Notice and Consent: How [Not] to Notify Customers of Contract Changes

​📣In case you missed it, January 2024 was fairly eventful regarding notice and consent requirements. This area is evolving and is skewing pro-consumer.

❗So, what happened in January?

🔷Uber – The Massachusetts Supreme Judicial Court (SJC) heard oral arguments to determine whether Uber gave “reasonable notice” to its users before changing its terms. More specifically:

🔺Uber used an in-app pop-up notification that told users that its terms had been updated

🔺Users COULD click to view the terms, but they were NOT required to view them

🔺Users were also NOT required to “agree”

📌Keep in mind that the SJC required Uber to revise its T&C’s in 2021 after determining that Uber “must provide its customers reasonable notice of the company’s binding terms and obtain customers’ reasonable manifestation of assent to those terms”

🔶Popular Bank- The Second Circuit determined that bank customers did not provide contractual assent to new contract terms, and so the bank’s changes to its contract were not valid. The bank had simply mailed an “update” to its customers explaining the changes.

The Second Circuit sided with customers focusing on whether the changes were “reasonably communicated ” to customers in a “clear and conspicuous way.” It noted that the bank stated in its notice that “continues to be a Mandatory Arbitration Provision,” which was misleading, because an arbitration provision was not previously part of the agreement.

💡Key takeaways:

If you make changes to a passive agreement (one where the other party does not negotiate):

🔅Tell the other party about the changes in a way that is clear, truthful, and hard-to-miss

🔅Ensure the other party takes some action that indicates they agree to maintain the contractual relationship.

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Can Lawyers use AI-generated images for their Websites?

🤖 With the development of artificial intelligence (AI) tools, content creation is affecting lawyers who use images on their websites and in their marketing. A failure to obtain licenses to use human-made images can lead to hefty copyright penalties, but AI offers a potential solution.
A significant legal case, Thaler v. Perlmutter, highlighted the issue of copyright for AI-generated works, ruling that human authorship is a necessary component for copyright protection. Despite this, AI-generated images can still be used on websites if they don’t infringe on copyrighted material and the underlying IP rights are not disputable. Here are some tips for using AI-generated images responsibly on your website.
✅ Determine the Image’s Ownership, Examine the Terms of Use
Make sure you have the necessary rights or permission for AI-generated images. Unlike when you create an image yourself, you do not own AI-generated content by default. If you prompted an AI-generated image from a third-party source, check its licensing agreement/terms of use to see if the AI output can be used on websites, for commercial applications, or any other specific restrictions.
✅ Select Photos That Talk About Your Practice and Your Target Market
Choose images that reflect your expertise, professionalism, and personality, while also aligning with your brand identity and tone. For instance, if you specialize in corporate law, opt for images that convey professionalism, success, or innovation.
✅ Give Appropriate Credit
Respect the licensing terms or any applicable copyright laws by giving the AI-generated image’s developer due credit. Accurate labeling of AI-generated photos is essential to avoid confusion or incorrect attribution, especially as regulations in this field are still developing.
💡Need help making sure the images used in your business are in compliance with the law? Contact us at Your Ad Attorney, Inc.

Can you easily change your Privacy Policy without informing users?

🤖 Artificial Intelligence (AI) companies often rely on their user databases as a primary source to drive tech and business innovation. However, they also have privacy policies to safeguard user information, leading to a conflict between business goals and privacy commitments.

Companies may attempt to address this conflict by altering their privacy policies to expand data usage, potentially without informing users. They adopt more lenient data practices, such as sharing consumer data with third parties or using it for AI training, without transparently informing consumers through updated terms of service or privacy policies. However, such actions could lead to legal consequences if companies fail to uphold their privacy commitments.

The FTC has a history of challenging deceptive practices related to privacy policies that breach promises made to consumers. For example:
🔹 20 years ago, the FTC charged Gateway Learning Corporation, the maker of “Hooked on Phonics,” for violating the FTC Act. This was due to changes in its privacy policy that allowed sharing consumer data with third parties without informing or obtaining consent from consumers.

