Government Relations – December 2022 Newsletter

With 2022 almost coming to a close, the end-of-year chaos and impacts of procrastination that routinely affect Congress and the Administration this time of year are in full swing. The details are still scant on what is included in Congress’ announced FY 2023 $1.7 trillion spending bill deal. The results of the 2022 Midterm Elections no doubt impacted negotiations of the final bipartisan, bicameral deal brokered between political party leadership;  crossover areas that could be in the spending bill mix include bipartisan health care policy areas, an election reform package, the usual year-end tax extenders, aid for Ukraine, a children’s privacy bill, Congressional earmarks, a retirement savings reform package and so much more. 

The Biden Administration’s Department of Labor (DOL) and Federal Trade Commission (FTC) also seem to be firing on all cylinders, after both recently issued a series of long-awaited rulemakings that experts believe will have broad impacts on several sectors of the economy, including advertising. Proposed changes from the DOL to the joint employer rule and independent contractor classification rule are expected to raise legal liability and costs for employers. A new proposed federal overtime rule is also expected soon which most labor policy experts expect to be a doozy.  And to top it off, the FTC’s ongoing efforts to explore a fairly restrictive comprehensive data privacy rulemaking could handicap responsible data use across the data-driven economy. The federal rule-a-palooza we’re seeing now will surely continue into next year, making it all the more important for 4As members to engaged in these important advocacy fights in 2023.

In this month’s newsletter, the 4As Government Relations team brings you the latest news on a full spectrum of policy areas relevant to agencies including labor, tax, data privacy, climate change, and regulatory compliance. This issue goes deep on details of the FTC Green Guides rulemaking and other advertising-focused FTC rule changes, the recent enforcement delay for the NYC law regulating employer use of automated employment screening tools, HHS’ new far-reaching guidance on the use of online tracking technologies by HIPAA entities, the latest legal updates to Maryland’s digital ad tax, and more. 

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4As Voices Advertising Agency Concerns Over Draft Federal Independent Contractor Rule

On December 13, 2022, the 4As submitted written comments to the U.S. Department of Labor (DOL) regarding its proposed rule to revise its analysis for determining employee or independent contractor (IC) classification under the Fair Labor Standards Act (“FLSA”). 4As specific written comments supplemented other general written comments filed as part of our membership in a coalition with the U.S. Chamber of Commerce and over two hundred businesses and state and local chambers of commerce. 

This proposed rule would make it harder for businesses of all types, including agencies, to classify their workers as independent contractors under federal wage and hour laws and increases the risk that some of their workers may be misclassified. In the agency ecosystem, independent contractors have always played an important function in executing client campaigns. But with some of the shift from agency of record (AOR) work to more project-based work, independent contractors will play an outsized role in the future, as agencies will need to scale their workforces quickly in response to project lifecycles.

As written, the proposed rule would revert back to the previous interpretation of the “economic reality test” factors (as was developed under the Obama Administration) with a few tweaks. It would rescind the Trump-era 2021 independent contractor rule, which placed greater importance on two of the five (now six) factors—employer right to control over a worker’s work and a worker’s opportunity for profit and loss. Instead, it would reinstate the multifactor totality-of-the-circumstances assessment to the worker classification analysis, with no factor or set of factors having a greater or predetermined weight.

Specific Agency Concerns in the IC Rule Included in the 4As Comments

Included in the 4As written comments advocating against the adoption of the new proposed rule were arguments to:

• Explain how agencies effectively utilize skilled, creative contractors and espouse upon the ongoing flexibility benefits of having them available to scale their workforces to address-changing client project lifecycles. This is especially important during times of economic uncertainty, where advertising clients tend to want more wiggle room in the pay agreements they’re making with agencies.
• Debunk the popular misconception that freelancing just equates to lower skilled ‘gig work’. The growing skill-bias of freelancing and steadily rising education level of freelancers should imply a reasonable understanding of the costs, benefits, and risks of workers operating as a skilled independent contractor.  
• Provide clear rationale for why in advertising, the best creative freelancers often have a preference to operate as independent contractors; flexibility and personal autonomy to establish their own freelance brand are critical components of the skilled creative contractor mentality.
• Urge the DOL not to return to a past DOL interpretation of the “integral” factor criteria (which considers whether the work is integral to the employer’s business rather than whether it is exclusively part of an integrated unit of production); the proposed rule’s interpretation is particularly adverse to IC classification for agencies.
• Express a desire for more DOL clarification regarding the “skill and initiative” factor and solicit information on level of due diligence required by businesses to ensure their contracted workers are performing work for others (or hope to) and demonstrating initiative toward that end; the proposed rule does not provide clarity for the pervasive scenario in which workers who desire to be independent contractors choose themselves to be “economically dependent” on work made available to them by one company.
• Address DOL’s unnecessary partiality in weighing the “permanence” factor in favor of employee status if a working relationship is “exclusive” or “continuous. We feel such a decision is out of touch with the modern realities of today’s business operations and unfairly penalizes independent contractors who have worked hard and garnered client trust. Agency employers derive significant, ongoing value from working with the same, preferred creative freelancers over long-term, client-agency projects or relationships.

Also included in the comments were general appeals asking DOL to issue significant guidance materials and FAQ documents that elucidate upon what small businesses need to do differently in practice in order to to align with new analyses for determining employee versus contractor status. The 4As asked DOL to specifically solicit complex hypotheticals and examples (including those which have scenarios with ICs from the skilled creative industry) from business stakeholders to add to these guidance materials and/or to be included in the final rule.

Since the proposed IC rulemaking’s comment period has closed, DOL will now review all stakeholder feedback and then issue a final rule. Exact timing on when a final rule will be issued and when it will take effect remains unclear; however a best guess is still sometime within 2023. 

Additional information on the proposed rule for federal independent contractor classification can be found here.

 

FTC Seeks Public Comment on Updates to Its “Green Guides” for Use of Environmental Advertising Claims

On December 14, 2022, the Federal Trade Commission (FTC) announced that it is seeking public comment on potential updates and changes to the Green Guides for the Use of Environmental Claims. The Commission’s Green Guides help marketers avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act. The Commission seeks to update the Guides based on increasing consumer interest in purchasing sustainable products.

As part of the notice, FTC has not issued any specific amendments or planned changes to the Green Guides for public comment. Instead, the FTC is asking the public for generalized comments within a nineteen-question framework. The framework includes multiple questions indicating the possibility of potentially broad modifications; moreover, the final question asks if the FTC should consider a rulemaking related to deceptive or unfair environmental claims, on par with its dual strategy in other FTC deceptive marketing claims areas, including specific areas with the FTC Endorsement Guides.  

The framework seeks comments regarding 1) the need for the guides, 2) their economic impact, 3) their effect on the accuracy of environmental claims, 4) their interaction with other environmental marketing regulations, and 5) evidence of consumer perception of environmental claims.  Also included, the FTC provided twelve specific claim terms where it expects to receive comments, including: 1) carbon offsets and climate change, 2) compostable, 3) degradable, 4) ozone-safe, 5) recyclable (two issue areas), 6) recycled content (three issue areas), 7) energy use and efficiency, 8) organic, and 9) sustainable.

Given the list, recyclability claims appear to be a key focus;  the notice seeks to address issues such as whether the FTC should distinguish between products that may be collected for recycling vs. products that are collected and ultimately recycled, as well as consumer understanding of unqualified recycled content claims (for example, “pre-consumer” or “post industrial”).

The Green Guides notice is expected to be published in the Federal Register in mid-January.  Once the notice is published, comments will be due within sixty days. 

 

4As Submits Comments to FTC’s Initial Data Privacy Rulemaking

On November 21, the 4As submitted a written comment letter to the Federal Trade Commission’s (FTC) initial rulemaking on consumer data privacy. The 4As written comments focused on 1) pushing back against the FTC’s preconceived notion that all commercial data practices (even by responsible commercial entities that promote consumer choice) are “commercial surveillance;” 2) the economic and competition value of digital advertising; and 3) the FTC’s need to balance any new privacy regulations against the significant consumer benefits of free data flows. 

