AD-ttorneys@law – February 3, 2022

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In This Issue:

Washington State Debates Personal Data Protections

Will the Evergreen State join Colorado and Cali and flick the data off-switch?

…Doesn’t Mean They’re Not Out to Track You

Assume for the moment that you’re privacy minded. By that, we mean you’re in a state of mind that goes beyond toying with private browser extensions or password managers.

Let’s assume instead that you’re interested enough in privacy to want to opt out of trading your personal data whenever you browse — to ruthlessly withhold your information from every site you visit.

If you are this type of person, then you know just how difficult a prospect the withholding of your personal data is. Not simply because you are expected to opt out on a website-by-website basis but also because you need to repeat the process every time you revisit a site … and because certain sites will break when you withhold information … and because other sites and services make the process of rejecting their tracking indisputably onerous.

Nuclear Option

Maintaining privacy online is akin to having a wrestling match with a spider’s web. Every interaction invokes multiple new commitments that are overlapping and very sticky.

Many consumers don’t mind the benefits that come from allowing some forms of data collection. But what’s the best way out for consumers who never want their data collected? There are services that promise to help people opt out of data collection, but they’re often prohibitively expensive. More popular are one-click-opt-out options provided by browser extensions, which burn off the hydra’s heads behind the scenes. But a truly comprehensive solution will need to address the problem at its root, and that means legislation.

Enter Washington State Senator Reuven Carlyle. His proposed bill SB 5813 would offer a single on/off switch that keeps the targeted advertising leviathan from sucking up consumers’ personal data, which would include personally identifiable information (PII), as well as information gleaned from browsing habits and history.

The Takeaway

The Federal Trade Commission endorsed just such an approach more than a decade ago. Carlyle’s proposal bears the stamp of the 800-pound gorilla of all data protection laws, the California Consumer Privacy Act (CCPA), which we’ve covered in depth. Consumer opt-out is built into the CCPA’s DNA, and the Golden State’s attorney general recently threw his weight behind Global Privacy Control — a new specification that allows browsers to communicate a “Do Not Sell” request to any website a user visits. Colorado recently passed a similarly robust law.

SB 5813 is moving through the Washington State legislative process. You can check out the first public hearing on the bill here, around 57 minutes in. We’ll keep you posted on this and other similar legislation, as well as any movement on the federal front, which would bring what some believe is needed but controversial simplicity to the emerging patchwork of state-level personal data regulations.

A Boxer, a Baller and a Model Walk Smack into the Bar

Kardashian et al. accused of selling cryptocurrency then selling out

Another Incubus

Ethereum is the name of the blockchain technology underlying EMAX, a new ERC-20 cryptocurrency token that was recently launched on the Ethereum network.

The name of the technology was inspired by the eponymous 19th-century scientific concept. As one Ethereum co-founder explained: “I immediately realized that I liked [Ethereum] better than all of the other alternatives that I had seen; I suppose it was the fact that [it] sounded nice and it had the word ‘ether’, referring to the hypothetical invisible medium that permeates the universe and allows light to travel.”

Sounds wonderful, no? A perfect geek name for the latest tech in the thick of the geek trend du jour?

Unfortunately, the existence of ether isn’t hypothetical; it’s completely debunked. Experiments in the late 1800s demonstrated that light didn’t need the ether — or any other medium — to travel anywhere.

Pump-a-Chump

The modern cryptocurrency company EthereumMax is also accused of being a mirage of sorts, at least according to a class action complaint recently filed in the Central District of California. In the complaint, plaintiff Ryan Huegerich alleges that EthereumMax, the company behind the creation of the EMAX token, used celebrity endorsers to “pump” the value of currency and allow them to make a killing off the artificially high prices.

Huegerich names three celebs — mega-influencer Kim Kardashian, NBA player Paul Pierce and boxer Floyd Mayweather — as co-defendants in the case. He claims that the celebrities acted in league with EthereumMax executives to promote the currency shortly after it was introduced to the market.