🔹 Last summer, the FTC accused a genetic testing firm of breaking the law by revising its privacy policy to widen the types of third parties with whom it could share consumers’ personal data retroactively. The FTC stated that the company did so without informing or obtaining consent from consumers who had previously shared personal data.

📌 The FTC remains committed to taking action against companies involved in unfair or deceptive practices, including those that covertly alter their privacy policies or terms of service to gain unrestricted access to consumer data for product development.

📖 Read more here: https://lnkd.in/eeBbXHKa

💡 Need help making sure your business’ privacy policy is in compliance with the law? Contact us at Your Ad Attorney.

New Proposed Ruling to Make Usage of AI Voice Calls Illegal

📌FCC Chairwoman Rosenworcel announced a proposed Declaratory Ruling that would clearly identify calls made using AI-generated voices as “artificial” sounds under the Telephone Consumer Protection Act (TCPA). As a result, AI calls would be governed by the FCC and the TCPA, which would, according to the news release, “make voice cloning technology used in common robocalls scams targeting consumers illegal.”

Furthermore, the news release states that “FCC will give the State Attorneys General across the country new tools to use to combat these scams and protect consumers”

📋The FCC issued a Notice of Inquiry (NOI) in November asking for feedback on how developing AI technology will affect the agency’s ongoing efforts to shield customers from unsolicited and unlawful phone calls and texts under the TCPA.

In addition to the announcement, the Biden Administration issued an executive order on AI in October 2023 encouraging the FCC to combat unwanted robocalls and robotexts that are made possible or made worse by AI and to implement AI technologies that improve consumer service by preventing unwanted robocalls and robotexts.

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New FCC Rule: Consent to Receive Automated Calls/Texts Can Be Given to One Company at a Time

📋 The Federal Communications Commission (FCC) recently issued an order adopting a new rule that will limit the ability of businesses to contact potential customers found using lead generators.

Background: It’s been well established by the Telephone Consumer Protection Act (TCPA) that companies cannot make autodialed calls and texts or prerecorded voice messages without having the recipients’ express written consent. The issue addressed by the FCC’s order is that companies have been obtaining consent – but not just for themselves. To the detriment of the people, companies often obtain blanket consents that allow numerous companies to contact an individual, in what is called “the lead generator loophole.” They then pass along the names and phone numbers of the consenting individuals as “leads” to other companies.

The new “One-to-One Consent Rule” closes the lead generator loophole by mandating:

🔸Individuals can provide consent to receive robotexts and robocalls to only one company at a time.

🔸The calls/texts they receive after they provide consent must be “logically and topically associated with the interaction that prompted the consent”

📌 In short, the FCC has clarified that a automated call/text consents cannot simply list or hyperlink to a list of multiple telemarketers to which the consent may apply. Companies that violate the one-to-one consent rule could be subject to statutory damages under the TCPA, which are stated $500 per call/text and $1500 per call/text if done “knowingly”. (THEY ADD UP QUICK!!)

This new rule will most significantly affect business that utilize lead generators to contact new business leads. The financial services, real estate, and insurance industries are just a few that commonly rely on this practice.

☎️ Contact Your Ad Attorney, Inc. today. We help businesses comply with the ever-evolving world of advertising laws.

#FCC #business #advertisinglaw #TCPA

“Review Hijacking” – Why a Supplement Company Must Pay $600k to Consumers

🚩The Bountiful Company was issued a final consent order by the Federal Trade Commission (FTC) for deceiving consumers on Amazon. According to the FTC, Bountiful participated in a practice called “review hijacking,” which is where a company steals or repurposes reviews from one product and applies them to another.

Bountiful had manipulated a feature on Amazon and deceived consumers by applying ratings and reviews from established products that Bountiful offered on Amazon to its new products – this made it appear that Bountiful’s new supplements had more favorable reviews and ratings than they actually did. The Amazon feature is intended for variations on the same product (size, flavor, color, etc.), but Bountiful used it to group unrelated products in an effort to boost the sales of poor-selling releases. Aside from a boost in reviews and ratings, some new Bountiful products were also unjustifiably given badges like “#1 Best Seller” and “Amazon’s Choice” on the Amazon marketplace.

