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Update on Children’s Marketing

Maine Introduces Bill to Limit Use of Children’s Health Information

Last year, Maine enacted "An Act To Prevent Predatory Marketing Practices Against Minors" that prohibited the collection, receipt and use of personal information and health-related information from minors for marketing purposes without first obtaining verifiable parental consent. A coalition of publishing and educational groups challenged the law on constitutional grounds, arguing that the law was overbroad and restricted First Amendment rights. The court subsequently dismissed the complaint because Maine’s Attorney General agreed not to enforce the law.

This year, the Maine legislature introduced a bill titled “An Act to Protect Minors from Pharmaceutical Marketing Practices” (LD 1677) that would repeal the law enacted last year and would prohibit the collection and use of personal information collected on the internet from a minor (i.e., those who are at least 13 and under 17 years of age) for the purposes of pharmaceutical marketing. The law authorizes Maine’s Attorney General to promulgate rules consistent with the federal Children’s Online Privacy Protection Act (COPPA) within one year of the effective date of the bill. We will notify you when the Attorney General issues the proposed rules.

Although this bill is more narrowly drawn than the bill enacted last year, it may still have a big impact on pharmaceutical marketing. COPPA applies to personal information collected from those under 13 while the Maine bill applies to personal information collected from those who are at least 13 and under 17, and COPPA contains some exceptions, such as allowing an entity to use a child's email address for a one-time notification, that are not in the Maine bill.

FTC States That It Will Revise COPPA Rule Ahead of Schedule

In its report titled “Beyond Voice: Mapping the Mobile Marketplace,” the FTC stated that it will expedite the regulatory review of its COPPA Rule to determine whether the rule should in any way be modified to address changes in the mobile marketplace. This review, originally set for 2015, instead will commence in 2010, and will provide an opportunity for public comment.

The report summarized the FTC’s town hall meeting on mobile commerce, held in May 2008, and outlined several general goals or concerns: (1) the increasing use of smartphones to access the mobile web presents unique privacy challenges, especially regarding children; (2) most complaints to state regulators involve inadequate disclosures of the cost of mobile services; and (3) the FTC will continue to monitor the impact on consumers of unwanted mobile text messages.

Food Marketing and Childhood Obesity

The FTC held a day-long forum in December 2009 called “Sizing Up Food Marketing and Childhood Obesity.” The forum assembled industry representatives, federal regulators, consumer groups, scientific researchers, and legal scholars to discuss issues related to food marketing to children. Specifically, the panelists discussed current research on the impact of food advertising on children, and the food and entertainment industries’ progress toward self-regulation and implementation of the recommendations in the FTC’s 2008 report “Marketing Foods to Children and Adolescents: A Review of Industry Expenditures, Activities, and Self-Regulation.”

Marketing Violent Entertainment to Children

Also in December 2009, the FTC issued its seventh report on marketing violent entertainment to children. The report states very clearly that marketers of violent music, movies, and video games can do more in three areas: restricting the marketing of mature-rated products to children; clearly and prominently disclosing rating information; and restricting children’s access to mature-rated products at retail. FTC Chairman Jon Leibowitz stated, in a separate statement accompanying the report, that “in the future, it will be particularly important to address the challenges presented by emerging technologies – such as mobile gaming – that are quickly changing the ways that children access entertainment.”

Federal Communications Commission Proceedings

The FCC is also studying several issues relating to children. In June 2008, the FCC issued a Notice of Inquiry and a Notice of Proposed Rulemaking relating to product placement (which the agency refers to as “embedded advertising”). The Notice of Proposed Rulemaking requested comments on whether the existing rules governing children’s programming “adequately vindicate the policy goals underlying the Children’s Television Act” and, if not, what additional steps should the FCC take to regulate embedded advertising in programming directed to children. Existing rules, “designed to protect children from confusion that may result from the intermixture of program and commercial material in children’s television programming,” limit the amount of commercial material in each hour of children’s programming and require broadcasters to use separations or “bumpers” between children’s programming and commercials. The agency acknowledged that “embedded advertising in children’s programming would run afoul of our separation policy because there would be no bumper between programming content and advertising” and asks whether that prohibition should be made explicit in its rules. So far, the agency has not issued a proposed rule as part of this proceeding.

More recently, in October 2009, the FCC issued a Notice of Inquiry called “Empowering Parents and Protecting Children in an Evolving Media Landscape.” The agency is seeking information on the extent to which children are using electronic media today, the benefits and risks these technologies bring for children, and the ways in which parents and teachers use content blocking and filtering technology. The Notice urges commenters to consider the full range of electronic media platforms, including broadcast television and radio, multichannel video programming distributors, audio devices, video games, wireless devices, nonnetworked devices, and the internet. The agency recently extended the deadline for comments to February 24.

FTC and CARU Continue to Enforce COPPA

In October 2009, the FTC announced that Iconix Brand Group agreed to pay $250,000 to settle charges that it violated COPPA by knowingly collecting, using, or disclosing personal information from children online without first obtaining their parents’ permission. According to the FTC, Iconix required consumers on many of its brand-specific websites to provide personal information, such as full name, email address, zip code, and in some cases mailing address, gender, and phone number as well as date of birth in order to receive brand updates, enter sweepstakes contests, and participate in interactive brand-awareness campaigns and other website features.

In January 2010, CARU (Children’s Advertising Review Unit) announced that Build-A-Bear Workshop had agreed to modify its website after CARU expressed concern that the site allowed a visitor under the age of 13 to submit an email address to sign up for an e-newsletter without first sending a notice to a parent; visitors seeking to register for the site’s Stuff Fur Stuff Club could click the browser’s back button and change their date of birth to reflect an age over 13 and then continue and enter personally identifiable information; and the site’s e-card feature collected personally identifiable information (PII) from children under 13 and allowed them to disclose PII in an e-card without first obtaining prior parental consent.

This client alert is a publication of Loeb & Loeb LLP and is intended to provide information on recent legal developments. This client alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations.

Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.