Ghostwriters: Medical Research or Paid Endorsers (and are they mutually exclusive?)

When Merck was busy battling lawsuits emanating from the pain medication Vioxx, the Wall Street Journal, among other news organizations that were reporting on the proceedings, also reported on the practice of “ghostwriting,” alleging that five out of the six authors of a study published in the Journal of the American Medical Association were paid consultants to Vioxx lawyers! An editorial accompanying the studies in JAMA opined that manipulation of publications in the promotion of drugs by paid ghostwriters might not be such an uncommon occurrence. The Washington Post even went so far as to report that the JAMA studies essentially “accuse” the drug manufacturer of “scientific fraud.”

Merck responded to the Wall Street Journal article expressing disappointment at reports that trial lawyers might have made payments to authors whose work found their way into medical journals. While a majority, if not all, of the Vioxx cases have been settled, inquiries into the practice of ghostwriting—payments by pharmaceutical manufacturers for articles frequently extolling the virtues of one drug or another and appearing in medical journals—seems to be a continuing, and problematic, means of promoting pharmaceuticals.

As they say, timing is often everything. A few weeks ago, I had prepared a presentation for an international gathering of lawyers at Limerick University in Ireland, describing the use of testimonials and endorsements in advertising. You can read my previous post and obtain a .PDF copy of the presentation. In briefing the assembled professionals—mainly from the United States and Europe—my presentation and their interest focused heavily on the Federal Trade Commission’s proposed updates and revisions to its Guides that were last revised in 1980.

One of the items clearly on the FTC’s agenda is DISCLOSURE—specifically, disclosure of material connections between those who promote and endorse products and services, and the advertisers and companies that create, manufacture, distribute and sell these products and services. Indeed, the FTC is considering extending liability to endorsers themselves who promote goods and services, if the claims being made are found to be false, deceptive, or misleading, or if they represent unfair competition. While much of the discussion surrounding these revisions has focused heavily on new social media and digital distribution—buzz, viral and word-of-mouth marketing, social networks, bloggers, vloggers, sploggers and virtual worlds—and both traditional and revised Guides (as well as specific advertising guidelines for regulated pharmaceuticals), all focus on the potential for misleading consumers as to the credibility of the speaker or writer, where a material connection to the sponsor is not clearly disclosed. Whether a physician who reads an article that is authored by a paid ghostwriter and that appears in a medical journal, would be considered a “consumer” under these circumstances; or whether an independently peer-reviewed article would be considered advertising or promotional activity, are separate questions. But clearly these are topics that have created “buzz.”

Well, here we go again. Just recently, the ABAjournal.com reported that Wyeth paid ghostwriters for articles published in medical journals—in this case promoting certain replacement hormone therapy in menopausal women. You can read the full article here. While proponents (or should we say “defenders”) of payments made to authors assert that if the medical professional is qualified; if the content is subject to rigorous peer-review by independent experts; and if the authors retain complete editorial control over the content and the views that are expressed; it should not be a problem and should be considered perfectly fine.

Assuming, as both the pharmaceutical companies and the individual authors assert, that the content of these articles is scientifically accurate, many questions arise. For example, is disclosure even necessary under these circumstances? Could failure to disclose these payments be construed as deceptive or misleading—always, or only under specific circumstances, and if so, what circumstances? What criteria will be used to determine if a payment is “material,” and if disclosing (or not disclosing) that fact that would affect the reader’s perception of the credibility or impartiality of the authors? Is this even a “consumer” regulatory issue or does this belong to the FDA or another regulatory body relevant to the medical profession, since this isn’t really “consumer” advertising? These are questions perhaps that that FTC and David C. Vladeck, its new Director of the Bureau of Consumer Protection, may well decide to focus upon.

Free CLE? Free To Travel? Start Packing!

“Advertising Law in the United States and Europe: The Challenges Ahead” is the subject of a CLE Conference organized and sponsored by the University of Limerick Law School and the Franklin Pierce Law School that is being held July 24 and 25 in Limerick, Ireland (Limerick is 20 minutes from Shannon). Douglas J. Wood and Joseph I. Rosenbaum, Co-Chairs of Rimon’s global Advertising Technology & Media Law Group, are among the distinguished faculty, which includes some of our clients, as well as scholars and government leaders from both sides of the Atlantic.