❓What are the consequences of Bountiful’s deceptive conduct?

The FTC took action to hold Bountiful accountable and protect consumers. Its order requires Bountiful to:
📌Pay $600,000 to compensate harmed consumers;
📌Stop making similar misrepresentations and using deceptive review tactics; and
📌Provide periodic records to the FTC to demonstrate compliance with the order.

💡What’s the ultimate lesson here?

✅ Keep your reviews truthful and accurate; and
✅ Don’t mislead your customers about the quality of your products or services (even when deception is easy).

☎ Need guidance or have questions about truthful advertising or how to comply with marketing regulations? Don’t hesitate to reach out to our team at Your Ad Attorney, Inc. Schedule a call with me at https://calendly.com/youradattorney. We are here to assist you in staying on the FTC’s good side.

670 Companies Warned of $50k+ Penalties for Unsubstantiated Product Claims

📋 The Federal Trade Commission (FTC) has issued penalty offense notices to 670 companies, urging them to substantiate their product claims to avoid hefty civil penalties exceeding $50,000. These notices come after similar warnings related to endorsements, testimonials, education practices, and money-making opportunities.

These penalty offense notices warn companies of specific deceptive practices they should avoid, and the takeaways regarding product claim substantiation include:
❌ DO NOT make product claims without any reliable evidence to support them.
❌ DO NOT make health or safety claims without proper scientific evidence that has been objectively evaluated by qualified individuals and accepted by the professional community.
❌ DO NOT promote a product as a cure, mitigation, or treatment for a serious disease without conducting and relying on a well-designed human clinical trial that meets specific criteria.
❌ DO NOT misrepresent the level or type of evidence backing a claim.
❌ DO NOT assert that a product claim has been scientifically or clinically proven without enough evidence to convince the relevant scientific community.

In short, companies should be able to adequately back up what they say in their advertising – and they need to gather their evidence for their claims before they are made.

Although there is some controversy over the FTC’s use of their authority in sending these notices regarding substantiation, two things are clear:
🔹the FTC isn’t playing games, and
🔹it is crucial for marketers and manufacturers to comply with regulatory guidelines to ensure their marketing is accurate, valid, and not harmful to consumers.

📌 If you need guidance or have questions about substantiating your product claims or how to comply with marketing regulations, don’t hesitate to reach out to our team at Your Ad Attorney, Inc. We are here to assist you in navigating these important legal considerations with ease.

#marketinglaw #advertisinglaw #legal

Are you aware of New York’s newly proposed price gouging rules?

Following a string of warnings to New York businesses since the outbreak of the COVID-19 pandemic, New York attorney general Letitia James recently published a Notice of Proposed Rulemaking to establish stronger barriers against price hikes during emergencies such as the pandemic. The proposed rule aims to protect consumers amidst abnormal market disruptions by imposing stricter regulations on businesses for price gouging.

New York’s current price gouging law, New York General Business Law 369-R, provides that, “[d]uring any abnormal disruption of the market,” no business in the distribution chain may charge an “unconscionably excessive price” for good or services. Proof of price gouging may include pricing representing a “gross disparity” between the price charged for the same product or service prior to and following the market disruption. The statute also provides businesses with an affirmative defense if they are able to show that a price increase preserves their profit margin or if additional costs beyond their control were imposed. However, the law offers little guidance regarding compliance, including regarding what constitutes “unconscionably excessive” pricing or a “gross disparity” in price.

Consequently, the following seven proposed rules seek to improve clarity for businesses by providing additional guidance and guardrails to rely upon:

🔸Presumptive Cases of Gross Disparity – a “gross disparity” in price exists when a product’s price increase exceeds 10% of the price at which it was sold before the market disruption.

🔸Costs Not Within the Business’s Control – a business may claim the affirmative defense that additional costs imposed on consumers are not within their control, provided that such costs are “only actually incurred costs attributable to the production, purchase, storage, distribution, taxation, labor, and sale of the specific good or service, and a directly attributable percentage of the overhead costs of the business.”

