DMA Comments on Proposed Labeling Requirements for Toy and Game Ads on the Web

DMA Comments on Proposed Labeling Requirements for Toy and Game Ads on the Web

November 21, 2008 — Yesterday, in a letter to the Consumer Product Safety Commssion, DMA provided comments on the Consumer Product Safety Commission’s proposed labeling requirements for toy and game advertisements on the Internet. DMA previously provided comments to the Commission with respect to labeling requirements for toy and game advertisements in catalogs and other printed materials.

The full text of the letter follows.

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November 20, 2008

Via electronic filing: spsc-os@cpsc.gov

Mr. Todd A. Stevenson, Secretary

Office of the Secretary

Consumer Product Safety Commission, Room 502

4330 East-West Highway

Bethesda, MD 20814

Re: ADVERTISING REQUIREMENTS NPR

Dear Secretary Stevenson:

The Direct Marketing Association (“DMA”) appreciates the opportunity to provide comments on the Consumer Product Safety Commission’s (“Commission”) proposed labeling requirements for toy and game advertisements on the Internet. We previously provided comments to the Commission with respect to labeling requirements for toy and game advertisements in catalogs and other printed materials.

The DMA (www.the-dma.org) is the leading global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques. DMA advocates industry standards for responsible marketing, promotes relevance as the key to reaching consumers with desirable offers, and provides cutting-edge research, education, and networking opportunities to improve results throughout the end-to-end direct marketing process. Founded in 1917, DMA today represents more than 3,600 companies from dozens of vertical industries in the U.S. and 50 other nations, including a majority of the Fortune 100 companies, as well as nonprofit organizations. Included are catalogers, financial services, book and magazine publishers, retail stores, industrial manufacturers, Internet-based businesses, and a host of other segments, as well as the service industries that support them.

We support the goal of addressing consumer product safety concerns on the Internet. Traditionally, the Internet has not been regulated to avoid limiting growth of this channel. Rather than imposing highly prescribed labeling requirements for toys and games advertised on the Internet, our experience suggests that the market may best determine how most effectively to convey such warnings to consumers. At a minimum, we recommend that any Internet advertising requirements allow for flexibility. As catalogers, marketers, and retailers, both on- and offline, our members understand the need to balance product safety concerns with the limitations imposed by advertising space. Even in the online world, the amount of information that may be displayed is limited by such factors as the screen size on which an advertisement is viewed, the physical size of the advertisement, and a user’s personal browser or monitor setting. As described below, just as we recommended in our comments relating to catalogs and other printed materials, the DMA supports the use of defined alert symbols to address size restraints of Internet advertisements. We also want to ensure that the Commission establishes a realistic compliance timetable that accounts for increased compliance costs and the impact on small businesses, which make up a significant portion of the industry. Requiring compliance within 3 weeks of the filing date of the comments is a difficult challenge that could result in severe and negative consequences for consumers, businesses, and e-commerce. Set forth below we provide the following comments:

· The Commission should provide a one year grace period for businesses to comply with any adopted Internet advertising requirements.

· The rules should permit flexibility in the placement of warnings.

· The rules should not impose a type-size requirement for warnings in advertisements on the Internet.

· The rules should permit the use of abbreviations, symbols, and combined warnings for Internet advertisements.

· The Commission should either clarify that cautionary statements are not required when a product appears on product lists or exempt product lists from the rules.

· The Commission should provide a one year grace period for businesses to comply with any adopted Internet advertising requirements.

The statutory deadline for compliance with the Internet advertisement requirements of Section 105 of the Consumer Product Safety Improvement Act (“CPSIA”) is December 12, 2008. The Commission has stated that these Internet advertisement requirements will go into effect on that date regardless of whether the Commission has issued a final rule on the Internet requirements by then. While we recognize that unlike for catalogs the CPSIA does not provide a statutorily-stated grace period for the Internet requirements, we ask the Commission to use the same discretion that it used to propose rules pertaining to the Internet to provide for a one year grace period for compliance with the Internet-related requirements.

