May 9, 2008

Jeff Perlman, Executive Vice President – Government Affairs
Clark Rector Jr., Senior Vice President – State Government Affairs
Robert Kohlmeyer, Manager – Government Affairs

FTC Holds Mobile Marketing Workshop

Federal Trade Commissioner Jonathan Liebowitz said he is concerned about increased marketing to cell phones and warned mobile content providers that they must improve disclosure of premium content costs on cell phones. Liebowitz noted that industry best practices guidelines are a positive step, but companies must correctly implement and enforce the rules or his agency will. His remarks were made at the FTC's "Beyond Voice: Mapping the Mobile Marketplace," a workshop held to examine mobile marketing practices, including privacy implications and consumer protection issues, especially the protection of children.

At the workshop, the Center for Digital Democracy, a consumer privacy group, announced they will formally call on the FTC to investigate privacy issues surrounding mobile devices, including location tracking and profiling. The group said that the possibility that companies may misuse consumer information justifies the FTC to take action, despite no evidence of such misuse and mobile companies flatly denying any improper use of personal data.

Panelists raised concerns about children sending messages, purchasing content and opting-in to marketing campaigns without parental consent. The use of GPS and other location-based technologies in mobile applications that allow users to share their current location with both friends and marketers was also debated. The FTC has no current plans to change policies on mobile marketing.
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Direct-to-Consumer Drug Advertising Faces Oversight and Investigations Subcommittee Scrutiny

House Energy and Commerce Committee Oversight and Investigations Subcommittee Chairman Bart Stupak, D-Mich., called for "significant restrictions" on direct-to-consumer advertising of prescription drug products, saying that the ads are "designed to mislead and deceive for the profit of pharmaceutical companies." He made his remarks at a hearing investigating three drug advertising campaigns pulled from the air in the past few years. Minority Leader John Shimkus, R-Ill., said that the timing of the hearing was off, as all three criticized campaigns predate the implementation of new DTC rules under the FDA Amendments Act of 2007, which gives the Food and Drug Administration authority to fine drug companies for false or misleading advertising. The law, signed by the president in September, originally contained onerous marketing restrictions including a three-year moratorium on new drug advertising and FDA preapproval of all DTC ads. The full House and Senate removed these restrictions before the bill was approved. At the hearing, pharmaceutical company representatives defended their advertising campaigns, saying that their drug advertising claims are supported by research. Nancy H. Nielsen, president-elect of the American Medical Association, renewed the group's call for a moratorium on new drug advertising until doctors are educated about the risks and benefits of new products.
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House FDA Bill Would Require New Meat Labeling

A draft bill circulating in the House would require additional labeling for grocery store packaging of meat, poultry and seafood. The Food and Drug Administration Globalization Act contains a provision that would mandate a label on products containing carbon monoxide added to affect coloring. The proposed label would state: "Carbon monoxide has been used to preserve the color of this product. Do not rely on color or the 'use or freeze by' date alone to judge the freshness or safety of the product." The provision is part of a comprehensive bill designed to reform food and drug safety.
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States' Tax Revenue Declining

The National Conference of State Legislatures has issued a report stating that declining tax revenue has led to budget deficits for fiscal year 2008 in 16 states and Puerto Rico, with additional states expected to be in the red for fiscal year 2009. According to the group's April 2008 state budget update, both personal income tax and sales tax revenue has not met expectations in 16 states and was below estimates in nine states: Alabama, Arizona, California, Florida, Georgia, Idaho, Nevada, Rhode Island and Virginia. Twenty-three states might have budget deficits in 2009 totaling over $26 billion. States looking for new revenue sources to meet budget demands often turn their attention toward taxing favored services, including advertising.
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