Advertising & Marketing 2020 features ten jurisdictions. The guide provides expert legal commentary on advertising claims, clinical studies, comparative advertising, social/digital media, native advertising, influencer campaigns, advertiser liability, sweepstakes, reduced-price offers and loyalty programmes.
Last Updated: October 09, 2020
Advertising and Marketing: 2020 in the Rear-View Mirror
Every year has its share of interesting developments and unique circumstances. It is likely, however, that none in recent memory can rival 2020. Nor, surely, have so many ever been so eager to put a year behind them. Few areas of the law are as sensitive to the everyday concerns that impact all of us around the world as advertising and marketing. Particularly in a digital era, advertisers and marketers can react almost in real time to create messages, and products and services, to address the concerns and needs that are foremost in the minds of global consumers.
The COVID-19 pandemic brought out the best and worst in advertisers. On the positive side, advertisers quickly responded to the pandemic by adding to our marketing lexicon phrases such as “contactless delivery.” “socially distanced” and “curbside pickup.” Products most of us had never heard of, or gave little thought to, such as face shields, PPE, hand sanitiser and even the lowly toilet paper roll became must-haves. A new advertising medium was born: the face mask. Finally, companies used advertising to garner corporate goodwill as they embraced first responders and others on the front line in the battle against COVID-19 or touted efforts to shift manufacturing efforts towards sorely needed products such as ventilators.
On the negative side, far too many advertisers also raced to take undue advantage of the public’s fears over COVID-19. Regulators have been busy chasing after products that falsely claimed to sanitise, boost immunity and even prevent and cure COVID-19. Complaints of price gouging were also commonplace, though often it was difficult to distinguish between cost-based price increases and true price gouging. Finally, advertisers and media companies parsed through the fine print of their force majeure clauses as advertisers sought to pull back advertising commitments for products and services for which there was little or no demand during national lockdowns or sponsorship money for events that were either cancelled or did not take place as planned.
The death of George Floyd in late May, while being arrested by Minneapolis police, brought more turmoil to 2020 in the USA and, to some degree, in the rest of the world. Calls for racial justice and protests, sometimes violent, were widespread, and the Black Lives Matter movement became a battle cry. Advertisers, who already felt themselves often caught in the middle of a bitterly divided and partisan American public, found themselves grappling with yet another divisive issue. Advocates on one side of the issue often accused advertisers of speaking out too little on issues of racial justice, while those on the other side often accused them of saying too much. Gone, perhaps, are the days when advertisers could opt to sit above the fray of politically explosive issues.
It was perhaps a blessing then that 2020 also witnessed the continued dramatic growth of cannabis products, particularly CBD, in the USA and around the world. In the USA, almost all the states have now followed the lead of the federal government and decriminalised CBD, albeit sometimes with onerous labelling requirements. In a nod to the digital era, some of these labelling requirements mandate the use of QR codes for disclosure of product information. However, the use of CBD in dietary supplements and other ingestible products continues to be illegal under federal law, and it remains unclear when, and if, the Food and Drug Administration will lift this restriction. While this has not stopped some smaller companies from marketing such products, larger brands, though sometimes teasing CBD food offerings, have largely avoided introducing such products, preferring to wait until there is greater legal clarity.
While the public’s appetite for CBD-related products seems insatiable, the science around CBD and what, if any, benefits it provides remains unsettled. Regulators have issued warning letters and brought enforcement actions against CBD products with more serious disease-related claims, and the ubiquitous class action counsel have begun to challenge some CBD marketing claims.
Influencer marketing continues to grow and evolve as a key marketing tool for brands. Spending on influencer marketing is expected to almost double to USD15 million by 2021. At the same time influencer fraud also continues to rise; leading many marketers to turn increasingly to the use of micro-influencers who can be more easily controlled, use of computer- generated influencers created by or for the brand and use of employees as social media ambassadors. The pandemic has even further fuelled the demand for influencers as these individuals are already set up to create content from home and have a ready to share portfolio of engaging and high-quality content. As a result, more and more brands today are not only hiring influencers to promote their brands but relying on influencers to create photo and video content. As influencer marketing continues to grow at an exponential rate, regulators around the world continue to closely scrutinise these activities to ensure transparency to consumers.
The COVID-19 pandemic drastically changed the way businesses operate. While brick-and-mortar retailers around the world were already struggling with a decline in sales leading to numerous bankruptcies and closures, the pandemic has forced all businesses to shift their focus to online sales. E-commerce, mobile commerce and social commerce have become the new norm. Shoppable ads have increased in popularity, augmented reality and virtual reality are increasingly being used to create an immersive online shopping experience and stay-at-home mandates have fuelled the expansion of subscription-based programmes. These shifts in marketing strategies have given rise to increased regulatory scrutiny of often overlooked regulatory issues such as adherence to shipping and delivery promises, automatic renewal and continuous service programmes.
