Tag Archives: lesson

Native Advertising Is blurry, but Disclosures Must Be Clear

By: Sheila Raftery Wiggins

“Native advertising” is an advertisement that may blur the distinction between advertising and editorial, video or other content. For example, an advertisement may be integrated into a newspaper website, with a “headline” and then a few lines of text which looks like a regular story rather than looking like an advertisement.

Native advertising is so effective with consumers that it is also a hot topic with the Federal Trade Commission (“FTC”). The FTC may deem an advertisement that looks like an ordinary news article to be deceptive if consumers are not provided with sufficient information to differentiate the advertisement from publisher-generated, non-advertising content.  This information may be inherent in the nature of the advertisement, or it may require a separate disclosure indicating that the advertisement is a marketing communication.

Be careful, and abide by the FTC’s guidance, including the FTC’s Enforcement Policy Statement on Deceptively Formatted Advertisements, to avoid deception. The Enforcement Policy states that “an ad is deceptive if it promotes the benefits and attributes of goods and services, but is not readily identifiable to consumers as an ad.” The FTC’s guidance lists 17 mini case studies that provide examples of what does and does not require a disclosure.

GOAL: The goal is whether the consumer can reasonably ascertain that the advertisement is paid marketing material.

LESSON: Native advertising should contain a clear and prominent disclosure such as “ad,” “advertisement,” and “paid advertisement” – but, terms such as “promoted” or “sponsored” are ambiguous. For videos, the disclosure should be made in the video itself before the consumer receives the advertising message.

Sheila Raftery Wiggins, of the Newark office, handles matters involving complex commercial disputes, insurance defense, coverage disputes, financial fraud, and attorney ethics.

Texting Advertisements or Employment Offers May Violate TCPA

By: Sheila Raftery Wiggins

Potential drivers filed a class action suit against a well-known ride hailing firm in federal court (N.D. Ill.) alleging that text messages sent to potential drivers violate the Telephone Consumer Protection Act (“TCPA”). A sample text states: “You’re invited to drive [insert name]. No schedule. No boss. Sign up now and get a $500 bonus,” according to the recently-filed complaint. The case seeks $500 or $1,500 in damages for each text message which violates the TCPA.

Similar claims have been filed against this ride hailing firm in other federal courts, including in California. The firm has had some success defeating similar cases.

Generally, text message advertising services require “prior express written consent” from recipients, and employment solicitations require “express consent” which need not be in writing.

LESSON: A text campaign for employment should explicitly state that it is an employment solicitation.

Sheila Raftery Wiggins, of the Newark office, handles matters involving complex commercial disputes, insurance defense, coverage disputes, financial fraud, and attorney ethics.

E-commerce: Clickwrap Versus Browsewrap Agreement

By: Sheila Raftery Wiggins

The goal of an e-commerce contract is whether the “reasonable” consumer is aware of the e-commerce contract terms. A browsewrap agreement uses hyperlinks to the contract terms and conditions. A clickwrap agreement requires users to scroll through the terms before they are required to agree to them. The California state appeals court recently held that a browsewrap agreement for an online florist is not enforceable because the hyperlinks and overall design of the website would not have put a reasonably prudent Internet user on notice of the terms of use. LESSON: Design your website to give the consumer notice of the contract terms so the terms are enforceable.

Sheila Raftery Wiggins, of the Newark office, handles matters involving complex commercial disputes, insurance defense, coverage disputes, financial fraud, and attorney ethics.

2 Years and 10 Miles: Federal Court Reviews Franchise Agreement’s Non-compete Clause

By: Sheila Raftery Wiggins

Two years and 10-mile radius = enforceable. The Federal Court in Philadelphia ruled against AAMCO, which sought to enforce the non-compete clause in its franchise agreement, prohibiting a franchisee from engaging in transmission repair within two years from terminating the relationship and within a 10-mile radius. Here, the franchisee sold his franchise and opened a repair business 90 miles away from their former AAMCO location—but 1.4 miles away from another AAMCO location. The court ruled: No violation by the franchisee. LESSON: The non-compete clause should be tailored to address: (1) direct competition and (2) abuse of the franchise system/improper use of trademarks or goodwill.

Sheila Raftery Wiggins, of the Newark office, handles matters involving complex commercial disputes, insurance defense, coverage disputes, financial fraud, and attorney ethics.

“Silent” Partner of a New York Franchise Location: You ARE Responsible for Unpaid Wages

By: Sheila Raftery Wiggins

Many franchise locations are operated by a privately held corporation.  In New York, the top 10 shareholders of a privately held New York corporation (determined by value of their interest) can be held liable for unpaid wages.  Effective January 19, 2016, the top 10 shareholders of privately held corporations organized in other states can now be held similarly liable.  LESSON: A shareholder should not be “silent” regarding the operation of the business.

Sheila Raftery Wiggins, of the Newark office, handles matters involving complex commercial disputes, insurance defense, coverage disputes, financial fraud, and attorney ethics.

Wendy’s Franchisee’s Employment Arbitration Agreement Is Found to Be Illegal

By: Sheila Raftery Wiggins

The NLRB ruled that the mandatory arbitration agreement – which a Wendy’s franchisee asks its employees to sign – contains illegal waivers of class and collective rights. The NLRB’s decision conflicts with a federal appellate court ruling in 2013 in a case known as D.R. Horton.  Expect more cases – in the NLRB and the court system – to resolve this dispute. LESSON: Check your employment agreements and the arbitration clauses.

Sheila Raftery Wiggins, of the Newark office, handles matters involving complex commercial disputes, insurance defense, coverage disputes, financial fraud, and attorney ethics.

In Hot Water: Charging Sales Tax When Selling Water Bottles and Other Non-taxable Items

By: Sheila Raftery Wiggins

Franchisees of an international coffee chain were sued in New York and New Jersey for charging extra money—in the form of sales—for non-taxable food items such as water bottles and packaged coffee. LESSON: Check your state’s sales tax guide, which may limit taxes on certain food items and drinks. WARNING: Failure to comply could land you in hot water defending against a consumer class action lawsuit or a government investigation. HELP: If you are not in compliance, put together a strategy – include legal counsel to address all civil and criminal issues – to remedy this situation.

Sheila Raftery Wiggins, of the Newark office, handles matters involving complex commercial disputes, insurance defense, coverage disputes, financial fraud, and attorney ethics.

Puffery Vs. False Claims: The FTC Is Watching

By: Sheila Raftery Wiggins

LESSON: Avoid false endorsements by the government, especially when the government does not rank your business industry. The FTC reprimanded a fitness franchisor for falsely stating that the FTC endorses or has ranked the fitness franchise. A false claim may give cause to: (1) the filing of a complaint with the Federal Trade Commission—the filing is free, (2) a lawsuit and (3) decreased reputation. Comments to this post are welcome.

Sheila Raftery Wiggins, of the Newark office, handles matters involving complex commercial disputes, insurance defense, coverage disputes, financial fraud, and attorney ethics.