Consumer protection junkies had the good fortune of hearing FTC BCP Director David Vladeck (we blogged on his background here) speak twice this week, once at an ABA Antitrust Section Federal Enforcement Committee brown bag program in Washington, DC and earlier this week at the annual NAD advertising conference in New York, where Vladeck gave the opening keynote address. We wrote in this space on an ABA address he gave after being on the job a few days (see here). His priorities, after "all of four months" have decidedly taken shape -- including food marketing to children and adults, internet marketing, endorsements, green marketing, ad literacy efforts aimed at children, privacy, better coordination with sister agencies, and efforts to grow the BCP’s resources. He began the NAD address by assuring the conference that "national advertising was a high priority for the Commission" and in particular, there will be "increased scrutiny for food ads," particularly those involving health claims. He said the agency is working to assess whether industry self-regulation in the food marketing to kids arena is working or whether additional safeguards are needed. The agency is not only concerned with marketing food to kids, but also with substantiation for functional food claims marketed to adults, saying "one outlier study should not be the basis that the product confers a benefit, particularly a health benefit."
During both presentations, Vladeck expressed his concern with abuses by affiliate network marketing, such practices as fake news stories, fabricated blogs touting endorsements without revealing sponsorship by a manufacturer and offers of free trials generated by misleading pre-checked boxes where consumers sign up for services they do not want that are impossible to cancel. Vladeck emphasized that eliminating financial fraud remains a top goal: "Many schemes prey on people pushed to the financial edge of the current economy. We focus on scams designed to take that last dollar in these times of recession." Vladeck stated that the BCP is focusing its most urgent efforts on what it considers to be “the worst types of these abuses” - high initial fees in debt repair and mortgage foreclosure schemes. The agency hopes to address these abuses by both continuing to bring enforcement actions and making changes to the applicable FTC regulations.
Commenting on the revised testimonial guides, Vladeck explained that the earlier guides were "adopted in a different world." While the original guide's basic principles remain largely valid, many examples were not relevant in the context of infomercials, the internet and virtual marketing or in areas where "the advertiser did not always disseminate the ad but expects a profit from the message." He explained that "consumers have a right to know when they are being subjected to a sales pitch" and, therefore, that any material connection between user-generated content and manufacturers should be disclosed. In eliminating the safe harbor for a disclaimer of "results not typical," Vladeck explained that disclaimers of atypicality were "not working as intended" and there was "clearly time for a change and that time has arrived." He clarified that the guides do not bar the use of such a disclaimer but advertisers are responsible for ensuring that consumers are not misled by the ad as a whole.
Environmental claims can help consumers, according to Vladeck, but only when they are not misleading. While the FTC is examining its green guides and determine if an update is needed, they will "continue to be vigilant in this area," citing its recent cases involving biodegradable claims and also allegedly unsubstantiated improved gas mileage claims. (As to one pending case where a manufacturer claimed its product would allow cars to "harness the power of nuclear fusion" to eliminate the need for gas, Vladeck said "we charged those folks with violating the laws of science.")
Additionally, he sends "a clear message that retailers are accountable for the claims they make" when packaging and selling store brands.
Vladeck mentioned efforts undertaken by the agency to protect children. These include a forthcoming guide to internet use aimed at 8 to 14-year olds that is meant to instruct children, their parents and teachers on key internet use issues facing today’s children, including social networking websites, texting, and sexting. The agency is also working with Scholastic to develop an interactive website to teach children about ad literacy.
At the ABA talk, Vladeck indicated he was working to try to figure out how to grow the FTC’s resources given the FTC’s relatively small size coupled with its vast mandate. He said they agency needs “Biblical multiplication of resources from Congress, but since we won’t get that manna,” the Staff is at work trying to harness the power of partnerships. This includes working to harmonize law enforcement efforts with sister agencies, including forming a working group with the FDA and DOJ's Consumer Litigation group and partnering with state Attorneys General and some of the larger legal services providers, particularly with regards to the BCP’s anti-fraud efforts. Through these collaborations, Vladeck hopes the agency will be able to “cover broader areas and engage in more litigation.” He also was clear about his interest in streamlining FTC processes, including "crafting more precise injunctive language for future orders." He told us when he started that he intended to maintain the FTC’s open door policy, and four month in has not changed that view. He will not tolerate delay, however, indicating “I will meet with anyone but there is a time limit. I am not going to wait to send an enforcement matter to the Commission due to [scheduling] delays.”