A compliance deadline of December 12, 2008 is not operationally practical, particularly for small businesses. Each web site operated by a retailer is an online marketplace that brings together multiple vendors; in some cases 3,000 to 15,000 manufacturers and suppliers. The industry-wide effort required to reach out to each vendor to gather the required information and then to translate that information to web pages will take more than the approximately 3 weeks remaining until the December 12, 2008 deadline. In addition to the time needed to change the content of a retailer’s web site, up to an additional 60 days may be required to make changes to a web site’s template, which for some businesses would be necessary to implement some of the Commission’s recommendations. Changing a web site’s template is not simply a matter of adding content and may require new web designs and modifications to fields. Cost also presents a challenge to meeting the deadline because changing web page template designs runs in the tens of thousands of dollars.

A December 12th deadline would also negatively impact consumers, which could experience confusion due to changes in web site layouts. Generally, retailers engage in the practice of putting their web sites into “lock down” to minimize such consumer frustration during high retail periods. In the months of November and December, many retailers do not make design or template changes to their web sites to avoid any disruptions to consumer access. During this tough economic climate, retailers cannot afford to frustrate, or worse yet lose, customers from complications that may result from redoing retailers’ web sites in the middle of this holiday season.

Additionally, if compliance with the December 12, 2008 date remains unchanged, and the final rule is not issued by that date, retailers will find themselves in the position of needing to implement costly changes twice; once to comply with CPSIA, and once again to comply with the final rule after it has been issued. Businesses should not bear an unnecessary financial burden, particularly in this financially unstable time. By providing a grace period, the Commission could avoid subjecting businesses to the financial hardship caused by multiple costly modifications to their web sites. We therefore recommend that the Commission provide, at a minimum, a one year grace period for compliance with any Internet-related requirements.

The rules should permit flexibility in the placement of warnings.

The Commission’s proposed rules would require cautionary statements to be located immediately before any other statements in an advertisement that describe the function, use, or characteristics of toys or games advertised on the Internet. While we support warning consumers about potential safety hazards of toys or games, retailers require some flexibility in the manner in which such warnings are communicated to consumers, including the placement of the warnings. So long as warnings are placed in a conspicuous and clear location, and the statements include the statutorily required disclosure, businesses should retain the ability to display cautionary statements in a manner consistent with the nature of the advertisements. Permitting such flexibility would simply extend the Commission’s proposed approach for print materials, which does not prescribe specific locations for cautionary statements.

A flexible approach would provide the market with an opportunity to determine how best to communicate effective warnings to consumers. Businesses may find that warnings can be effectively communicated by providing a link, legend, or floating text box in an Internet advertisement or at the point of purchase (e.g., a “buy me” button leading to a warning, or a warning underneath a 1-800 number). Given the chance to innovate, the market may produce technological means of providing warnings in ways that we have yet to imagine. Without such flexibility, prescribing exactly how and where a warning must be placed in an Internet advertisement could also foreclose other emerging business models (i.e. mobile marketing).

Additionally, a flexible approach is necessary because just as catalog and other print advertisements face physical limitations, so too do Internet advertisements. Specifically, the amount of information that may be communicated to a consumer is limited by the space allocated for an advertisement. The Commission should avoid adopting a rule that prescribes a warning’s specific placement because businesses cannot always control the manner in which advertisements are displayed to consumers. For example, how an advertisement may display on a screen will differ depending on the consumer’s personal settings, such as display resolution, font size, and browser window size. Likewise, the Commission should not adopt a rule that requires notice “before” or “above” the scroll. Retailers have no control over where a scroll appears on a screen because a scroll’s location depends on the size of the screen, which varies widely among desktops, laptops, mobile phones, and other portable devices.

Providing this flexible approach would thus address the need for clear and conspicuous product warnings without displacing other relevant information. We urge the Commission to maintain this balance.

The rules should not impose a type-size requirement for the text of warnings in advertisements on the Internet.

The Commission has proposed requiring the text size of cautionary statements to be at least equal to the size of the largest text in an Internet advertisement that describes the function, use, or characteristics of toys or games. We recommend that the Commission refrain from imposing a type-size requirement and avoid imposing requirements that are more explicit. The Commission should resist suggestions to implement specific size requirements because web sites use a range of text sizes and customers may alter font sizes on their viewing screens. We recommend that the appropriate type-size be determined by the size of the advertisement, provided a retailer displays a warning clearly and conspicuously.

The rules should permit the use of abbreviations, symbols, and combined warnings for Internet advertisements.