The 4As comments also emphasized our alignment with the robust written comments submitted by the Privacy for America coalition, a large group of digital advertising trades and companies who support the enactment of preemptive, federal privacy legislation that preserves responsible commercial use of data and promotes consumer choice. The 4As is a founding member of the Privacy for America coalition.

The FTC’s ANPRM includes a list of 95 questions (some with subparts) on topics including:

• Privacy Protections for Children and Teens
• Restrictions on Targeted Behavioral Advertising
• Significant Restrictions on Data Processing
• Data Security
• Biometric Information
• Algorithms and Algorithmic Discrimination

A more detailed summary of the FTC privacy rulemaking can be found here. 

The ANPRM, which the FTC approved on a 3-2 party-line vote, is the initial step in a process that could result in the adoption of the first major federal regulation addressing privacy, data security, and algorithmic discrimination across broad sectors of the U.S. economy. 

The FTC first indicated in December 2021 that it intended to initiate this rulemaking to “curb[] lax security practices, limit[] intrusive surveillance, and ensur[e] that algorithmic decision-making does not result in unlawful discrimination”, after a formal request for rulemaking petition was filed by thinktank Accountable Tech. 

The FTC cited its rulemaking authority under Section 18 of the FTC Act, 15 U.S.C. § 57a, AKA Magnuson-Moss. The FTC’s rulemaking procedures include a number of specific requirements, including publication of an advanced notice of proposed rulemaking, notice of proposed rulemaking, informal hearings, and a judicial review period that, collectively, have caused most Magnuson-Moss rulemakings to take years to complete. We’d expect the FTC’s privacy rulemaking to be no different.

For more information about the ANPRM, please read this fact sheet released by the FTC. 

 

CFPB Issues Outline of Proposals and Alternatives Under Consideration in Connection with Rulemaking on Personal Financial Data Rights

In an October 27 announcement, the Consumer Financial Protection Bureau (CFPB) released an “Outline of Proposals and Alternatives Under Consideration” (Outline) to initiate a rulemaking on “personal financial data rights”. Whatever rules the CFPB creates could serve as a model for the Federal Trade Commision (FTC) down the road as it considers its own, more comprehensive, consumer data privacy rulemaking.

CFPB’s rulemaking aims to create a financial marketplace where companies would need to improve their offerings to keep their customers. Consumers could switch providers more easily to get a better deal or escape poor customer service, and companies would have to keep and attract customers through competitive prices, high-quality services, and improved products. Nascent firms would be able to use consumer-authorized data to build and widely offer products and services that can compete with big incumbents. 

The Outline is one of the first steps toward issuing a proposed data rights rule implementing Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). The Outline describes ideas that the CFPB is considering, which if promulgated as rules, would impose new obligations on covered data providers and authorized third parties regarding their collection, use, disclosure, and retention of “consumer financial information.” The Outline also includes questions for small entity representatives and other stakeholders soliciting feedback on such proposals.

The proposals under consideration include:

• The ability for consumers to transfer their account history to a new company (data portability).
• Limitations imposed by the CFPB on third parties reselling authorized data for other uses.

As part of its rulemaking process, the CFPB stated it will host panel convenings to solicit feedback from small entities on the proposals under consideration and produce a report summarizing the input received to help inform the development of a proposed rule. Stakeholders can provide written feedback to [email protected] by January 25, 2023. A proposed rule is expected in late 2023, with a final rule slated for 2024. 

 

Judge Strikes Down Maryland Digital Ad Tax as Unconstitutional; Appeal Still Possible

On October 17, Anne Arundel County Circuit Court Judge Alison L. Asti struck down Maryland’s tax on digital advertising. Verizon Media Inc. and Comcast challenged the law in the state’s court, via Comcast of California/Maryland/Pennsylvania/Virginia/West Virginia LLC et al. v. Comptroller of the Treasury of Maryland, No. C-02-CV-21-000509. 

