In response to overwhelming negative community feedback to ICANN, and a strongly worded letter from the Intellectual Property Constituency (“IPC”) of ICANN, ICANN decided it needed to respond to these accusations. It directed its outside counsel to write to both the U.S. Federal Trade Commission and the Canadian Office of Consumer Affairs to determine if Vox Populi has violated any laws or regulations. It is also possible that these agencies may find ICANN itself in violation. ICANN also instructed their Chief Contract Compliance Officer, Allen Grogan, to investigate this issue further to determine if any contractual obligations have been breached. Finally, ICANN responded to the IPC in which they defended their actions but also indicated they were investigating any possible illicit activity further. Importantly, they encouraged ICANN community members to share any information on the “.sucks” rollout with ICANN to determine Vox Populi’s compliance.

Tax Day and the Threat to Advertising

Posted: Apr 15, 2015 12:00am ET

In an apparent symbolic gesture, the Senate Finance Committee chose April 15th as the day for the business community and other groups to provide their comments in regard to tax reform. The advertising community in particular has reason for extreme concern because of proposals put forward in the last Congress in both the Senate and House that threaten to radically transform the tax treatment of advertising.

These proposals would require advertisers, for the first time in this country’s history, to amortize or write off 50% of their advertising expenditures over 5 or 10 years. This change from the longstanding ability of advertisers to write off advertising expenditures immediately would impose an at least $169 billion in additional tax burdens on advertising over 10 years.

Recent data from IHS Global Insight, a world-renowned economic think tank, demonstrates that advertising annually creates multimillions of jobs and generates trillions of dollars for the U.S. economy.

Here are a few of the key findings:
•    Advertising supports 18.7 percent of U.S. GDP and 20.8 million of the 147.5 million jobs in the country
•    Each dollar spent on advertising expenses generates nearly $19 of economic output
•    Every $1 million spent annually on advertising supports 28 American jobs
Importantly, IHS Global Insight’s studies have found that advertising has profound positive job and economic stimulus impacts in every state and congressional district in the U.S.

In its filing today to the Senate Finance Committee, ANA noted that the vast majority of our major free-market economic competitors, including those with far lower corporate tax rates than the rates presently imposed in the U.S., have not saddled advertising efforts with these types of severe economic burdens.

On Tax Day, ANA once again is calling on the Congress to maintain the present tax treatment of advertising in order to support the continued vigor and viability of this crucial sector of our economy.

Our detailed filing can be found here.

Important Changes at the FCC Bring New Challenges for Advertisers

Posted: Apr 6, 2015 9:15am ET

At last week’s Advertising Law & Public Policy Conference, dozens of knowledgeable and informative speakers addressed a variety of important legal, legislative, and regulatory topics for advertisers. One of our speakers, FCC Commissioner Michael O’Rielly, addressed the increasingly significant role the FCC plays in the daily functioning of the advertising community.

According to Commissioner O’Rielly, the convergence of technology – particularly mobile technology – has created a new place for advertisers at the FCC. As the FCC oversees the mobile space, the role of advertising in communications media has become more important to the agency. This is a change from the past when advertisers were largely unregulated by the FCC and received scrutiny almost solely from the FTC on unfairness and deception issues. Now, advertisers and others may be susceptible to FCC regulation without a clear roadmap as to what is/is not permitted or expected.

The FCC’s recent foray into broadband regulation with new net neutrality rules demonstrates that it intends to be an extremely active player in the way that messages are communicated and received online. Privacy regulation, oversight of data security and breaches, and enforcement of various FCC rules and regulations will be the new reality for advertisers. The broadband rules will be subject to court challenge and possible legislative intervention, but as Commissioner O’Rielly pointed out, court decisions could be years away and the passage of legislation is still far from certain. So, advertisers will need to proceed as if the rules are in effect, at least until there is a stay issued by the courts or some other limit on their application.

This enhanced FCC participation may result in concurrent jurisdiction between the FCC and the FTC in some areas. In other ways, FTC regulation may be preempted and the FCC may emerge as the more dominant regulatory authority operating under very different regulatory standards. The exact lines of demarcation between the two agencies is very unclear at this point, so as Commissioner O’Rielly warned, marketers must be vigilant in keeping track of what is being done at the FCC.

Furthermore, the FCC is showing itself to be far more aggressive in regard to privacy, data security, and data breach issues. FCC regulators are not nearly as familiar with the business of advertising as are regulators at the FTC, since there has been a far longer history regarding FTC jurisdiction in our area.  It’s incumbent on advertisers to educate the FCC members and staff about our business, including challenges, opportunities and limitations that advertisers face.

2015 Advertising Law & Public Policy Conference Raises Key Questions for Advertisers

Posted: Mar 24, 2015 11:00am ET

ANA’s Advertising Law & Public Policy Conference takes place March 31-April 1 in Washington, DC this year. The conference focuses on the collision of law and policy in the advertising world. The slate of knowledgeable and influential speakers will address many key questions facing senior lawyers and business executives responding to the rapidly changing marketing ecosystem.

Among the key questions to be covered at the conference are:

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About This Blog

Focuses on all federal and state government and legal initiatives that threaten national advertisers' freedom of commercial speech. The blog is penned by Dan Jaffe, the ANA's Group Executive Vice President, Government Relations, who also heads the trade association's Washington office.