What’s more, these institutions have graciously agreed to allow us to invite our clients to attend at no charge. Yes, you read correctly. Free! Now you must be a client to take advantage of this promotional offer, and although you will have to pay your own way to join us and stay for the two-day course, what better time and excuse to visit Ireland? Yes, it’s short notice, but airfares are favorable, and if you are in Europe you literally have no excuse not to get away and take advantage of this great opportunity. Just click to learn more about the Agenda, the Faculty, the University of Limerick Law School, where the conference will be held; or nearby accommodations. Being a client does have its privileges, so if you are interested, email either Doug Wood or Joe Rosenbaum as soon as possible to take advantage of this opportunity. And start making your travel arrangements now!

Give Credit (Card), No Give a Gift (Card)! Why Not Give Both?

Although consumer credit regulation is hardly new – Regulation E, the Fair Credit Reporting Act, Regulation Z and laws regulating disclosures, debt collection practices, billing statements and the like have been around for decades – for the first time in U.S. history, Federal legislation is tackling pricing, rate modifications, advertising disclosures and fees, and adding a gift card angle as well. 

While the House has not yet passed this or any other version of the legislation, those in the know believe a similar, if not identical, bill will be approved by the House of Representatives and that the President is likely to sign it. 

Are you a bank, payment card association, credit union or financial institution that issues credit cards or gift cards? Here are highlights of the bill that passed the Senate:

  • When marketing, a card issuer would not be permitted to increase any advertised ‘teaser’ rates for at least a year after a new account was opened for the consumer, and promotional rates advertised to consumers must remain in effect for at least six month;
  • Unless the credit-issuing institution can get proof that anyone under 21 can actually repay their credit card debt, credit cards can only be issued to individuals under the age of 21 if a parent, legal guardian or guarantor agrees in writing to be responsible for the debts;
  • If a consumer pays more than the minimum balance due, the excess must be applied to the balance with the highest interest rate;
  • Card issuers will not be allowed to change rates retroactively on existing balances (there is an exception where the consumer is past due by 60 days – which, I guess, presumes that when a consumer can’t afford to pay their balance within 60 days, it’s ok to raise their rates since they probably won’t be able to afford to pay a higher rate either);
  • Bills for balances due must be sent at least three weeks (21 days) before their due date;
  • Card issuers will no longer be able to charge additional fees to consumers for alternate payment mechanisms (e.g., by mail, telephone, online, electronic, wire transfers), unless the consumer requests and the issuer offers some type of ‘expedited’ service;
  • Consumers must be asked if they want to allow ‘over-limit’ credit transactions and if they do not affirmatively consent, the card issuer will not be permitted to charge a fee if the issuer still authorizes the transaction (e.g., your credit limit is $1,000 and you charge something for $1,001 and the authorization system approves the transaction anyway);
  • Changes in the terms and conditions that apply to consumer cardholders will require at least 45 days’ notice; and
  • The minimum amount of time a gift card must remain valid for use will be 5 years. First, it is likely this will apply to gift cards that are consumer-oriented and where full value is paid, and not to discounted, bulk sales, non-consumer, incentive, employer or promotional gift cards – but then the legislation isn’t final yet, is it? Furthermore, the Federal legislation is not likely to preempt more consumer-friendly State law (e.g., California prohibits any expiration date on such gift cards), but it will place a minimum level of consumer protection against earlier expiration, even in States that have no applicable regulation.

There is also consideration being given to removing any current legal and contractual restrictions on merchants that would allow them to differentially price their products and services based on the incremental costs (or savings) of accepting different forms of payment. When credit and debit cards were scarce and cash was king (cash, as in ‘currency’), regulation and industry groups frowned upon differential pricing, arguing that allowing a merchant to charge more for the use of a credit card was discriminatory to the consumer – even though the cost of accepting such payment instruments was higher (the merchant pays a fee (discount rate) to the card-issuing enterprise for the privilege of accepting the particular brand of card). Furthermore, the growth of corporate and purchasing cards and the use of payment instruments in B2B transactions has resulted in situations where a manufacturer accepts a purchasing card (procurement-based credit card) in payment of sales to distributors, wholesalers and retailers – a fee is charged to the manufacturer for the card transaction. This chain continues until a consumer makes a retail purchase, and if any or all of these transactions involve branded payment instruments and not cash, travelers’ checks, bearer bonds or two goats and a chicken, today, a fee would most likely accrue on each payment-card transaction at each step of the way . . . significantly raising the cost to everyone and ultimately the consumer. Stay tuned.