The judge’s ruling cited that the controversial state law violates the U.S. Constitution’s Dormant Commerce Clause, the federal Internet Tax Freedom Act’s prohibition on discriminatory taxes on online services (insofar as Maryland does not institute a similar tax on non-digital advertising), and the First Amendment (because it is not viewpoint neutral).

After the judge’s decision, the office of Maryland Comptroller Peter Franchot said that it is “reviewing the decision and deciding next steps,” which might include a legal appeal. The Maryland Attorney General’s Office, which has defended the law in state and federal court, has called the tax a legitimate and necessary revenue-raising measure for the state’s education system.

As enacted, Maryland digital advertising tax applies to gross revenue derived from digital advertising services; it has a rate escalating from 2.5 percent to 10 percent of the advertising platform’s assessable base based on their annual gross revenues from all sources (i.e., not just digital advertising, and not just in Maryland). The graduated rate applies to tax entities with more than $1 million in gross revenues from digital advertising services in Maryland AND $100 million in annual gross revenues. However, it is not a typical progressive tax, as the rate applies to all taxed activity, not just the marginal amount. 

Maryland’s tax on digital advertising was estimated to raise $250 million a year to help pay for a sweeping K-12 education measure to expand early childhood education, increase teacher salaries, boost college and career readiness and help struggling schools.

Maryland’s digital ad tax is also being challenged in federal court by the U.S. Chamber of Commerce. Oral arguments in that case are set for November 29. The pending U.S. District Court challenge is docketed as Chamber of Commerce of the United States of America v. Peter Franchot, Comptroller of the Treasury of Maryland, No. 21-cv-410-LKG.

The legality of Maryland digital ad tax law is being watched closely by other states that have also weighed a similar tax for online ads.

The 4As along with many other advertising industry partners submitted comments on the proposed regulations implementing the tax. The tax took effect beginning January 1, 2022, with the first filing obligation for large taxpayers beginning in April 2022. Final regulations operationalizing the procedures for assessing tax obligations can be found here. In spite of recent unfavorable legal updates, the Maryland Comptroller’s office has taken steps earlier this year to issue the estimated tax forms needed to help covered entities to file their estimated quarterly tax payments as part of their obligations under the law.

Important for agencies, last year the legislation’s lead Senate sponsor and President of the Maryland Senate, Bill Ferguson (D-46), clarified that he doesn’t believe that the tax would be levied against a company reselling ad space to a marketer client; instead, he explained that the legislative intention of the bill is to tax the digital company selling the original advertising space (i.e. Facebook, Google, etc.). The 4As Government Relations team will continue to advance opportunities to codify this specific exemption through clean-up legislation or future official administrative interpretations.

 

FTC Explores “Junk Fees” Rulemaking

The Federal Trade Commission is seeking public comment on a potential rule prohibiting “junk fees” and related practices via a new advanced notice of proposed rulemaking (ANPR) published in the Federal Register on November 8.  The new rule has the potential to dramatically change how fees are communicated to consumers in advertising, impacting nearly all industries that charge some type of hidden or abstruse fee.  The published ANPR comes after previous meetings and announcements made by the FTC, CFPB, and the White House, indicating imminent plans to prohibit so-called “junk fees” that “can weaken market competition, raise costs for consumers and businesses, and hit the most vulnerable Americans the hardest.”

Importantly, the proposed junk fee rulemaking is not confined to a specific industry. The ANPR references deceptive junk fee practices in a wide array of sectors and industries, including auto financing, phone cards, fuel cards, payday lending, telecommunications, live entertainment, travel (including airlines, hotels, room-sharing, car rentals, and cruises), higher education, financial products and services, telemarketing, funeral services, publishing, insurance, and membership programs.

Key Definitions

Per the ANPR, “junk fees” are defined to include “unfair or deceptive fees that are charged for goods or services that have little or no added value to the consumer, including goods or services that consumers would reasonably assume to be included within the overall advertised price.”  The term includes, but is not limited to “hidden fees,” which are fees disclosed only at a later stage of the customer experience or potentially not at all.

