Authors: Jason W. Gordon
Search engine optimization was increasingly critical to reach consumers as various jurisdictions opened, closed or created a hybrid model to sell products and services.
We witnessed the explosion of nonfungible tokens, Dogecoin, meme stocks and companies going public through special purpose acquisition companies.
Remote water-cooler talk centered on discussions about GameStop Corp., and whether someone actually owns cryptocurrencies.
Michael Strahan and William Shatner went to space on Blue Origin LLC's latest rockets. Back here on Earth, electric vehicle company Rivian Automotive Inc. had a blockbuster initial public offering while selling fewer than 1,200 vehicles.
A new administration in the White House and a new Congress brought in some new regulation, and a ton of political theater.
Politicians were happy to call CEOs from social media platforms and Big Tech to testify, but we failed to see a single bill brought to President Joe Biden's desk.
The introduction of vaccines to combat COVID-19 led us to believe that a global reopening would occur, but the introduction of variants, and the political divide on shots in arms produced mixed results. In this meme-stock trading, Dogecoining, space flying, vaccine-developing world, we identify the following trends for 2022:
1. The FTC's New Approach
There is a new sheriff in town at the Federal Trade Commission. Lina Khan was sworn in as chair of the FTC on June 15, 2021, and she wasted no time in setting her agenda.1
Khan released a memorandum outlining her visions and priorities for the FTC.2 She outlined her views on the FTC's strategic approach, policy priorities and operational objectives, pushing for a "holistic approach to identifying harms."3
Khan grouped together antitrust and consumer protections violations by explaining that these violations "harm workers and independent businesses, as well as consumers."4
Khan also focused on "targeting root causes rather than looking at one-off effects" resulting in a focus on structural incentives, like conflicts of interests or business models that enable illegal conduct.5
Importantly, Khan pushes for an "integrated approach" to FTC work, encouraging staff to move away from viewing the work between consumer protection and competition as separate from one another.6
Khan notes the importance of the FTC using its entire arsenal of tools and authorities following the April 2021 decision in AMG Capital Management v. FTC.7 We are all aware of the resounding effect of this U.S. Supreme Court decision on the FTC's authority.
In July 2021, the U.S. House of Representatives passed a bill, H.R. 2668, along party lines, that would amend Section 13(b) of the FTC Act to provide the FTC with the express authority to obtain both injunctive a monetary equitable relief for violations of the FTC Act.8
The bill includes the specific types of equitable relief that the FTC could pursue including restitution, money refunds, contract recission, or reformation and the return of property.9 It also provides the FTC with disgorgement authority.10 Notably, Biden's Build Back Better Act does not give the FTC any new authority in regards to seeking equitable relief.
The FTC does not want to wait for Congress to change the law. Instead, the FTC has utilized its Notice of Penalty Offense power for the first time since the Reagan Administration as a way to seek monetary damages.
Under the FTC's Penalty Offense authority, the FTC can seek civil penalties against a company or individual if the FTC proves that the company or individual had actual knowledge that the FTC had already issued a decision in prior administrative cases that the same conduct that the company or individual is engaging in was unfair or deceptive under the FTC Act.11
The FTC sent out warning letters to over 700 brands, which arguably puts them on notice of past FTC decisions that found certain conduct unfair or deceptive.12
The FTC also issued an enforcement policy on negative options. The policy statement warns companies against deploying "illegal dark patterns that trick of trap consumers into subscription services."13 The policy provides that companies will face consequences if the company's sign-up process does not:
- Provide clear and conspicuous disclosures of material terms;
- Obtain the consumer's express informed consent; and
- Provide consumers with an easy and simple cancellation mechanism.14
This new policy statement indicates that the FTC is focusing on potential enforcement actions involving automatic renewal subscriptions, continuity plans, free-to-pay conversions, and pre-notification plans.
The FTC is setting its sights clear on enforcement. The loss of Section 13(b) is not going to slow the FTC down. It is making its intentions abundantly clear that it is going to go after those it has deemed bad actors through both new and old techniques. Accordingly, we expect the FTC to continue to be active in its enforcement powers, in particular for influencer marketing and dark patterns.
2. Renegotiation of the SAG-AFTRA Commercials Contract
The Joint Policy Committee LLC15 and Screen Actors Guild-American Federation of Television and Radio Artists, or SAG-AFTRA, are gearing up for another round of contract negotiations as the current collective bargaining agreements16 are set to expire on March 31.
The past two years were largely spent navigating pandemic-related issues, including the joint release by the JPC and SAG-AFTRA of the commercial production safety protocols to account for the continuing challenges presented by COVID-19; ones we can unfortunately expect to continue through 2022.17
The safety protocols cover numerous areas such as preemployment testing, testing during employment, positive test result protocols, and compensation for testing and screening for COVID-19.18 Like all of us, the JPC and SAG-AFTRA continue to monitor the evolving COVID-19 landscape.
