May 20, 2016
Clark Rector EVP of Government Affairs, AAF
e-Cigarette Advertising and Commercial Free Speech
In the words of former baseball player and philosopher Yogi Berra, “It’s like déjà vu all over again.” California Senator Barbara Boxer (D) has called upon the Federal Trade Commission (FTC) to expedite its study of the e-cigarette industry examining whether their advertising is encouraging children and youth to take up vaping.
Years of experience with other disfavored products leads us to expect that – no matter the results of the study – someone in Congress will likely call for bans or restrictions on e-cigarette advertising. While they will claim to be trying to protect youth, the actual limitations will likely be much broader and ban much advertising aimed at adult and legal consumers.
To be clear, the American Advertising Federation (AAF) has no position on e-cigarettes or what the legal age to buy and use them should be. However, AAF has a strong position on commercial free speech and opposes any effort to ban or restrict the advertising of any legal product or service to legal consumers.
Fortunately for the advertising industry, the U.S. Supreme Court agrees with us and has affirmed that commercial speech is included under the free speech provisions of the First Amendment to the U.S. Constitution.
Simply stated, the Court ruled that the government may only restrict truthful commercial speech if it can show that the restriction is “narrowly tailored” and directly advances a substantial government interest.
The right to ban a product does not give the government the right to ban the speech about the product. Besides, banning the speech will not work. The experience of other countries shows that banning advertising does not lead to a reduction in the consumption of the product.
By all means, the FTC and Congress have the right to study the advertising for these or any other products. But they have the duty to respect and follow the Constitution, including the right of marketers to truthfully advertise legal products and services – no matter how unpopular they may be.
May 22, 2015
Clark Rector Jr., Executive Vice President–Government Affairs
Flawed Illinois Data Breach Bill Moving
AAF, the Chicago Advertising Federation and AAF-Northern Illinois have sent a letter to all members of the House urging them to oppose SB 1883 a well-intentioned, but seriously flawed piece of legislation intended to protect consumer data and require reports of data breaches that pose a threat of identity theft or economic harm.
SB 1883 would create an overly-broad definition of personal information, including “consumer marketing information;” increase the regulatory burden on businesses; and require over-notification of data breaches, without a counterbalancing benefit to Illinois residents. The bill would require businesses send breach notices to Illinois consumers even when there is no risk of identity theft or economic harm.
In addition, many provisions of the bill go beyond or conflict with requirements of other states, putting an undue burden on companies seeking to do business in Illinois.
The legislation has passed the Illinois House Judiciary-Civil Committee and is awaiting action by the full House.
Tax Writing Committees Still Hope to Enact Tax Reform
Professional staff members from both the U.S. Senate Finance Committee and House Ways and Means Committee have said that they still hope to pass comprehensive corporate tax reform this year. Finance Committee working groups, including the one looking at new revenue options, are expect to submit their reports to the full committee by the end of May.
Tax reform proposals introduced in the previous Congress by the former chairmen of both committees would have limited the first year federal tax deduction for advertising expenses to 50%, with the rest amortized over 5 to 10 years.
Many local AAF members have joined with other members of the Advertising Coalition to meet with members of the tax writing committees to explain the importance of keeping advertising fully deductible in the year in which it is incurred to both the industry and the economy.
DAA Announces Enforcement Date for Mobile Principles
The AAF supported Digital Advertising Alliance (DAA) has announced September 1, 2015 as the date that enforcement of DAA Mobile Guidance Principles will begin. This included guidance specific to mobile, such as cross app data, precise location data and personal directory data. As with other DAA Principles, oversight will be provided by the Council of Better Business Bureaus and the Direct Marketing Association.
As of September 1, companies that collect and use data across sites or apps for interest based advertising will be require to demonstrate compliance with the DAA Principles as they relate to mobile activity.
February 27, 2015
President Proposes Privacy Bill of Rights
President Barak Obama has unveiled a legislative proposal to create a Consumer Privacy Bill of Rights. The proposal was previewed in the President’s January speech at the Federal Trade Commission covered in an earlier edition of Government Report. It is intended to give consumer certain baseline protections and provide certainty for business.
The rights as outlined in the proposal are:
Individual Control: Consumers have a right to exercise control over what personal data organizations collect from them and how they use it.
Transparency: Consumers have a right to easily understandable information about privacy and security practices.
Respect for Context: Consumers have a right to expect that organizations will collect, use, and disclose personal data in ways that are consistent with the context in which consumers provide the data.
Security: Consumers have a right to secure and responsible handling of personal data.
Access and Accuracy: Consumers have a right to access and correct personal data in usable formats, in a manner that is appropriate to the sensitivity of the data and the risk of adverse consequences to consumers if the data are inaccurate.
Focused Collection: Consumers have a right to reasonable limits on the personal data that companies collect and retain.
Accountability: Consumers have a right to have personal data handled by companies with appropriate measures in place to assure they adhere to the Consumer Privacy Bill of Rights.
As a legislative proposal, the Consumer Privacy Bill of Rights is very unlikely to be enacted. However, it will help to frame much of the policy debate on these issues in Congress.
While skeptical of the need for legislation, the AAF continues to urge business to adopt best practices that show a respect for these rights.
As reported in the last issue of Government Report, the AAF supported Digital Advertising Alliance continues to innovate to give consumers control and choice about receiving interest-based advertising in apps and the mobile web.
Congress Focuses on Privacy
Congressional committees on both sides of the Hill continue to hold hearings on many privacy issues such as the Internet of Things (a catchall term that refers to new Internet connected devices such as fitness trackers, home appliances, automobiles, etc.), data security and student privacy. Many of these issues are only tangentially connected to advertising, Unfortunately such distinctions are often lost during debate and legislative drafting, so AAF keeps a close eye on developments. Industry does not always oppose legislative solutions as they sometimes preempt inconsistent state laws and create a single national standard, thereby giving greater certainty to both consumers and businesses.
Ad Tax Included In Governor’s Budget
Pennsylvania Governor Tom Wolf (D) recently released his proposed budget for the state. In it he recommends increasing the sales tax rate by 10%, from 6% to 6.6%, and extending the tax to many personal and professional services – including advertising services.
Other items reportedly slated to be taxed in the include motion picture and video industries, financial investment, real estate and legal services among many others. Since the Governor is a Democrat and both chambers of the legislature since are controlled by the opposing Republican Party, most observers in Harrisburg do not expect the Governor’s budget to be enacted. AAF has alerted it’s Pennsylvania advertising federations to the proposal and will continue closely monitor the situation.
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