Scope of the Rulemaking

The proposed rulemaking targets the following “deceptive” practices:

• Misrepresenting or failing to disclose clearly and conspicuously, on any advertisement or in any marketing, the total cost of any good or service for sale;
• Misrepresenting or failing to disclose clearly and conspicuously, on any advertisement or in any marketing, the existence of any fees, interest, charges, or other costs that are not reasonably avoidable for any good or service;
• Misrepresenting or failing to disclose clearly and conspicuously whether fees, interest, charges, products, or services are optional or required;
• Misrepresenting or failing to disclose clearly and conspicuously any material restriction, limitation, or condition concerning any good or service that may result in a mandatory charge in addition to the cost of the good or service or that may diminish the consumer’s use of the good or service, including the amount the consumer receives;
• Misrepresenting that a consumer owes payments for any product or service the consumer did not agree to purchase;
• Billing or charging consumers for fees, interest, goods, services, or programs without express and informed consent;
• Billing or charging consumers for fees, interest, goods, services, or programs that have little or no added value to the consumer or that consumers would reasonably assume to be included within the overall advertised price; and
• Misrepresenting or failing to disclose clearly and conspicuously on an advertisement or in marketing the nature or purpose of any fees, interest, charges, or other costs.

While there have been laws and enforcement actions targeting similar practices in specific industries at both the state and federal levels (including by the FTC itself), the ANPR addresses concerns about the limitations of “such piecemeal policies limited to particular sectors or regions,” addressing what the FTC majority believes is the need for “comprehensive nationwide regulation.”

Interested parties have until January 9 to provide comments and feedback on the ANPR.

 

NYC Delays Enforcement of Its Law Regulating the Use of Automated Employment Screening Tools

The New York City Department of Consumer and Worker Protection (DCWP) recently announced that it will postpone enforcement of its new law (Local Law 144) intended to regulate the use of automated employment decision tools until April 15, 2023. Local Law 144 would require employers to conduct bias audits on automated employment decision tools, including those that utilize artificial intelligence and similar technologies, and would require employers to provide certain notices about such tools to employees or job candidates who reside in the city.

The DCWP cited a high volume of stakeholder comments as its rationale for delaying enforcement of Local Law 144, which was previously supposed to take effect Jan. 1, 2023. The department held a public hearing on the law in November 2022 but said it would schedule a second public hearing at a time to be determined.

Local Law 144 would require employers to conduct bias audits on automated employment decision tools, including those that use artificial intelligence and similar technologies, and would require employers to provide certain notices about such tools to employees or job candidates who reside in New York City.

More information about Local Law 144 can be found here.

Agencies may also wish to review laws in other states where they operate, and in particular, Illinois and Maryland, as additional or different measures may be required to remain compliant with other applicable labor laws. The DC Attorney General also introduced a bill in 2021 that addresses discrimination in automated decision-making tools generally.  Similar legislation is likely to trend across other states, as this technology continues to infiltrate hiring practices and other areas of business.  At the federal level, the U.S. Equal Employment Opportunity Commission (EEOC) announced an initiative in October 2021 to evaluate the use of artificial intelligence in hiring and other employment decisions. The outcome of that evaluation is still TBD.

 

HHS Issues Far-Reaching Guidance For Online Tracking Technologies Under HIPAA

The Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS) issued a new guidance bulletin regarding the use of online tracking technologies (i.e. cookies, web beacons and pixels) by covered entities and business associates under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Under 45 CFR 160.103, a “covered entity” is a health plan, a health care provider, or a health care clearinghouse.

The guidance bulletin was issued amid a flurry of class action lawsuits, state and federal regulator inquiries, and media investigations regarding utilization of data tracking technologies on websites and mobile applications by healthcare organizations and other HIPAA-regulated entities. The guidance has far-reaching implications for HIPAA regulated entities that utilize online platforms, and many organizations will need to update their use of tracking technologies in order to maintain compliance with HIPAA. 

