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Socially Aware Blog

The Law and Business of Social Media

FTC Warns Advertisers to Check the Fine Print in “Operation Full Disclosure”; Shot Across the Bow Could Signal Law Enforcement Actions to Come

Posted in FTC

The Federal Trade Commission (FTC) announced this week that it sent warning letters to more than 60 national advertisers regarding the inadequacy of disclosures in their television and print ads. The letters are part of an initiative named “Operation Full Disclosure,” which the FTC implemented to review fine print disclosures and other disclosures that it believed were difficult to read or easy for consumers to overlook, yet included critical information that consumers would need to avoid being misled.

What Does it Mean for a Disclosure to be “Clear and Conspicuous”

Disclosures may be necessary to clarify a claim or to ensure that the full terms of an offer are adequately disclosed, in order to avoid a charge of deception by material omission. In FTC jurisprudence, disclosures must be “clear and conspicuous,” and while they may modify claims in the text of an ad itself, they may not contradict any such claims. The most recent pronouncement on how to make effective disclosures (this one was focused on online disclosures, but the general principles are the same) was issued in March 2013. The key is that if a disclosure is necessary to make an ad truthful and not misleading, it must be clear and conspicuous; otherwise, it is as though the disclosure was not made at all.

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Status Updates

Posted in Status Updates

Hooray for Hollywood. According to a new study by KPMG, television and movie viewers have never had it better. A report by the consulting company found that the overwhelming majority of well-known movies and television shows are available legally to U.S. viewers through online services such as Amazon Prime, Netflix and Hulu. The study found that fully 94 percent of popular titles were legally available through one channel or another. The study also pointed out that these legal services provide high-quality viewing, which is generally not true of illegal services. Maybe it is possible to compete with free? After all, sellers of bottled water have done well vis-à-vis tap water by offering products that are high-quality, reasonably priced, convenient and ubiquitous.

There’s an app for that too. Entertainers, celebrities and others who are popular with the teen-age and young-adult demographics are increasingly choosing to promote themselves on mobile app-based social networks, or so-called “chat apps,” rather than through Facebook or Twitter, where it can be hard to stand out amidst the sheer volume of posts. These new chat apps, including Line, Kik, Snapchat, WeChat and Viber, allow for more direct engagement with followers. For example, when Paul McCartney and his band recently headed to Japan, he used Line to interact with fans, personally responding to inquiries and offering a free pack of stickers featuring cartooned images of himself.

Hipster’s paradise. Here at Socially Aware, we’ve taken a keen interest in Ello, the incredibly hip new social media platform that is generating a big buzz in the tech community. Indeed, some have dubbed Ello the “anti-Facebook,” because it does not sell ads based on user data, does not require users to use their real names and has a business model that relies on users to pay for premium features that they select. It is also invitation-only, further sparking interest in the new platform. Ello’s founders say they are aiming the network at artists, designers and programmers – not at the whole universe.  They also report that Ello is doubling in size every three or four days. Will Ello become the next big thing? Will consumer concerns regarding online privacy fuel the growth of alternative platforms such as Ello and, in the search space, DuckDuckGo, services that purport to provide greater privacy protections for users?

Status Updates

Posted in Status Updates
  • Status check.  In the recently released Corporate Directors Survey from PricewaterhouseCoopers, 41% of corporate board members reported that their companies monitor social media for adverse publicity.  That’s up from 32% in 2012.  One commentator suggests that a company’s entire board of directors—not just the members of its audit or risk committees—should be charged with social media oversight, given the reputational risk social media chatter poses and the medium’s potential as an effective investor relations tool.
  • Fightin’ words?  An Indonesian law student landed in a police detention cell for criticizing a historic city online because police in that country suspected her of running afoul of the 2008 Law on Information and Electronic Transactions, Indonesian legislation that provides prison time for anyone convicted of using electronic media—including social media networks—“to intimidate or defame others.”  Many criticize the law as being inconsistent with Indonesia’s successful transition from an authoritarian state to a robust democracy.
  • The wrong number.  Twitter users sometimes give the social media company their cell phone numbers in order to be able to view tweets as text messages. But when a cell phone number that has been submitted to Twitter for that purpose is reassigned to a new user, do Twitter’s text messages to that number violate the Telephone Consumer Protection Act? Beverly Nunes claims they do. In a suit she filed in the U.S. District Court for the Northern District of California, Nunes is seeking class certification, and at least $500 in damages for each unsolicited Twitter text she received.  In a Sept. 16 motion to dismiss Nunes’s complaint, Twitter contends that the texts do not violate the TCPA because, among other things, they were not sent using an “automatic telephone dialing system or an artificial or prerecorded voice,” as the statute requires.

