Friday, 28 January 2011

OFT announces crackdown on product endorsement blogs

London - The UK Office of Fair Trading (OFT) has begun a crackdown on users of social networking website Twitter who endorse products and brands without clarifying whether they have been paid for their online remarks.

Enforcing the Consumer Protection from Unfair Trading Regulations (CPRs), the OFT said in a statement on 13 December: ‘Online advertising and marketing practices that do not disclose they include paid-for promotions are deceptive under [CPR] fair trading laws. This includes comments on blogs such as Twitter’.

The announcement follows a July 2010 OFT investigation into whether PR firm Handpicked Media (HM) had paid bloggers to write exclusively about the firm’s clients. “[The OFT] wanted to make an example of us”, said Krista Madden, of HM. “The public should be smart enough to realise when it is a genuine tweet. It will be hard to monitor [paid posts]. Celebrities have been given freebies, gifts and jollies for years without having to declare them.”

“Under the CPRs, [this] can be regarded as an unfair commercial practice”, said Oliver Bray, Partner at Reynolds Porter Chamberlain. “Brands need to make clear when promotions have been paid for or there is a very real risk of enforcement action by the OFT.” 

In the US, the Federal Trade Commission demands that paid posts contain the words ‘ad’ or ‘spon’. This requirement does not exist in the UK. “The key here is transparency,” said Nick Johnson, Partner at Osborne Clarke. “The US short-form disclosures are an efficient way of achieving that.”

Published previously in E-Commerce L&P magazine, London 2010. Copyrights apply.

Monday, 10 January 2011

Gambling markets in 2010 - a global view

This year started with a sigh of relief for UK-based operators, when, in January, the UK Government took away a competitive advantage for offshore businesses and proposed a licencing regime for foreign gambling operators. While the Chinese cracked down heavily on gambling a month later, the French rolled out their plans for ‘controlled liberalisation’ when ARJEL, the French authority in charge of online gambling, disclosed new licensing requirements. 

In March, a new Bill banning payment processors from accepting online gambling payments was signed into law in Norway. In the UK, with the general elections just a month away, the Horseracing Levy became an election topic in April when the Labour Party announced it would force offshore operators to contribute to the Levy and pay taxes, while the Conservative Party called the system ‘outdated’. 

While regulation at European-level seemed further away than ever, the Council of Ministers of the EU did manage to agree on a common definition of ‘illegal gambling’ in May. The European Commission (EC) finally closed a series of legal cases against Italy: on 5 May the EC stated it no longer had any objections against a new gambling law allowing Italy to open its online sports betting market to foreign operators. 

Attention shifted away from Europe in June when the Australian Government rejected the advice of one of its own commissions to regulate online gambling. Further up, the Antiguan Prime Minister was considering imposing sanctions on the United States following the long-standing dispute over Antiguan operators on the US market. The South African market came to an abrupt standstill when a court ruled on 16 August that online gambling operators, payment processors and internet service providers were in breach of the country’s National Gambling Act and they could no longer operate without the risk of prosecution. 

Hope in the US for the regulation of the market reached an all-time high in August when the House of Representatives Financial Services Committee approved HR2267, the ‘Barney Frank Bill’. Six months and an election later, however, it seems very unlikely online gambling will be legalised anytime soon. The optimism of August did encourage companies to strike deals with the US though. Sportingbet and the US Attorney's Office in New York reached a non-prosecution agreement in September. The London-based company paid the US a $33 million fine, and will not be criminally prosecuted for providing gambling services to US customers. A month later, the US announced it was going to put forward proposals to require financial institutions to report all electronic transfers in and from the US, even very small amounts of money, from 2012. This would make it much easier for law enforcers to pick up (illegal) gambling transactions. 

Back in Europe, the EC notified Romania in October it could not accept the country's draft gambling law. Only last month the new Australian Government surprised the gambling industry by appointing an expert panel while postponing the introduction of the controversial and much-talked about internet filters, possibly until 2012. This month, the new Danish law came under scrutiny of the EC, with the investigation undoubtedly to be continued in 2011.

Published previously in World Online Gambling. London, 2010. Copyrights apply.

Reid pushes for e-gambling Act in ‘lame duck’ Congress

US Senate Majority Leader Harry Reid (Democrat) confirmed on 7 December he is pushing for a last-minute Bill to legalise online poker in the US. “Senator Reid is working to find a way to get it done”, his Spokesman said. While the text of the Bill has not been made public, members of Reid’s team have been circulating a 57-page document since late November, proposing to amend the Unlawful Internet Gambling Enforcement Act - which bans online gambling in the US. 