While the events of 2020 have played out in a very public fashion across all forms of social media, concerns about consumer privacy remain widespread around the globe. In Europe, enforcement of the General Data Protection Regulation (GDPR) continues, and in July the Court of Justice of the European Union stuck down the EU-US Privacy Shield data sharing agreement. Other countries have followed the lead of the EU, including Brazil, whose privacy law became effective in 2020.
In the USA, the long-awaited (and for some, dreaded) 1 January 2020 effective date for the California Consumer Privacy Act (CCPA) arrived. Although enforcement under the CCPA by the California Attorney General began on 1 July 2020, the state continues to amend its implementing regulations and proposals to further modify the CCPA remain pending in the California legislature as well as on the 2020 ballot. Other states have joined California in passing various forms of consumer privacy legislation, creating compliance headaches for the many companies that do business across state lines. As a result, a broad consensus exists that there is a need for comprehensive consumer privacy legislation at the federal level. So far, however, efforts to reach consensus on what those provisions should be, and whether and to what extent any federal law should pre-empt state privacy laws, remain stymied.
Around the world privacy concerns continue to focus on so-called Big Tech. In the USA, the Federal Trade Commission (FTC), in April of this year, gave final approval to its record-breaking, multibillion dollar privacy related settlement with Facebook. The US government is also seeking to force TikTok to give up control of its US business over concerns that consumer data may find its way into the hands of the Chinese government.
In the EU, finalisation of a draft decision regarding possible GDPR violations by Twitter remains pending, and other investigations into GDPR complaints against Apple, Facebook, Google and LinkedIn are ongoing. Regulators are also looking at potential new laws to further strengthen their hand in the ongoing battle between Big Tech and consumer privacy advocates.
Federal Trade Commission
The FTC is often a bellwether for advertising enforcement trends around the world. And 2020 has proven to be a year of interesting contrasts. On the one hand, the Republican-led FTC has continued its surprising trend of aggressive enforcement of consumer protection law. It was not so long ago that the FTC conceived the novel practice of seeking “consumer redress”, requiring companies to forfeit dollars associated with the sale of misleading products or services to consumers which are then, at least in some cases, returned to those consumers. In 2020, the demand for consumer redress as part of false advertising settlements became virtually presumptive. Furthermore, while the Commission has, in the past, acknowledged the difficulty in demanding consumer redress when the deception does not involve the performance of the product or service because the nature of any harm to consumers is intangible (for example, claims that a product is biodegradable or "Made in the USA"), the FTC’s philosophy in this regard has begun to change. This year the FTC, for the first time, announced a settlement in a case involving deceptive Made in USA claims that included consumer redress. The FTC has also aggressively used its civil penalty authority, when available, to claw back money from allegedly deceptive advertisers. This has included seeking its first ever civil penalty under the Restore Online Shoppers' Confidence Act (ROSCA), a statute that regulates automatic renewal provisions, and proposing to codify its Made in USA guidance as a trade regulation rule that would give the FTC the authority to seek civil penalties.
Finally, the FTC has been divided along partisan lines over whether to more aggressively seek to hold officers individually liable when the companies they lead violate consumer protection laws. Traditionally, the FTC has typically limited such liability to small, privately held companies in which the company and its officers/owners are often mirror images of one another and profits flow freely from the company back to its principals. The two Democratic members of the FTC have pushed for broader use of individual liability, including against officers of large, publicly traded companies on the theory that individual officer accountability will enhance corporate compliance with consumer protection laws.
Even as it moves to aggressively carry out its consumer protection mandate, the FTC faces a number of legal challenges. A pair of cases in the US Supreme Court will consider whether the FTC has legal authority for its longstanding practice of seeking consumer redress alongside injunctive relief in federal court. Even if the Court upholds the FTC’s authority, the Court may narrow the scope of the FTC’s redress authority, for example, by potentially limiting it to net profits rather than consumer harm. Thus, the Supreme Court’s decision could profoundly change how the FTC enforces consumer protection laws in the USA.
The FTC also faces legal uncertainty about its ability to obtain injunctive relief in federal court for allegedly unlawful conduct that is no longer occurring and for which there is little prospect of any recurrence. Look for further clarification of the FTC’s authority in this regard in the coming months.
I hope that you will enjoy and be enlightened by these advertising and marketing updates from leading practitioners around the world. A year ago, no one would have predicted many of the 2020 highlights noted above. No doubt 2021 will have its own surprises, but, having made it through 2020, advertisers and marketers can fairly say, “bring it on, we are ready for you.”