Status Updates

Posted in Status Updates
  • Pin Money. Brands of all sizes have long used the virtual pin board/social media site Pinterest to promote their wares and drive traffic to their web sites. Beginning in October 2014, companies will be able to purchase paid advertisements on the site as well. Pinterest announced plans to make “Promoted Pins” available to more than just the handful of big brands that have been helping the company to test its ad product since last fall. The company expects to ultimately offer advertisers pay-per-click arrangements like the ones available to purchasers of Google’s sponsored search results, and is amending its privacy policy to state, among other things, that Pinterest may collect information about its users from its advertisers and in connection with its advertisers’ websites and apps.
  • Benched judge. Michael Maggio, a state trial judge in Arkansas, was removed from the bench by the state’s highest court after he acknowledged posting confidential details about court cases in social media outlets. The judge was handling a closed adoption involving actress Charlize Theron, and he admitted posting private facts about the case. After a report by a state judicial-discipline commission, he was removed from the bench and prohibited from handling any judicial office in the future. He was found to have violated at least 23 strictures that apply to sitting judges.
  • Sweet tweets. According to a study conducted by Twitter, the Twitter accounts of members of casts of television shows get a 228 percent increase in followers if the actors live-tweet their shows. This follows other studies that indicate that TV ratings can go up as a result of live-tweeting. Grey’s Anatomy and Scandal, both originated by Shonda Rhimes, are among the shows that have gotten major boosts from the social network.

To Click or Not to Click? Ninth Circuit Rejects Browsewrap Arbitration Clause

Posted in Litigation, Terms of Use

In Kevin Khoa Nguyen v. Barnes & Noble Inc., 2014 U.S. App. LEXIS 15868 (9th Cir. 2014), decided on August 18, 2014, the Ninth Circuit rejected an attempt to bind a consumer to an arbitration clause found in an online terms of use agreement not affirmatively “click accepted” by the consumer but readily accessible through a hyperlink at the bottom left of each page on the subject website.

The case arose from a “fire sale” by defendant Barnes & Noble of certain discontinued Hewlett Packard TouchPads. Plaintiff Nguyen had ordered two of the TouchPads, but received a notice from Barnes & Noble the following day that his order had been cancelled due to unexpectedly high demand. Nguyen sued Barnes & Noble in California Superior Court on behalf of himself and a putative class, arguing that he was forced to buy a more expensive tablet instead.

Barnes & Noble, after removing the suit to federal court, moved to compel arbitration under the Federal Arbitration Act, arguing that, by using the Barnes & Noble website, Nguyen had agreed to an arbitration clause contained in Barnes & Noble’s Terms of Use. Nguyen responded that he could not be bound to the arbitration clause because he had no notice of and did not consent to the Terms of Use. Barnes & Noble countered that the placement of the Terms of Use hyperlink on its website had given Nguyen constructive notice of the arbitration clause.