So: Consumer Credit? Co-branded promotions? Loyalty Rewards Programs? Gift Cards? Premiums and Incentives? Retail Promotions? Payment Card Industry (PCI) Data Security Standards? Privacy & Data Protection? Identity Theft? Data Breach? Pre-Screening? Online Digital Payment Systems? Corporate Cards? Purchasing Cards? E-Commerce? Regulation E? Regulation Z? Statement Insert Advertising; Credit/Demographic Market Segmentation? Free? APR? Limited Time Offer?

Any of these sound familiar? It’s what we do? Our Advertising Technology & Media Law Group; our Financial Institutions Group; our Data Security and Identity Theft Group . . . need we say more . . . If you need help (or you are just over stimulated by the flurry of legislation, regulation and excitement), call us or email me at joseph.rosenbaum@rimonlaw.com. We can help.

Gift Cards (The Gift That May Stop Giving) *

Attention holiday shoppers. Not sure what to buy Aunt Matilda or cousin George? A gift card allows them to buy whatever they like? Maybe. Large retailers such as Sharper Image, Bombay Company and Linens ‘N Things have filed for bankruptcy or gone out of business, leaving behind millions of dollars in unused gift cards. In bankruptcy, money left on a gift card is treated as a debt, which the bankruptcy court can decide if it is to be repaid, and how. If the retailer stays in business, the court may allow it to continue to honor its cards, but even then consumers may not get the full value. Sharper Image, for example, was allowed to continue accepting gift cards, but only if the cardholder spent twice the value of the card in a single transaction. Bombay Company was allowed to pay its gift-card holders 25 cents on the dollar. If the retailer closes its doors, it is possible the consumer’s only recourse would be to file a claim and stand in line with the other unsecured creditors.

Continue reading “Gift Cards (The Gift That May Stop Giving) *”

Italian Authorities Aren’t Loyal to Customer Information Used for Behavioral Marketing

A new provision of the Italian data protection law (Loyalty Cards, issued Feb. 24, 2005), is getting a workout. The Data Protection Authority fined a well-known supermarket chain €54,000 for not giving customers adequate information regarding use of personal data. The retailer issued loyalty cards—for shoppers to obtain discounts and rewards—and gathered customer names, email and cell phone numbers (personally identifiable information) and behavioral marketing information (spending habits and locations). Customer profiles were then evaluated and used to create targeted ad campaigns. The retailer didn’t ask customers for consent for all of these uses—a violation of the data protection law.

In Italy, if customer information is not used solely for operating the loyalty program, but for customer profiling and advertising, the consumer must be told and must give consent. While consent is not needed to carry out contract obligations needed to fulfill the loyalty reward program itself, collecting more information than needed for that purpose or using information for other purposes requires specific consent. Is this true elsewhere? In Europe? The United States? Canada? Latin America? Asia? New Zealand? Call me and find out, or read my bio.

Deceptive Sweepstakes Draw NY Fines

In June, H&R Block settled charges brought by the New York Attorney General arising from two sweepstakes programs involving instant-win scratch-off cards. The cards were available at retail when purchasing tax-return preparation services, or online via free registration. The advertisements online, in print, and on radio and television mentioned “no purchase necessary,” but the mentions were fleeting or not conspicuous, according to the NY AG. Further, in-store advertising did not include these words, nor were Official Rules posted in the retail stores. The NY AG noted that under these circumstances, customers who found about the promotions in retail stores had no way to know they could enter online at no charge. The NY AG alleged the lack of disclosure in stores about free entry, coupled with unclear or minor disclosures in the other ads, was false and deceptive. To settle, H&R Block agreed not only to clearly post the Official Rules at participating retail offices, but also to pay $245,000 in penalties and costs. The settlement also requires H&R Block to train employees to direct consumers to information about no purchase means of entry and clearly disclose that alternate means of entry are available whenever advertising mentions entry is available by purchasing an H&R Block service.

