Government Relations

Proposed New Federal Trade Commission Powers

Congress is close to passing a new law that will change the way in which the Federal Trade Commission (FTC) oversees advertising at the federal level. The new law is buried deep within a proposed piece of legislation (H.R. 4173), written to provide financial regulation control.

The new law would repeal the current process for FTC rulemaking that has been in place for over 30 years. Under current protocol, when the FTC looks to enact industry wide rules it must; hold hearings on the proposed rules, prepare a statement of purpose including economic impact analysis, and must identify the actual harm that the new rule is looking to resolve.

The new law would make it much easier for the FTC to place restrictions on advertising by simply publishing them in the Federal Registrar and allow 60 days for public comments before enacting new industry rules.

The threat to over-regulation of the advertising industry is very real. In December, 2009 the FTC in with the support of three other agencies (CDA, FDA and USDA) announced a new “voluntary” restriction on advertising food to youths under 18 years of age. The standards for “appropriate” foods that can be marketed to children are so stringent that many household products such as yogurt, vegetable soup, peanut butter and most breakfast cereals would be off limits. While the December 2009 rule was voluntary, if the new law is passed the FTC could make it mandatory very easily.

The National AAF & Ad 2 SD is urging members to contact our local US Senate Representatives, letting them know that we oppose the new authority given to the FTC in the House financial regulatory reform bill.

Please post a comment and let us know what your thoughts are on the topic. We would love to hear your point of view!

Pennsylvania Governor Looks to Cut Advertising Tax Exemption

The Pennsylvania Governor, Edward Rendell, recently released his proposed budget for the upcoming year. He is attempting to cut 73 different sales tax exemptions including the exemption for advertising costs. The budget still needs to be voted on by legislators. The AAF is working with local members to urge law makers to consider the consequences of such a budget including; a decrease in tax base and the loss of jobs.

Let Them Have Broadband

In a speech given by the chairman of the FCC, Julius Genachowski, outlined a plan in which 90% of all Americans should have access to broadband internet by the year 2020. He also discussed plans to have national broadband service by 2020.

Microsoft and Yahoo and Get the Green Light

The U.S. Department of Justice and the European Commission have approved an agreement between Yahoo and Microsoft.  The partnership between these two tech giants was agreed upon close to a year ago, but has just passed the first legal hurdles and will begin implementation in the next few weeks.

“It’s the First Amendment”
The American Advertising Federation in part with the American Association of Advertising Agencies (AAAA) and the Association of National Advertisers (ANA) have filed an amicus brief in the U.S. District Court challenging a recent law that allows the U.S. Food and Drug Administration authority to restrict tobacco and advertising.

The position of these advertising industry organizations is that the law violates First Amendment free speech. The brief explains how the First Amendment also protects commercial speech.

The brief cites a Court decision in Lorillard v. Reilly (2001), which states that “so long as the sale and use of tobacco is lawful for adults, [there is] a protected interest in communication about it and adult consumers have an interest in receiving that information”. The Lorillard case has successfully struck down a number of advertising restrictions across the county.

Pharmaceutical Advertising Dysfunction
While the U.S. Senate is working on a Health Care Reform bill, a few senators have decided to work on including legislation that would eliminate the deductibility of pharmaceutical advertising.

In 2007 the advertising spend by drug companies was $5.375 billion. If this legislation were to pass, we can be sure that the ad budgets going forward would be drastically cut. The AAF is working closely with a grassroots network of local members to urge the senate to oppose such legislation.

May 13, 2008

To:                   AAF Members
From:               Clark Rector Jr., Senior Vice President – Government Affairs
Re:                   New CAN-SPAM Rule Provisions

The Federal Trade Commission has approved four new rule provisions under the CAN-SPAM Act intended to clarify various requirements under the act.

Four topics are addressed in the new rule provisions:

1. An e-mail recipient cannot be required to pay a fee, provide information other than his or her e-mail address and opt-out preferences, or take any steps other than sending a reply e-mail message or visiting a single Internet Web page to opt out of receiving future e-mail from a sender;
2. The definition of “sender” was modified to make it easier to determine which of multiple parties advertising in a single e-mail message is responsible for complying with the act’s opt-out requirements;
3. A “sender” of commercial e-mail can include an accurately registered post office box or private mailbox established under United States Postal Service regulations to satisfy the act’s requirement that a commercial e-mail display a “valid physical postal address”; and
4. A definition of the term “person” was added to clarify that CAN-SPAM’s obligations are not limited to natural persons.