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Status Updates

Posted in Status Updates
  • Time out. New FTC rules will generally require Internet retailers to give consumers the option of a full refund for an online purchase that the retailer failed to ship within the time period promised in the retailer’s solicitation for the purchased item. If such solicitation doesn’t specify a time period, the online seller may be required to ship the merchandise within 30 days of purchase to avoid having to secure the consumer’s consent to proceed with the delivery instead of making a refund. Internet retailers have until December 8th of this year to get into compliance.
  • Breaking news. In an effort to ensure its users’ news feeds feature more of the stories they actually want to see, Facebook is updating its news feed algorithm to push timely stories to the top. While the number of “likes” and comments a story received always affected where it showed up in users’ news feeds, the new algorithm will also take into account when a story elicited those responses. Facebook’s refreshed news feed formula will also favor stories that concern topics that are currently trending on the social media site.
  • Back to school. The NYPD’s top brass has so far taken four classes designed to teach them how to send appropriate tweets from the department’s more than 40 Twitter accounts. The goal: To get every New York City precinct, public housing patrol unit and transit commander tweeting by year’s end as effectively as Boston police did when they used Twitter successfully refute false reports and announce an arrest in connection with the 2013 Boston Marathon bombings. Until January of this year, New York’s Finest had only a single account, @NYPDnews, which was run by the department’s media relations team.

Status Updates

Posted in Status Updates
  • Is Tumblr trendier? A survey released by Tumblr says the users of that social media platform have higher average incomes than users of Facebook, Twitter, or Pinterest, and a report from Adobe says that this translates into cash: The average revenue per visit from a Tumblr referral is $2.57 on tablets and 67 cents on smartphones. Both figures are higher than the numbers for Facebook, Twitter, or Pinterest.  According to an Adobe digital analyst, “the fact that [Tumblr] produces the highest revenue per visit from mobile devices is likely due to its user base, which is skewed to young, trendy and well-educated urbanites with a greater affinity for online purchases and the disposable income to spend more.”
  • Come together. At a tech conference in San Francisco on September 15, Facebook announced that it, along with Google, Twitter, Square Inc., and other companies, is launching an initiative to jointly develop software programs that can be shared for free. This move has a great deal in common with Facebook’s strategy of offering its technology, including hardware technology, to other companies in an effort to reduce the costs of development and broaden Internet use. Facebook’s Open Compute concept, unveiled in 2011, already permits it to share the designs for more efficient products such as servers and network switches.
  • Expert needed? How esoteric are forensic methods of technologically linking a person to an online video in a criminal case? A New Jersey man was on trial for invading his ex-girlfriend’s privacy by posting nude pictures of her on Twitvid.com, a video-sharing service. Through several steps, a police detective was allegedly able to tie the uploading of the photos to a particular IP address that was linked to the defendant. The defense objected on the grounds that these technical aspects were not fully understandable to the average juror and required an expert witness to present them. The trial judge, as well as a New Jersey state appeals panel, agreed that a hearing was necessary to consider the nature and extent of the detective’s evidence and whether she was qualified to testify about it or whether an expert was needed.

She Liked It. She Really, Really Liked It: Federal District Court Holds Facebook Fan Page Manager Doesn’t Own “Likes”

Posted in Litigation

A federal district court broke new social media law ground in August 2014 when it held in favor of the cable network Black Entertainment Television (BET) in a suit brought by the founder of an unofficial Facebook fan page for one of the network’s television shows. In holding that BET acted lawfully when it asked Facebook to transfer the fan-created page’s “likes” to a BET-sponsored page, the U.S. District Court for the Southern District of Florida established important precedent: The only individual who can possibly claim to own a “like” on a Facebook page is the individual user responsible for it.

Background

Insurance agent Stacey Mattocks was so devoted to the television series The Game that she created an unofficial Facebook fan page for the show in 2008. By the time BET acquired the rights to The Game from the CW Network in 2009, Mattocks’ fan page had garnered a huge following, and BET—reportedly having failed to attract similar support for the show’s official fan page—wanted to capitalize on the social media audience that Mattocks had amassed.

Thus began a series of negotiations between Mattocks and BET, with Mattocks at one point managing the page for the Viacom-owned cable channel for $30 an hour. During Mattocks’ tenure in that part-time position, BET provided her with exclusive content to post on the Facebook page and began displaying its trademark and logos on it. The page’s following grew from two million to more than six million fans.