Pierce talked up the product in the wake of his acrimonious split with sports network ESPN. Mayweather helped list the currency as the “exclusive Cryptocurrency accepted for online ticket purchasing” for the Floyd Mayweather vs. Logan Paul Pay-Per-View event, and even touted the currency at Bitcoin’s 2021 conference in Miami. Kardashian posted advertising for EthereumMax on her Instagram account, which, according to the United Kingdom’s Financial Control Authority, became “the financial promotion with the single biggest audience reach in history.”

According to Huegerich, the value of the EMAX token grew 632% in just two weeks due to the efforts of the celebrity trio.

The Takeaway

And then the bottom fell out. According to the complaint, the value of EMAX plummeted shortly after Kardashian posted her Instagram ad, but not before the endorsers and the executives had dumped their own holdings in the token.

If proven, the allegations could create some discomfort for the celebrities in question — especially Mayweather, who Huegerich claims has a spotty record promoting cryptocurrencies. “In November 2018, Defendant Mayweather…settled charges with the United States Securities and Exchange Commission for failing to disclose payments they received for promoting fraudulent cryptocurrency investments,” the complaint maintains. In addition to more than $600,000 in fines, Mayweather “agreed not to promote any securities — digital or otherwise — for three years,” making the current alleged actions a violation of the settlement agreement.

Ryan Huegerich v. Steve Gentile et al. is shaping up to be a fascinating confluence of some of our favorite subjects — cryptocurrency, online personalities and deceptive advertising. As of now, only the complaint has been filed; we’ll keep you posted on what happens next.

NAD: Glad Needs to Clean Up Its Clorox-Related Product Claims

Cross-marketing can lead to unwarranted associations, negative attention

Folie-a-Phew?

When Glad Products Company teamed up with Clorox, it probably didn’t think it was getting much more than a mutually beneficial marketing opportunity.

Together the companies produced the prosaically named ForceFlex Plus with Clorox Tall Kitchen Drawstring Bags, a product for which the appeal is obvious. The scent of Clorox applied to kitchen garbage bags — short of diaper pails, the smelliest repository in the home — is a natural match. Who doesn’t want their trash smelling fresh? Or, at the very least, not smelling at all. However, what the product lacked was the disinfecting power of bleach.

So this hybrid product attracted negative attention from competitor Reynolds Consumer Products, which sought review before the National Advertising Division (NAD) of several claims made on Glad’s website, on the product’s packaging and in various commercials.

A Good Scrubbing

At the heart of the complaint is the other virtue associated with Clorox: cleanliness. The Clorox name, associated as it is with the cleaning and disinfecting qualities of bleach, isn’t simply about a fresh smell. Reynolds used this other association to challenge the advertising before NAD.

As usual, NAD produced a nuanced review. Glad’s product packaging escaped unscathed. Claims of “Eliminates Food & Bacterial Odors” and “Lemon Fresh Bleach Scent” passed the smell test. The Clorox logo was “appropriately tied to the odor elimination benefit it provides,” and reference to “bleach” in the second tag was “clearly related” to the scent of the product.

Claims made on the company’s website and in commercial advertising didn’t fare as well. The product was touted as both helping consumers “maintain a clean and healthy home” and keeping the home “feeling clean & healthy.” These claims, NAD held, could be construed to offer a health benefit — for instance, disinfection — and, without substantiation, should be discontinued.

Similarly, a “brief, small-font visual disclosure” that read “this product is bleach-free” in a 30-second commercial for the garbage bags couldn’t “cure the message that Glad ForceFlex bags provide cleaning and disinfecting benefits of Clorox.” Therefore, NAD recommended the commercial be discontinued.

The Takeaway

Glad agreed to all the changes, as most companies do when hearing from NAD.

The lesson is clear: In the absence of qualified claims, cross-marketing with another brand requires you to justify the attributes associated with that brand. Glad may not have even considered that the association with Clorox carried a whiff of health or cleanliness claims, but NAD assumed that consumers would draw the connection. (Indeed, Clorox has faced similar challenges all by its lonesome.)

Be precise about the benefits you’re offering the consumer and be ready to back them up — even if they seem to attach only by association. Anything less than that will create…



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