In September 2021, the JPC and SAG-AFTRA agreed to an addendum to the safety protocols that provides a framework to allow producers to mandate COVID-19 vaccines for commercial productions, subject to certain requirements.19 This addendum gives producers the ability to implement a mandatory vaccination policy in addition to the existing safety protocols.20
Key aspects of the addendum set forth how producers can verify vaccination status, including maintaining documentation of vaccination status in compliance with applicable laws and the requirement that the producer must inform SAG-AFTRA that it is implementing such a policy.21
The producer may only require that a prospective employee to respond yes or no as to whether they are fully vaccinated or whether the prospective employee has a sincerely held religious belief or disability that prevents them from being fully vaccinated.22
In addition to developing COVID-19-related guidance for commercial productions, in June 2021 as a response to SAG-AFTRA's promulgation of the Influencer-Produced Sponsored Content Agreement,23 the JPC and SAG-AFTRA announced the 2021 Waiver for Influencer-Produced Sponsored Content.24 The influencer waiver is more favorable to advertisers in several key areas, including the advertiser's ability to own the content and the elimination of the requirement that the influencer have a loan out corporation.
We will be watching to see where the negotiations take the collective bargaining agreements and the continued role COVID-19 will play in the entertainment industry. The JPC and SAG-AFTRA continue to work towards building a safe environment for everyone involved in productions.
3. Decoding the Latest Tech Buzzwords.
Welcome to the metaverse, perhaps the most out-of-this-world concept. The metaverse presents an evolving, alternative digital environment where change can happen instantly.
And how does someone own something in the metaverse? Enter NFTs, or nonfungible tokens. Technically speaking, NFTs are units of information recorded on a blockchain about a good or service that is not interchangeable. In much simpler terms, NFTs essentially enable you to buy and sell ownership of unique digital items. NFTs can be anything digital, like a drawing or an item in a video game. The blockchain is what keeps track of who has ownership of the NFT.
Brands are already embracing the metaverse and NFTs; from brand collaborations to virtual experiences. MGM Studios partnered with VeVe Digital Collectibles to create an NFT of the ticket stub to the premiere of the James Bond movie, "No Time to Die."25
Nike Inc. purchased a virtual shoe company, RTFKT, that "redefine[d] the boundaries of physical and digital value to serve their broad community of creators" and "leverage[d] the latest in game engines, NFTs, blockchain authentication and augmented reality" to create virtual products and experiences.26
The artist FEWOCiOUS partnered with the same RTFKT Studios to create virtual editions of FEWOCiOUS x RTFKT shoes which sold for $3.1 million in total.27
Burberry Ltd. launched an interactive virtual replica of its flagship Tokyo stores that allowed consumers to navigate the store and buy items from its collection.28 The Taco Bell brand created five different taco-themed, animated NFTs and released five editions of each in early March 2021.29
Brands can utilize NFTs in unique ways beyond simply selling them. For example, brands could embed an NFT in a product it sells with some of the products being a so-called surprise-and-delight NFT, which could be entry into a virtual concert or fashion show.30 NFTs could also be used as prizes in sweepstakes or other prize promotions.31
NFTs present incredibly interesting issues that span over all types of law. There may be intellectual property concerns, right of publicity concerns, financial and regulatory concerns, and privacy concerns. The metaverse and NFTs present unique opportunities in the advertising and marketing industry, and brands have already begun to utilize them.
We foresee NFTs being an even bigger deal in the new year. Brands and artists will continue to collaborate on producing NFTs; and as Nike showed us, acquire companies that do this kind of branding well.
4. Data Privacy Keep Your Hands Off My Data!
In November 2020, California voters approved Proposition 24, which created the California Privacy Rights Act, or CPRA, set to go into effect Jan. 1, 2023, and enforcement scheduled for six months later.32 The CPRA amends and will supersede the California Consumer Privacy Act.
The CPRA creates a state agency, the California Privacy Protection Agency, or CPPA, to enforce compliance with the law.33 Key provisions of the CPRA include new consumer rights including the right to limit the use and disclosure of sensitive personal information and the right to opt-out of the sharing of personal information for cross-contextual behavioral advertising purposes.34
The CPPA held public meetings beginning in mid-2021,35 and has a deadline of July 1, 2022, to adopt final regulations.36 Even though the CPRA is not in effect until January 2023, it will give consumers the right to request personal information collected on or after Jan. 1, 2022.37
California is not the only state to enact privacy laws. Colorado and Virginia have adopted their own. Virginia's privacy law, the Virginia Consumer Data Protection Act, among many other things, regulates the collection, use, and disclosure of personal data and is set to go into effect on Jan. 1, 2023.38
It also provides Virginia consumers with several rights, including the right to submit a request to access, correct, and delete their personal data.39 In addition, Colorado enacted the Colorado Privacy Act set to go effective July 1, 2023.40 Like California and Virginia, Colorado provides consumer rights that include the right to opt out of the processing of their personal data in specific scenarios, the right to correct or delete their personal data, and the right to access their personal data.41
Businesses should take this year to assess their compliance with these new laws and prepare plans to get their privacy programs in order. This may include updating privacy policies, changing their privacy practices, and training their personnel. It is only a matter of time before other states join in on the privacy fun by enacting their own laws. For example, Massachusetts, New York, North Carolina and Pennsylvania have consumer data privacy proposals in the works.42 We will need to continue to watch to see which states may join in.