The Commission has made a preliminary determination that use of abbreviations in Internet advertisements is neither necessary nor desirable. As we indicated in our previous comments, the DMA supports the use of abbreviated notices. Similar to catalogs and other printed materials, Internet advertisements are also constrained by the size of advertisements. The amount of information that may be communicated to a consumer may be limited by the advertisement’s size and a user’s browser settings. In addition to including a product’s safety message, businesses must also communicate other relevant aspects of a product, such as a product’s price, features, uses, and availability.

We support using abbreviations, symbols, and combined warnings in Internet advertisements. As observed by the Commission in the context of catalogs and other printed materials, it may be difficult to spell out cautionary statements completely in advertisements. The physical limitations of Internet advertisements also often make it necessary to use shorthand cautionary statements. The use of defined abbreviated warnings balances the need for providing appropriate product warnings with the need to communicate other relevant product information.

Additionally, because symbols transcend language (e.g., the skull and crossbones representing toxic), the DMA supports adopting, in consultation with industry, specific safety symbols that are recognized to represent certain product safety concerns. A symbol requires little space and in many ways can convey a more meaningful and conspicuous message than words. In our experience as marketers, symbols are often universally understood and can be more conspicuous and effective than lengthy or detailed warnings. As provided in our earlier comments, we have attached representative symbols for your consideration, which are currently used in Europe for labeling purposes. The symbols and abbreviated warnings could also be linked to more detailed written definitions in a clear and conspicuous key or legend in a designated area of the web site, such as at the bottom of the web page, a new web page, or another easily accessible location. Permitting the use of symbols in addition to abbreviations to represent cautionary statements would thus achieve the purpose of the proposed rules, which is to provide meaningful and conspicuous product safety messages to consumers, while addressing the space limitations associated with advertisements.

The DMA also supports permitting warnings to be combined in Internet advertisements. In circumstances where multiple disclosures for a product are required by law, allowing the combining of warnings for small parts, small balls, and marbles would simplify the task of compliance for retailers, while still providing consumers with the requisite warning information. Additionally, using combined warnings would provide retailers with a means to avoid over warning consumers with unnecessary repetition of safety information while still providing easy access to the warnings. Our members tell us that consumers can become desensitized from too much text, but often immediately see and comprehend the meaning of symbols.

By providing flexibility through the use of abbreviations, symbols, and combined warnings, the Commission also will not inhibit the development of new services or different platforms, such as mobile marketing. DMA thus urges the Commission to consider how its proposed rules could impact the development of future business models.

The Commission should either clarify that cautionary statements are not required when a product appears on product lists or exempt product lists from the rules.

The Commission has proposed rules designed to address Internet advertising requirements for toys and games, however the scope of the rules lacks clarity. Specifically, the proposed rules state that any toy or game that requires a warning about a choking hazard must include a cautionary statement in the product’s advertisement if the advertisement “provides a direct means for the consumer to purchase or order the product.” “Direct means of purchase or order” is defined to mean “Internet Web sites that enable consumers to purchase a product online or through the use of a telephone number or fax number provided on the Internet Web site.” The definition could be broadly interpreted to capture product and service offerings where it is not practical to offer such notices. For instance, it is unclear whether the rules require cautionary statements on each web site location where a product and/or a means for purchase is displayed.

As currently worded, the proposed rules could capture product lists that are produced when a customer conducts a category search. Although these lists do not contain product information and are not intended to serve as the primary product advertisements, products from lists often may be added to a purchase cart without a consumer ever clicking on the product to access the full description of the product. These same product lists could also include a phone or fax number that could permit the purchase of an item without the customer seeing the full advertisement.

A rule that captures such product lists is problematic. Most retailers do not have the technical capability to provide cautionary statements within product lists. Requiring warnings to appear with product lists would also cause what were once short lists to be quite expansive. When consumers conduct category searches, they expect to see only a snapshot of a product and to be able quickly to scroll through search results. Exempting cautionary statements from such product lists would therefore not be contrary to consumer expectations. We thus urge the Commission either to clarify that cautionary warnings are not required when a product appears on product lists or to exempt product lists from the rule.

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We thank you for the opportunity to submit these comments. We look forward to continuing to work closely with the Commission on these important issues. Please do not hesitate to contact me with any questions at 202/861-2423.

Sincerely,

Jerry Cerasale

Senior Vice President, Government Affairs

1615 L Street, NW Suite 1100

Washington, DC 20036

cc: Stuart Ingis, Venable LLP

Michael Signorelli, Venable LLP

Tara Sugiyama, Venable LLP