 To increase the chances of success, it is expected the Bill will be ‘linked’ to another piece of legislation and will be introduced before 5 January, the end of the ‘lame duck’  session - the period between the election and Congress’ new term. After that, chances of success will dwindle rapidly since a majority of newly elected Members - mostly Republicans - opposes online gambling. Under the proposals, internet poker games could only be offered by operators of existing bricks-and-mortar casinos. Most of these businesses are located in Las Vegas, Nevada, Reid’s home state. That explains why “Reid will do whatever it takes to protect and advance this proposal”, said Elizabeth Corey, Partner at Foley & Lardner LLP. “He will look for any vehicle to attach this gaming proposal to.”

The American Gaming Association (AGA) has welcomed Reid's proposals. “This is law-and-order legislation...a solid regulatory framework,” said Frank Fahrenkopf, the AGA’s Chief Executive. Supporters of Reid, mainly gambling businesses and Nevada politicans, have claimed the proposed legislation would bring in more than $3 billion in tax revenue and will create thousands of jobs.

While it is far from certain whether the new Bill will be passed before Republicans take control of Congress in January, “Reid does for online gamblers in one week what Frank could not do in four years”, wrote Larry Rutherford, Staff Editor at, on his popular blog.
A number of Republicans, however, wrote in a public letter  to Reid on 1 December that “creating a federal right to gamble requires careful deliberation, not back-room deals or earmarks for special interests”.

Corey believes that “Reid has lost the element of surprise and faces continuing opposition. But Reid is a fighter and he gives as good as he gets,” she said. “We all know stranger things have happened as Congress rushes to adjournment.”   

Published previously in World Online Gambling. London, 2010. UK Copyright laws apply.

Tuesday, 4 January 2011

Twenty Ten

- 2010: an e-commerce year to remember -

The year kicked off with a victory for manufacturers of luxury products keen to protect their brands, when, in February, a Paris court ruled that eBay should compensate Louis Vuitton for facilitating the sale of counterfeit Louis Vuitton products. Although another case in which a UK court ruled that eBay was not liable for listing fake L’Oréal goods illustrated the battle of ‘the brand owners v counterfeiters’ is far from over, 2010 should be considered as a year in which copyright infringements and counterfeiting were taken more seriously than ever before.

Many countries, like the UK, France, Ireland and South Korea, passed new or updated laws aimed at combatting online piracy more effectively by creating a more defined framework for copyright breaches on the net. In the UK, the controversial Digital Economy Act (DEA) came into force in June and a highly symbollic copyright agreement with China - the biggest infringer - was signed. Enforcement is still considered to be one of the biggest challenges, so many welcomed, in November, the publication of the final draft of the Anti-Counterfeiting Trade Agreement, aimed at establishing standards on intellectual rights enforcement. The US, in the meantime, has taken its own approach and has, without a court order, started shutting down file sharing websites.

It was certainly also a year in which Google dominated the headlines. Its controversial AdWords policy, the data protection and copyright agreements with a number of countries and groups, and the announced investigation into possible abuse in the online search market in Europe all made the headlines. But it was not only bad press for Google: its advertising revenues rose to $25 billion this year.

And 2010 might go down as the year free online news saw the beginning of the end. In July, Rupert Murdoch put his collection of newspapers The Times, The Sunday Times and the Financial Times (FT) behind a paywall. Although unique readership numbers have fallen significantly - readership has fallen around 90% - it seems publishers are starting to see the lucrative side of it: in December, the FT reported The Telegraph Media Group (publisher of The Daily Telegraph) will launch a similar scheme in the New Year, with others expected to follow.
Television also made a digital jump forward. Google launched its Google TV service in November and the UK High Court ruled, in the same month, that the activities of a TV streaming website are covered by copyright law despite the fact that it is not a broadcaster itself.

In publishing, more books were sold online than in traditional bookshops and 2010 was the year of the ‘e-reader’. When the year kicked off, Kindles and Nooks sold impressively well on Amazon but the launch of the Apple iPad in April was an outright, unrivalled milestone. With three million devices sold in the first 80 days, it was undeniably the e-commerce hit of this year.

Published previously in E-Commerce Magazine, London 2010 (C) Copyrights apply