What’s Covered Under the New Guidance

The guidance analyzes how the HIPAA rules apply to user-authenticated webpages (i.e., when user login is necessary before the user can access the webpage), unauthenticated webpages (i.e., publicly-available websites that do not require a user login to access the webpage) and mobile apps; it also makes it clear in no uncertain terms that “HIPAA regulated entities are not allowed to use tracking technologies in a way that would result in impermissible disclosures of Protected Health Information (PHI), or any other violations of the HIPAA rules.”

The guidance details the circumstances in which data collected by online tracking technologies is considered PHI, indicating it will be contingent upon the website or mobile app (and, in some instances, the page or screen within that website or mobile app) through which the data was collected and the overall context. 

Summary of the OCR Guidance Bulletin

PHI. The OCR reiterates throughout the guidance bulletin that HIPAA applies when covered entities collect user data that include PHI via tracking technologies and also if such data is then shared with technology vendors. Per the guidance bulletin, PHI would include “individually identifiable health information” (IIHI), such as an individual’s medical record number, home address, email address, or appointment dates, as well as an individual’s IP address or geolocation, medical device ID, or any unique online or mobile identifying code. “IIHI collected on a regulated entity’s website or mobile app generally is PHI,” even if the user does not have an existing relationship with the covered entity and even if the IIHI does not include specific treatment or billing information (e.g., appointment dates or type of healthcare services).

User-Authenticated Webpages: As a general practice, patient portals and telehealth platforms collect and have access to PHI, including diagnosis and treatment information, billing information, and other sensitive consumer data. Per the guidance bulletin, a covered entity must configure any user-authenticated webpages (i.e. those that utilize user logins) that include tracking technologies to allow such technologies to only use and disclose (and secure) PHI in compliance with HIPAA. Important for agencies, tracking technology vendors are business associates IF they create, receive, maintain, or transmit PHI on behalf of a regulated entity “for a covered function (i.e. health care operations) or provide certain services to or for a covered entity (or another business associate) that involve the disclosure of PHI.” 

Unauthenticated Webpages: This category includes publicly available pages that allow anyone to access the content and typically only contain basic information about a covered entity. Per the guidance bulletin, tracking on these types of webpages is generally not regulated under HIPAA. In some cases, the guidance states,  tracking technologies on such unauthenticated webpages may have access to user PHI and may disclose such data to outside vendors, thus triggering the HIPAA Rules. Specifically as an example, the guidance bulletin mentions that if a login page of a covered entity’s patient portal requires a user to enter registration information such as one’s name and/or email address, such webpage then contains PHI and becomes subject to HIPAA. Moreover, webpages that allow users to search for doctors, view appointment availability or make appointments, or view information about specific symptoms or conditions (e.g., pregnancy) without first logging in could potentially collect an individual’s email address and/or IP address, thereby potentially disclosing PHI to the tracking technology vendor, and thus triggering the HIPAA Rules.

Mobile Tracking: The guidance bulletin states that information typed in by a user, as well as device-level data (e.g., network location, geolocation, device ID, advertising ID, etc.) collected by a covered entity must comply with HIPAA for any PHI the mobile app uses or discloses. The guidance bulletin states that HIPAA applies to “any PHI collected by a covered health clinic through the clinic’s mobile app used by patients to track health-related variables associated with pregnancy….”, a clear nod to the recent Supreme Court Dobbs Decision. Importantly, the guidance bulletin indicates that HIPAA Rules do not protect data that users voluntarily enter into “mobile apps that are not developed or offered by or on behalf of regulated entities, regardless of where the information came from.”  This would include health information entered into lifestyle- or fitness-related mobile apps operated by an entity not regulated by HIPAA. Such data collection would still be under the regulatory purview of FTC and potentially under applicable state privacy laws.

