Federal Trade Commission (FTC)

If you’re offering any products or services involving a negative option or automatic renewal plan, pay close attention to the FTC’s announcement today of a proposed rule that would drastically alter requirements for negative option disclosures while simultaneously granting the agency authority to seek redress and civil penalties for misrepresentations unrelated to the negative option transaction itself, such as claims related to underlying products, features, and services.  Among other things, the rule as proposed would require cancellation be “at least as easy to use as the method the consumer used to initiate the Negative Option Feature,” obtain consent before trying to “save” a cancellation attempt, and provide annual reminders for services that do not involve the physical delivery of goods.

In her dissent, Commissioner Wilson characterized the proposed rule as an “end-run around the Supreme Court’s decision in AMG” and detailed a host of substantive and procedural issues with the proposed rule.

Further analysis and our take below.

Continue Reading FTC Proposes Massive Expansion of Negative Option Rule; Would Provide Redress and Civil Penalty Authority for Deceptive Practices Unrelated to the Negative Option Transaction

On March 13, 2023, the FTC submitted its 2024 budget request to Congress, along with a performance plan for FY 2023-2024 and a performance report for FY 2022. While generally an aspirational document, the budget includes a few notable asks that provide clues about agency priorities in the consumer protection space:

  • More money: The FTC is requesting a budget of $590 million and 1,690 full-time staff. By comparison, the FTC requested $490 million and 1,440 FTEs in its 2023 budget and $389 million and 1,250 FTEs in its 2022 budget. In relation to the agency’s 2020 requested budget ($312 million), this represents nearly a doubling of agency budget requests in the past four years, further emphasizing Chair Khan’s commitment to increasing the agency’s influence and impact.
  • More investigations, especially in privacy and data security: The Privacy and Identity Protection program is slated to receive the most additional full-time employees (FTEs) under the expanded budget request (from 79 to 103 proposed FTEs), with Financial Practices and Marketing Practices in the runner-up spots (14 and 12 FTE increases, respectively). The FTC states it intends to use additional resources in part to investigate and litigate more matters involving health privacy and children’s privacy; unfair or deceptive practices by platforms; frauds using new technologies in the areas of online and mobile transactions; harmful practices in multilevel marketing and the gig economy; and unlawful conduct in the fintech and payment processing space.

Continue Reading Reading the Tea Leaves in the FTC’s 2024 Congressional Budget Request

A recent post on the FTC’s Business Blog notes that although there may be disagreement about what “artificial intelligence” or “AI” is, those terms are being used in marketing campaigns, and the FTC worries that some advertisers “won’t be able to stop themselves from overusing and abusing them.” To help those advertisers out, the FTC’s

Our State AG webinar series continues, this time with Consumer Protection Division Director Kevin Anderson and Deputy General Counsel Daniel Mosteller of the North Carolina Attorney General’s Office (NC AGO). During our webinar, we learned about the office’s structure, consumer protection work as it relates to public health issues, and the tools they have pursuant to the consumer protection laws of North Carolina. In case you missed it, here is a recording of the webinar. We have also recapped what we learned below.

General Office Information

North Carolina elects its attorney general (AG) during the same cycle as the US presidential election. The AG oversees the Consumer Protection Division which also handles antitrust and charities matters. The division has approximately 20 attorneys, plus other staff members. The NC AGO promotes a “two-way dialogue” which takes place between the attorneys in the division and the front office to determine the office’s consumer protection priorities. The AG will set an agenda based on constituent needs. In parallel, the division continually works to spot new consumer protection issues to bring to the AG’s attention.

The NC AGO receives consumer complaints about a range of unfair or deceptive acts conducted within the state. Consumers can file complaints with the office, which in turn, sends the complaints to the businesses at issue, asking for their voluntary response, with the ultimate goal of resolving disputes. Complaint specialists handle these complaints, assisting consumers and businesses with the process, and logging complaints into a database so that the office can keep an eye on trends and issues that need investigating. Last year, the office received over 20,000 written consumer complaints—a large increase compared to ten years ago.

Continue Reading State AGs and Consumer Protection: What We Learned from ….North Carolina

For the second time in as many months, the Federal Trade Commission (FTC) last week announced a settlement alleging that a company’s use and disclosure of consumers’ health information for online advertising violated the law.  The BetterHelp settlement indicates that the FTC takes a broad view of what constitutes “health information,” but it raises questions about how the FTC will apply its reinterpretation of the Health Breach Notification Rule under its September 2021 policy statement.

Overview of the FTC’s Broad View of “Health Information”

BetterHelp is an online counseling service that has registered more than 2 million users since its 2013 inception.  When a consumer visits the site, the FTC alleges that she is “immediately prompted to begin” Better Help’s intake questionnaire that asks questions about the consumer’s history of therapy, current mental state, and religious beliefs among other characteristics, and then provides an email address and other information to create an account.