🔸New Goods or Services – the fact that a product or industry that did not exist before the market disruption is not a defense to the law, and profit margins for a new product that are higher in percentage terms than a comparable product may serve as proof of unfairly high prices

🔸Presumptive Cases of Unfair Leverage – “unconscionably excessive” pricing includes pricing obtained through “unfair leverage or unconscionable means,” including through the use of unfair bargaining power, high-pressure sales tactics, and ambiguous or hidden language in contracts

🔸Unfair Leverage – “unfair leverage” is presumed when either a seller with at least 30% market share or a large competitor (a business with over 10% market share in a market with five or fewer significant competitors) raises prices.

🔸The Statute Applies to All Parties in the Distribution Chain – the proposed rules specify that the statute applies to all parties involved in the distribution of goods and services sold in New York, including manufacturers, suppliers, wholesalers, distributors, and retail sellers

🔸Dynamic Pricing – for purposes of comparing pricing prior to and following a market disruption, the pre-disruption price for sellers employing dynamic pricing is the median price for the same good or service at the same time one week prior to the market disruption

Do you have any questions or concerns about the proposed changes to New York’s price gouging statute? If so, please contact Your Ad Attorney, Inc. today!

How do telemarketing laws impact your business?

📌 Overview of Applicable Laws
The Federal Telephone Consumer Protection Act (TCPA) places several prohibitions and restrictions on calls or texts to consumers, such as whether businesses use equipment that qualifies as an automatic telephone dialing system (ATDS or auto-dialer).

The definition of ATDS has been at the forefront of TCPA litigation, particularly considering changing technology.

In Facebook v. Duguid (2021), the United States Supreme Court issued its ruling to decide a split on the definition of an ATDS, and, by doing that, the Court narrowed the dialing systems that qualify as an ATDS or auto-dialer under the TCPA by deciding that a device must have the capacity either to store a telephone number using a random or sequential number generator or to produce a telephone number using a random or sequential number generator.

On the other hand, many states (Florida, Oklahoma, and Washington included) have enacted mini-TCPAs in their states that include a broader definition of ATDS than the TCPA post-Duguid.

📌 Takeaway
Now businesses need to be aware of both the federal and state requirements when creating a compliant calling and texting campaign. Does your business engage in telemarketing?

💡 Need Help?
Contact Your Ad Attorney, Inc. today to discuss how we can help you comply with the TCPA and state telemarketing laws.

Intuit in Hot Water with the FTC for misleading “free” claim

📋 The Federal Trade Commission (FTC) recently alleged that Intuit/TurboTax engaged in misleading ads for claiming that they offer “free” tax-filing services with inadequate disclaimers. The company failed to explain how people can make “free” tax filings or even clarify that the “free” claim only applies to consumers who file “simple tax returns.”

The FTC said that Intuit’s disclaimers were:

🔸Inadequate because the “free” tax-filing service is limited to “simple tax returns” or “simple U.S. returns only;”
🔸Disproportionately small when compared to the prominent text emphasizing the “free” service;
🔸Appearing for just a few seconds, in writing only, not read by voiceover, and often in color similar to the background;
🔸With eligibility requirements hidden behind a hyperlink over the words “See why it’s free,” requiring consumers to click on the hyperlink to trigger a pop-up explaining the limitations; and
🔸Unfair because their website forced consumers to spend significant time and effort creating an account and inputting their sensitive personal and financial information before learning they were ineligible for the “free” service.

Intuit has already agreed to settle claims with the attorneys general for all 50 states and the District of Columbia for $141 million, requiring Intuit/TurboTax to cease its “free” advertising campaign.

📌 The TurboTax case is a reminder that all advertising must be truthful and not misleading to consumers, and, more importantly, disclosures must be presented clearly and conspicuously. Disclosures cannot cure a false claim or provide information contradicting a material claim. Businesses should also avoid designing customer flows with #darkpatterns that hide or delay disclosure of material information (like fees!) or adopting bait-and-switch messaging to lead consumers to a more expensive outcome.

☎️Contact Your Ad Attorney today. We help businesses comply with advertising laws.

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