At this point, in early 2011, Mattocks and BET entered into a letter agreement granting BET administrative access to the Facebook page and the right to post content on it in exchange for the network’s promise not to change Mattocks’ administrative rights to the page. But Mattocks broke the agreement in 2012 when, after refusing a reported $85,000 annual salary offer from BET, she cut off the network’s control of the Facebook page and informed BET that she would maintain that restriction until the parties reached “an amicable and mutually beneficial resolution” concerning her employment.

BET reacted to being cut off by asking Facebook to “migrate” the page’s fans to a BET-sponsored page. After determining that the BET-sponsored page officially represented The Game’s brand owner, Facebook complied. Twitter also complied with BET’s separate request to disable The Game Twitter account that Mattocks maintained.

Mattocks filed suit in the U.S. District Court for the Southern District of Florida, alleging that BET tortiously interfered with Mattocks’ contractual relationships with Facebook and Twitter; breached its letter agreement with Mattocks; breached a duty of good faith and fair dealing with Mattocks; and converted a business interest that Mattocks had in the page. In late August 2014, the court held that BET was entitled to summary judgment on all of Mattocks’ claims.

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Status Updates

Posted in Status Updates
  • School discipline. The California legislature has passed a law that, if signed by Gov. Jerry Brown (or not vetoed by him before the end of September), would significantly expand privacy protections for students from kindergarten through high school. In particular, among other things, the law would limit education technology companies used by K-12 schools from knowingly engaging in targeted advertising to students or their parents and guardians; using certain student-related information to create a profile regarding a K-12 student; or selling or otherwise disclosing such student-related information. Will other states follow California’s lead?
  • Taxi wars. The upstart P2P ride-sharing service Uber and its allies – including the D.C.-based trade group the Internet Association – have begun a public relations campaign to “brand” traditional taxicabs in a negative light and to enhance the public image of ride-sharing apps. Their online campaign, known as “Taxi Facts,” refers to “Big Taxi” as if it were “Big Oil” or “Big Steel,” and states the public deserves to know the truth about the industry. Not to be outdone, the traditional taxi industry has launched a campaign that refers to the new entrants as simply “unregulated taxicabs.”
  • This Bud’s for you. Anheuser-Busch and Facebook have teamed up on a new promotion in which people will be able to go onto the social network and buy their friends beers for their birthdays, to be redeemed at a nearby bar or restaurant. The giver simply enters credit card information, and the recipient redeems an online voucher – as long as he or she is of legal age to drink. “The program was born of A-B’s desire to remain relevant with millennial consumers of legal drinking age – and strengthen our position as the perfect beer for connecting with friends around any occasion,” said Anheuser-Busch’s VP of consumer connections.

Status Updates

Posted in Status Updates
  • Disappearing ink. Facebook is testing, for a small group of users, a feature that will permit a user to schedule a post for automatic deletion after a specified period of time. It seems that the period can range from an hour to seven days, according to people who have seen it. It is worth noting, though, that these posts can take up to 90 days to vanish from Facebook’s servers permanently.
  • Feel free to Yelp. If you have a problem with your plumber or your car rental in California, go ahead and complain online. California Gov. Jerry Brown just signed a new bill that prohibits businesses in that state from using contracts that prohibit consumers from writing negative online reviews. Some businesses include these prohibitions, known as non-disparagement clauses, in the sometimes lengthy terms and conditions that they impose on their customers. These clauses will now be illegal in most cases in California.
  • Picture this. Just because a photo appears on a social media site doesn’t mean that it is free to use, as Agence France-Presse and Getty Images found out recently when a federal court upheld a damages award against them for infringing the copyright in photos of the Haitian earthquake that had been posted on Twitter.   The court had previously held that, although the photographer had given Twitter a license to display his photos by uploading them, he didn’t give AFP or Getty the right to use them.  In the recent ruling, the court declined to set aside the jury’s $1.5 million damages award against the defendants.