5. Political Theater?
Congress is focused on platform functions in society and the ever-growing impact it has on young users. Recently, Instagram's chief Adam Mosseri testified in front of Congress about Instagram's practices including the promotion of inappropriate content to young users and ads targeting younger users.43 Instagram is owned by the former Facebook, Meta Platforms Inc.
Many in Congress worry about the effect the use of social media has on young users. Facebook whistle-blower Frances Haugen brought these issues to the forefront when she exposed how social networks spread hate speech and misinformation, harming the mental health of young users.44
Mosseri isn't the only star in the latest blockbuster film out of Washington, D.C. All of the large platform CEOs are putting in their time testifying before Congress.45 Mark Zuckerberg of Facebook, Sundar Pichai of Google, and Jack Dorsey of Twitter are all working on their lines, scheduling their wardrobe fittings, and prepping for the C-SPAN show.46
Lawmakers noted that this information further adds to the bipartisan momentum "to set tougher rules for privacy and platform accountability."47
Congress likely realizes it cannot rely on these social media giants self-policing tactics anymore, and may need to implement stronger laws.
In December, Sen. Chris Coon, D-Del., Sen Rob Portman, R-Ohio, and Sen. Amy Klobuchar, D-Minn., announced the Platform Accountability and Transparency Act, or PATA, "a new bipartisan bill that would require social media companies, independent researchers and the public with access to certain platform data."48
PATA would require social media companies to disclose certain internal data and respond to independent research requests in an attempt to provide to the public more transparency regarding the impact that these social media platforms have.49 Any failure to comply with a request under PATA could subject the company to enforcement from the FTC and face potential loss of immunity under Section 230 of the Communications Decency Act.50
Whether the information gathered under PATA would lead to liability for a company's actions remains to be seen, but the information gathered could lead Congress to develop a more comprehensive strategy in its attempt to regulate major social media companies.
In May 2021, the U.S. House of Representatives introduced the Online Consumer Protection Act that would make a company's violation of its terms of service and related materials of its platform an unfair or deceptive act or practice and subject to FTC enforcement.51
The bill is meant to address shortcomings of Section 230 of the Communications Decency Act, which grants a legal liability shield for third party content.52 The bill is designed to protect consumers by ensuring that an online platform has a clear, transparent terms of service that must be enforced.53
Companies will be held accountable to the promises they make consumers and be forced to protect consumers as promised.54
By ensuring that companies have clear terms of service, the FTC should be able to "better execute their authority."55 This act would give individuals a private right of action to bring Section 5 claims. The act specifically states that Section 230 is inapplicable to violations of this act.
Congress is calling for transparency from social media platforms. Will Congress pass a law hacking up Section 230 this year? It is possible that such a law will pass ahead of the midterm elections, allowing Congress to go back to their districts, engage in the typical back-slapping during the rubber chicken dinners. But we will be curious to see if the law will really move the needle in the reduction of harmful content on social media platforms, and in particular, content harming our children.
As we enter the third year of the COVID-19 pandemic, we see that the law continues to move, including into a new worldly space. We expect that the Federal Trade Commission will increase its enforcement efforts, contracts between talent and the union will be renegotiated, and the metaverse will expand.
New privacy laws will continue to be a compliance issue for brands, as advertisers navigate the continued lack of uniformity among privacy laws. Ultimately, we believe that 2022 will produce growth, innovation, and a further expansion into the metaverse. But meaningful legislation may be curbed as Congress goes back home to do what it does best — run for Congress again.
- Lina Khan Biography, FTC, available at https://www.ftc.gov/ (visited Dec. 23, 2021).
- Memorandum from Lina Khan to Commission Staff and Commissioners regarding Vision and Priorities for the FTC, Lina Khan, (Sep. 22, 2021), available at https://www.ftc.gov/.
- Id. at 1.
- Id. at 2.
- Id. at 3.
- Id. at 1.
- Consumer Protection and Recovery Act, H.R. 2668, 117th Cong. (1st Sess. 2021).
- Id.; see also Press Release, House Committee on Energy and Commerce, Pallone & Schakowsky on House Passage of Legislation Restoring FTC's 13(b) Consumer Protection Powers (July 20, 2021), available at https://energycommerce.house.gov/.