The final CAN-SPAM rule and the commission’s Statement of Basis and Purpose can be seen at http://ftc.gov/os/2008/05/R411008frn.pdf.

Do not hesitate to contact me if you have any comments or questions.

Government Affairs | American Advertising Federation
1101 Vermont Avenue NW, Suite 500 | Washington, DC 20005
202) 898-0089 | Fax: (202) 898-0159 | www.aaf.org

In order to ensure the continued accuracy of television audience estimates, Nielsen announced it will move its usual February sweeps period to March 2009, after the end of the analog-to-digital broadcast television transition. TV companies rely on sweeps ratings numbers to establish advertising rates. In the same announcement, the company noted it will continue providing overnight ratings in February 2009 and does not anticipate any changes to national ratings reporting. Nielsen currently monitors broadcast signals over the air, so it may rely on cable signals as backup during the transition over the next several months.

The Federal Trade Commission held an environmental packaging workshop on April 30, hearing opinions from government officials, environmental group representatives and manufacturing and packaging companies. Most panelists agreed that changes were needed to the FTC’s Green Guides, a document that outlines permissible environmental claims in packaging and advertising. David Mallen of the Councils of Better Business Bureaus’ National Advertising Division said that environmental claims in advertising have nearly overtaken superiority claims as the most scrutinized. Panelists argued that consumers want brands to play a larger role in improving the environment and are often confused by environmental terminology, including “biodegradable,” “compostable” and “recyclable materials” versus “recycled materials,” and stressed that because there is no single body of data on recycling efforts, it is difficult to substantiate environmental claims. New FTC Chairman William Kovacic said his agency will continue to focus on state-of-the-art and difficult policy decisions, in combination with consumer protection, education and law enforcement. The AAF filed joint comments with the FTC urging them to proceed cautiously before making any revision to the guides.

The AAF protects and promotes advertising at all levels of government through grassroots activities.The nationwide network monitors advertising-related legislation on local, state and federal levels. The AAF puts its members face to face with influential lawmakers. They also encourage industry self-regulation as a preemptor to government intervention, when appropriate.New proposed FTC guidelines may affect those of us involved in online advertising. AAF Government Affairs department is taking on the issues.

To: AAF Members

From: Clark Rector Jr., Senior Vice President – Government Affairs

Re: FTC Proposed Behavioral Advertising Principles

As you may know, the Federal Trade Commission recently proposed self-regulatory principles for online behavioral advertising.

The American Advertising Federation supports self-regulation as the most effective way to protect consumers while insuring that innovation is not stifled in this dynamic and rapidly changing area. Unfortunately, we believe the FTC’s principles have a number of serious flaws.

For example, in arguing for the implementation of the principles, the commission has not articulated any concerns that consumers are harmed by behavioral advertising. We do not believe the principles strike an appropriate balance between restrictions on the use of information and the benefits to consumers through the use of that information. And of course, true self-regulation is developed by the affected industries, not the government.

The AAF has joined with a number of industry allies to submit comments to the commission. In them we make a number of important points:

Any self-regulatory principles in this area should be careful not to unnecessarily limit the tremendous benefits that behavioral advertising provides to consumers.

• The scope of activities should be limited to true “behavioral advertising” where information is collected across Web sites in order to predict consumer characteristics or preferences for purposes of online advertising.
• The principles should not require choice in all instances for the collection of information, particularly information that doesn’t personally identify consumers.
• Data retention should be one component within the “reasonable security” principle.
• A principle that allows flexibility based on circumstances in considering how notice and choice are best provided for changes in privacy practices should be adopted.
• Existing legal and self-regulatory regimes with respect to sensitive information should apply to behavioral advertising.

The full comments are available here: http://www.aaf.org/images/public/aaf_content/government/pdf/ftccomments_040908.pdf.

The FTC’s proposed principles on online behavioral advertising are available here: http://www.ftc.gov/os/2007/12/P859900stmt.pdf.