There are complex state laws that cover how promotions, chance, skill or combinations, are to be advertised and operated. When marketing globally, rules are more complicated with language, currency, prize notification and disclosure regulations, as well as age and consent requirements on national, provincial or trading-block scale. What is a “skill” or when is “no purchase” required? When does the chance of winning have equal “dignity” when entering without a purchase? These are often subject to varying interpretation—online and offline. Compliance (registration and bonding in some jurisdictions) can seem an endless legal quagmire. Fortunately, Rimon’s Advertising Technology & Media lawyers around the world can help.

Text, Lies & Videotape (Got Your Attention, Didn’t We?)

When Coors asked, football fans chose to receive text-message alerts about the NFL football draft, each one containing a blurb about Coors Light; and mobile devices can also send messages, not just receive them. They can be interactive! While messaging technology allows only 40 characters for an ad (the other 120 are for content), simple tag lines are the current vogue.

Coors is not alone. Marriott has sponsored a campaign combining print and cellphone ads with free sports alerts from USA Today’s website. Verizon Wireless is sponsoring an ad campaign in which Screenvision, a company that boasts an ad network of thousands of screens in thousands of motion picture theaters, will ask theater audiences to vote by text messaging, with results calculated and displayed on-screen. The advertising campaign will feature branded popcorn containers and a short film directed by Spike Lee entitled “VCast Street.”

“Deal or No Deal?” It’s a Deal – At Least for SMS!

When NBC Universal broadcasts “Deal or No Deal,” viewers are invited to play a “Lucky Case Game.” The game allows viewers to pick one of six cases and submit their entry via premium text message ($.99) or online. If you pick the right case, you are entered in a random drawing for a prize of up to $100,000. Well, wouldn’t you know. Someone lost and sued NBC under Georgia’s gambling laws, which make gambling contracts void and states that any “money paid…upon a gambling consideration may be recovered from the winner by the loser” (Hardin v. NBC Universal). There are also actions pending before the California courts. Just a few weeks ago, the Georgia Supreme Court held that the $.99 was not a bet or wager, and there was no “gambling contract” between the plaintiffs and NBC. For now, and at least in Georgia, a premium text message game is permissible.

Videogame Advertising to Hit the $1 Billion Mark

According to a report in Media Week, advertising spending for advertising in videogames will reach about $1 billion by 2012. Advertising in video games can take a number of forms: in-game advertising, which is preformatted ads that appear within the game itself; advergames, which are games constructed around a particular brand or product in order to highlight and promote that product or brand; context-sensitive or dynamic advertising, which is similar to in-game advertising, but rather than static advertisements, can be contextually modified in a number of ways depending on when, where and how the in-game scene is viewed. Most of that growth is projected in the casual, online, web game world catering to a broader audience than hard core console gamers. The logic is that people are more willing to accept advertising in return for free game playing on the web; and absent a dynamic Internet connection with more user acceptance than is evidenced to date, console gaming provides fewer opportunities for placing context sensitive or behavioral advertising.

Media in the Crosshairs?

I know of no suit by the FTC against a media company for running an allegedly deceptive advertisement for someone else’s product or service. In a July 9 letter, the FTC states the “active participation in advertising preparation” by a radio broadcaster is subject to challenge for possible violations of §5 of the Federal Trade Commission Act, which gives the Commission broad authority to prohibit “unfair or deceptive acts or practices.” The FTC characterized the broadcaster as a “hybrid entity,” both producing programming and participating in preparing advertising. In the past, ad agencies have been held liable for a deceptive advertisement if the agency was actively involved in developing and producing the advertising. Now the FTC is stating that media companies can be subject to the same analysis. Increasing use of product placement, sponsorships, context-sensitive advertising, branded entertainment and the host of ways advertising and programming increasingly intersect and blur, make it inevitable that media companies will more actively be challenged in connection with what products and services show up on the screen as part of programming. Now the FTC has also indicated the media may have responsibility for what shows up in advertising if a media company participates in its creation or development. It should also come as no surprise that certain advertising (targeted at children; diets)—those that have been special targets for FTC enforcement action—should receive the most attention. Do you have a policy regarding participation in the creation or development of advertising (if you are an advertiser or advertising agency you probably do) and does it need updating? If you are a media company, you may not (other than for your own ads)—but then, maybe you should. Where can you go for help? The answer is not a useless fact, but it is compelling.