- See 15 U.S.C. Sec. 45(m)(1)(B).
- Federal Trade Commission, Latest FTC Notice of Penalty Offenses tells 700+ National Advertisers that Deceptive Endorsements Can Lead to Financial Penalties (Oct. 13, 2021), available at https://www.ftc.gov/.
- Press Release, Federal Trade Commission, FTC to Ramp up Enforcement against Illegal Dark Patterns that Trick or Trap Consumers into Subscriptions (Oct. 28, 2021), available at https://www.ftc.gov/.
- Enforcement Policy Statement Regarding Negative Option Marketing, 86 Fed. Reg. 60,822, 60823 (Federal Trade Commission Nov. 4, 2021).
- Joint Policy Committee LLC Homepage, available at http://www.jointpolicycommittee.org/.
- Joint Policy Committee, LLC & SAG-AFTRA, 2019 Commercials Contract Memorandum of Agreement available at http://www.jointpolicycommittee.org/portfolio/1576/ and 2019 Audio Commercials Contract Memorandum of Agreement available at http://www.jointpolicycommittee.org/.
- Joint Policy Committee, LLC & SAG-AFTRA, COVID-19 Commercial Production Safety and Testing Protocol Agreement, available at https://www.jointpolicycommittee.org/.
- Joint Policy Committee, LLC & SAG-AFTRA, Addendum to COVID-19 Commercial Production Safety and Testing Protocol Agreement dated 4/16/21, available at https://www.jointpolicycommittee.org/.
- SAG-AFTRA, 2021 Influencer-Produced Sponsored Content Agreement available at https://www.sagaftra.org/ (PDF download).
- Joint Policy Committee, LLC & SAG-AFTRA, 2021 Waiver for Influencer-Produced Sponsored Content, available at http://www.jointpolicycommittee.org/.
- VeVe Digital Collectibles, Exclusive – No Time to Die Digital Movie Tickets, Medium (Oct. 5, 2021), available at https://medium.com/.
- NIKE, NIKE, Inc. Acquires RTFKT (Nike News Dec. 13, 2021), available at https://news.nike.com/.
- Reed Smith, Reed Smith Guide to the Metaverse, Issue 1 (May 2021), p. 13 (hereinafter the "Reed Smith White Paper"). Available at https://www.reedsmith.com/.
- Stacy K. Marcus & Deborah Bessner, Are Virtual Branded Worlds the Future?, AdLaw By Request (May 17, 2021), available at https://www.adlawbyrequest.com/.
- Reed Smith White Paper, supra note 22, p. 11.
- Reed Smith White Paper, supra note 22, p. 13.
- Reed Smith White Paper, supra note 22, p. 13.
- Sam Dean, California Voters Approve Prop. 24, Ushering in New Rules for Online Privacy, LA Times (Nov. 3, 2020), available at https://www.latimes.com/.
- California Privacy Rights and Enforcement Act of 2020, Cal. Civ Code. section 1798.199.10(a).
- Cal. Civ. Code sections 1798.120 and 1798.121.
- California Privacy Protection Agency, Board Meetings Homepage, available at https://cppa.ca.gov/.
- Cal. Civ. Code section 1798.185(d).
- Cal. Civ. Code section 1798.30(2)(B).
- Consumer Data Protection Act, Va. Code Ann. section 59.1-575 et. seq.
- Va. Code Ann. section 59.1-577.
- Colo. Rev. Stat. 6-1-1301 et seq.
- Colo. Rev. Stat. 6-1-1306(1).
- Thorin Klowsowki, The State of Consumer Data Privacy Laws in the US (And Why It Matters), New York Times, Wirecutter Blog, (Sep. 6, 2021), available at https://www.nytimes.com/.
- Anna Edgerton & Naomi Nix, Instagram Chief and Lawmakers Clash Over App's Real World Harms, Bloomberg.com (Dec. 8, 2021), available at https://www.bloomberg.com/.
- Shannon Bond, Facebook, Twitter, Google CEOs Testify Before Congress: 4 Things to Know, NPR (March 25, 2021), available at https://www.npr.org/.
- Anna Edgerton & Naomi Nix, Instagram Chief and Lawmakers Clash Over App's Real World Harms, Bloomberg.com (Dec. 8, 2021), available at https://www.bloomberg.com/. https://www.cnbc.com/.
- Press Release, Coons, Portman, Klobuchar Announce Legislation to Ensure Transparency at Social Media Platforms (Dec. 9, 2021), available at https://www.coons.senate.gov/.
- Press Release, Schakowsky, Castor Introduce Online Consumer Protection Act (May 10, 2021), available at https://schakowsky.house.gov/.
- Id; Online Consumer Protection Act Fact Sheet, available at https://schakowsky.house.gov/.
This article was originally published by Law360.