Brands’ Biggest Legal Problems in Digital

Brands are trying to get hip to social media and high-metabolism marketing. But that means confronting a whole slew of legal challenges.

The biggest challenge for brands in digital today is translating the traditional advertising laws into new media forms. Laws that involve television and print were thought up when there was a lot of space in media for disclosures. Then with the rise of the Internet, these laws were easily translated because there’s space online for that. With small screens for mobile and 140-character limits on Twitter, advertisers are plagued with combining their advertising statement with a disclosure.

“The problem is that advertisers haven’t gotten a lot of clarity on how to make appropriate discolsures,” said Allison Fitzpatrick, partner in the advertising, marketing & promotions group at the law firm Davis & Gilbert. “The FTC did produce a report a few weeks ago for mobile disclosure, but advertisers need more guidance. And a lot of the guidance they’re getting is after the fact. It’d probably be more helpful to know how traditional laws apply to new media prior to NAD action.”

Privacy has always been an issue online and even more so with the advent of social media and mobile. According to Gonzalo Mon, partner at the law firm Kelley Drye & Warren, new and different executions and technology always have their own set of legal challenges. Privacy is top of mind for brands now, mostly because of the massive amounts of consumer data now collected.

State regulators in California and the Federal Trade Commission are cracking down on the collection and use of data in social media and in mobile. Take what happened to Delta Airlines. California’s attorney general sued Delta for excluding a privacy policy within the company’s mobile app, claiming the app violates the state’s Online Privacy Protection Act. The suit claims that the Fly Delta app, which lets people manage their flights and bookings, collects users’ private information like location, name, number and frequent flyer account number and does not let users know how Delta uses this information. The lawsuit is still underway, but Delta could face a fine of $2,500 for each time the non-compliant version of the app was downloaded. This fine would be in the millions.

Brands are faced with other issues. One post could go viral and bring to light the wrongdoings of a brand. Subway is known for its “footlong” heroes. In response to a post about the footlongs, a consumer, Matt Corby, posted a picture of his Subway sandwich along side a ruler, showing the sandwich was not, in fact, 12-inches long. The initial image was posted to Reddit and the Facebook post received over 130,990 likes, 3,910 shares, and 5,890 comments. This resulted in three lawsuits by consumers against Subway.

“The informal nature of social media marketing tends to make people forget that it is still commercial advertising, and technically, the same laws apply regarding false advertising, use of trademarks, celebrity images, etc.,” said Andy Lustigman, partner at the law firm Oshlan Frome Wolosky.

“Curating” content can also be troublesome for brands in social media. Brands like Patagonia, Barneys and others often team up with bloggers. The problem is these individuals aren’t well-versed in advertising law. Expedia once sent a blogger to Disney to coincide with its new “Cars”-themed section on the brand’s website. Expedia let the blogger run the social media show for 36 hours. The company did not review the pictures or videos she posted. This turned out to work well for the brand, and it didn’t have any legal ramifications. But according to Kelley Drye’s Mon, whatever a blogger or an influencer says on behalf of a brand, the brand can be held liable for. If the blogger isn’t 100 percent accurate, or over exaggerates, the brand could face legal trouble.

This issue is a problem in crowdsourcing as well. In 2010, sandwich shop Quiznos ran a contest on Facebook asking fans to submit videos on why Quiznos is better than its competitor Subway. Subway caught wind of this and said that consumers were making a lot of false claims about its brand and subsequently sued Quiznos. After months of battling it out in court, the two sides ended up settling.

“You’ve got to be careful with crowdsourcing because a lot of times, consumers will submit content that infringes on copyright laws and make claims that are just untrue and the brand is responsible for that,” Mon said. “Crowdsourcing carries some peril because what happens is out of your control.”

Image via Shutterstock

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