Compliance Obligations: The guidance bulletin reiterates that regulated entities are mandated to comply with the HIPAA Rules when using tracking technologies and reminds covered entities to make sure that “all disclosures of PHI to tracking technology vendors are specifically permitted by the Privacy Rule and that, unless an exception applies, only the minimum necessary PHI to achieve the intended purpose is disclosed.” OCR urges covered entities to “ evaluate [their] relationship with [] tracking technology vendor[s] to determine whether such vendor[s] meets the definition of a business associate and ensure that the disclosures made to such vendor[s] are permitted by the Privacy Rule.” The OCR ends the guidance bulletin with some additional compliance reminders for regulated entities who utilize tracking technologies:

• The HIPAA Privacy Rule does not permit disclosures of PHI to a tracking technology vendor based solely on a regulated entity informing individuals of this possibility or occurrence in its privacy policy or privacy notice. All tracking technology vendors must sign a BAA with the covered entity and have applicable permission prior to a disclosure of PHI.
• The use of cookie consent banners does not constitute a valid HIPAA authorization to a vendor when PHI is being collected, disclosed, used, or stored with the vendor.
• It is insufficient for a technology vendor to agree to remove PHI from the information it receives or de-identify PHI before the vendor saves the information.
• Covered entities should conduct a breach risk assessment and analyze potential notification obligations. A breach requires notice to affected individuals, HHS and, in certain cases, the media and/or state regulators.

Other Considerations

In addition to the guidance bulletin, technology and health care companies that are collecting health data should also ensure that they are complying with state privacy and consumer protection laws. HIPAA has often been described as the floor for health care privacy compliance, and states may choose to pass and enforce more onerous privacy and consumer protection laws. Washington state is already exploring this possibility, with particular emphasis on consumer health data.

While the OCR’s guidance provides general categories of collected information and speaks to the likelihood that such information is PHI, the OCR emphasizes that determining what collected information is PHI will require a careful analysis of each organization’s unique circumstances.

 

FTC ANPR Issued for Fake Reviews and Buying Followers

In October 2022, the Federal Trade Commission (FTC) voted to issue an Advanced Notice of Proposed Rulemaking (ANPR) to take stakeholder input on how the agency can help combat fake reviews and the purchasing of social media followers to help boost indicators of social media influence. The FTC’s battle against fake, paid, or manipulated customer reviews has been ongoing for years, resulting in multiple enforcement actions and the publication of industry guidance. Now, the FTC has set its sights on a possible formal rule.

The ANPR seeks specifically comment on the costs and benefits of a potential rule, as well as the pervasiveness and potential harms to consumers and competition from certain clearly deceptive or unfair practices involving reviews and endorsements including:

• Fake reviews, which include reviews posted by people who do not exist, have not used the product or service, or who lie about their experience with the product. 
• Review reuse fraud, which would include reviews that were originally posted for a different product or service and then “repurposed” for a different product or service.  
• Paid reviews, which includes purchasing positive reviews for the company’s products and purchasing negative reviews for s competitors’ products. 
• Insider reviews, such as reviews posted by a company’s employees who do not disclose their connection to the company. 
• Negative review suppression, both on the company’s own ecommerce platform and third-party platforms. 
• Fake review websites, such as a website the seller sets up that appears to provide independent reviews of the seller’s products. 
• Buying followers, subscribers, views, or other indicators of social media influence.

The new FTC ANPR complements other recent actions by the FTC. In July 2022, the Federal Trade Commission (FTC) published a notice in the Federal Register soliciting public comment on its proposed changes to the FTC Endorsement Guides. The FTC’s recommended updates to its Endorsement Guides are intended to reflect “the new ways that advertisers now reach consumers to promote products and services, including through social media.” The FTC Endorsement Guides are interpretations of how the FTC Act applies to endorsements and testimonials in advertising and not formal rules.The 4As submitted written comments highlighting specific agency concerns with the changes.

The new ANPR tackles only a subset of what the Endorsement Guides address. The FTC’s recent decision to proceed on parallel tracks with its ANPR reiterates how important this issue is to the FTC. 

More information on the FTC ANPR can be found here. Written comments to the ANPRM are due January 9, 2022 and can submitted be via Regulations.gov.

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Please contact Alison Pepper for more information on the policy areas covered in this news bulletin or to get more involved in 4As advocacy efforts.