According to the FTC’s complaint, the company violated the FTC Act through its use of advertising pixels or web beacons and by uploading consumers’  “health information” to ad platforms for retargeting and to reach additional prospects. In the FTC’s view, the “health information” that BetterHelp disclosed not only included information about consumers’ past use or current enrollment in the company’s services but also their interest in obtaining therapy. This information was sufficient to “reveal” that consumers were “seeking mental health treatment.”

Continue Reading FTC to Advertisers: We’re Tracking Your Use of Health Information

Join members of Kelley Drye’s Advertising, Privacy, and Financial Services teams on March 8, 2023 at 12:30-1:30 ET for an overview of hot topics and issues to watch for in 2023 in fintech and financial services.

Both the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) have set an aggressive agenda for

For the 26+ years I served at the FTC, the agency always described itself as a “law enforcement agency,” not a “regulator.” That’s because the FTC spent most of its resources on enforcing the FTC Act and other laws passed by Congress, not creating new regulations on its own. While it would be an exaggeration to say that the FTC has become a regulator in the mold of the federal banking agencies or CFPB, Chair Khan is certainly pushing the FTC in that direction. Indeed, the agency’s rulemaking activity has dramatically increased under her tenure.    

From “Whack-a-Mole” to “Rule-a-Palooza”

What explains the change? For one thing, the FTC majority believes that the FTC’s former way of operating (which it often describes as “case-by-case enforcement” or even “whack-a-mole”) hasn’t adequately protected consumers and competition, warranting the creation of stricter, broader rules for the entire marketplace. For another, in the wake of the Supreme Court’s decision in AMG (holding that the FTC can’t obtain monetary relief under Section 13(b)), the FTC is increasingly relying on other legal tools to get money – notably, alleging rule violations wherever possible, which enables the FTC to seek civil penalties and/or consumer redress. Hence the desire for more rulemaking, or what Commissioner Wilson has described (in strongly worded dissents) as a “Rule-a-Palooza.”   

Continue Reading Is the FTC a “Regulator”?  It Sure Seems to be Moving in that Direction  

On February 9, the FTC provided the CFPB with its annual summary of activities enforcing the Equal Credit Opportunity Act (ECOA). The release of this summary provides a great opportunity for a round-up and some updates on new developments in this space over the past year.

What is ECOA?

ECOA prohibits discrimination in consumer credit transactions on the basis of a number of protected categories, including race, color, religion, national origin, sex, marital status, and age. The statute’s prohibition covers “any aspect of a credit transaction” – a phrase that has been interpreted by the CFPB to cover creditor activities before, during, and after the extension of credit. In addition, creditors who deny a credit application, provide substantially less credit than requested, or make a change in the terms of an existing credit agreement, must provide applicants with specific reasons for the “adverse action.” Regulation B implements ECOA’s requirements and sets out more detailed rules for creditors to follow.

Continue Reading ECOA and Beyond: Recent Updates and Developments in Discrimination Enforcement

Fake reviews continue to be a hot topic in consumer protection. In 2022, we reported that six states and the Federal Trade Commission filed a lawsuit against Roomster – a platform through which people can find rooms and roommates – along with its owners, alleging that they had “inundated the internet with tens of thousands of fake positive reviews to bolster their false claims that properties listed on their Roomster platform are real, available, and verified.” At the same time, the regulators announced a settlement with an individual who allegedly sold Roomster many of the fake reviews.

Roomster then filed a motion to dismiss and in early February, the court denied the motion. While the denial is no surprise, there are some key takeaways from the order.

Continue Reading FTC and State AGs Can Continue Joint Case Over Fake Reviews

While seventeen new state attorneys general are now sworn in and getting settled into their offices across the country, consumer protection continues to be the top of their agenda. Enforcement continues to take shape in different forms including individual actions, multistate investigations, and partnering with the Federal Trade Commission (FTC).  This year we expect states to target particularly salient issues such as dark patterns, autorenewal concerns, and/or data security and privacy, but those priorities will continue to evolve through discussions at the forums of their main national organizations.

For our first State AG webinar of the year, we dove into consumer protection in the Tennessee attorney general office with our guests, Chief Deputy Lacey Mase and Executive Counsel Jeff Hill. If you missed it, we’ve recapped what we learned.

Background of the Office

Unlike other states,  Tennessee is the only state where the AG is appointed by the state Supreme Court, with the AG serving for an eight year term. Qualified attorneys submit applications to the Supreme Court and are interviewed publicly before being selected to serve as AG.

Within the AG’s office, the Consumer Protection Division handles both consumer protection and antitrust work. The AG’s consumer protection priorities are constantly shifting in order to respond to consumer needs. The office evaluates whether resources should be allocated to large scale litigation needs such as multistate actions or whether there are smaller consumer concerns that need to be addressed within the state.

The Consumer Protection Division now houses the Division of Consumer Affairs which serves as the point of contact for consumer complaints about unfair or deceptive acts conducted within the state (until a few years ago, the Division was a separate agency). Tennessee does provide complaint mediation for consumers, where the office will routinely ask businesses for a response.

Continue Reading State AGs and Consumer Protection: What We Learned from….Tennessee