On Friday, the FTC announced what would ordinarily be an unremarkable enforcement action against a company for unsubstantiated earnings claims. The FTC alleges that WealthPress, an investment advice company purporting to offer training from experts on trading strategies, made a series of unsubstantiated earnings claims such as “make $24,840 or more every single week,” “track
Next Stop on the FTC’s Rulemaking Train: Proposed Revisions to the Business Opportunity Rule
In today’s open meeting, the FTC voted unanimously to issue an Advance Notice of Proposed Rulemaking (ANPR) considering expansions to and revisions of the FTC’s existing Business Opportunity Rule (“BOR”). This will be the first review of the BOR since it was promulgated back in December 2011. In her statement announcing the ANPR, Chair Khan
The FTC and CFPB are Coming for “Junk Fees,” but What Does that Really Mean?
The FTC’s Advanced Notice of Proposed Rulemaking (ANPR) seeking comment on a potential rule prohibiting “junk fees” and related practices hit the Federal Register yesterday. The rule has the potential to fundamentally alter how fees are disclosed in advertising and across the customer experience in nearly every industry that charges some type of fee. Interested parties now have until January 9 to provide comments and feedback on the proposal. The ANPR’s publication follows a series of meetings and announcements by the FTC, CFPB, and President Biden that the administration was taking actions to prohibit so-called “junk fees” that “can weaken market competition, raise costs for consumers and businesses, and hit the most vulnerable Americans the hardest.”
Prohibiting junk fees may sound uncontroversial in the abstract, but what does it mean in practice? We concentrate here on the FTC’s ANPR given its potential breadth and impact on a host of industries including travel, delivery services and others in the gig economy, restaurants, and e-commerce sites.
What is a “Junk Fee”?
The ANPR uses the term “junk fees” to refer to “unfair or deceptive fees that are charged for goods or services that have little or no added value to the consumer, including goods or services that consumers would reasonably assume to be included within the overall advertised price.” According to the FTC, the term includes, but is not limited to “hidden fees,” which are fees disclosed only at a later stage of the customer experience or potentially not at all.
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“An Arrow Has Found its Target”: Federal Appeals Court Deems CFPB Funding Method Unconstitutional, Invalidating Payday Lending Rule
In a decision with potentially far-reaching implications for the CFPB, a three-judge panel of the U.S. Circuit Court of Appeals for the Fifth Circuit yesterday ruled that the Bureau’s funding structure is unconstitutional. The case involved a longstanding challenge to the Bureau’s 2017 Payday Lending Rule and marks another significant obstacle for the Bureau two
FTC Proposes Changes to Endorsement Guides with Expanded Liability and More Onerous Disclosure Requirements
In addition to announcing a new COPPA policy statement and related “crackdown” on children’s privacy issues (discussed here) in its most recent open meeting, the FTC also proposed changes to the FTC’s Endorsement Guides. The changes would build on and expand previous guidance, including by expressly extending liability to endorsers, intermediaries, and platforms
The FTC Seeks Comments and Signals Changes to Come in New Rulemaking on Earnings Claims
Kick-Off Time for FTC Rulemaking on Earnings Claims
Last Thursday (February 10), the FTC announced that it “will vote” at its February 17 open meeting to issue an Advance Notice of Proposed Rulemaking (ANPR) on “deceptive earnings claims for business ventures, gig or other work opportunities, or educational, coaching or training offerings.” Here’s our take on what we can glean from this announcement
Senate Spars with FTC BCP Director Sam Levine over FTC Enforcement, Surprisingly from Both Sides
Yesterday, the Senate Commerce Committee’s Subcommittee on Consumer Protection, Product Safety and Data Security held its second hearing in less than a year on COVID-19 fraud, price gouging, and related enforcement efforts. Groundhog Day Eve was a fitting date for the hearing, as the Federal Trade Commission – this time through Bureau of Consumer Protection
FTC Settles with Company Over Failure to Post Negative Reviews
Companies often ask us whether they can highlight positive reviews without mentioning negative ones. The good news is that there are ways to do that, but when the conversation veers from highlighting positive reviews to suppressing negative ones, things get trickier. This afternoon, the FTC announced its first case involving a company’s failure to post
Next Up – Earnings Claims: Notice of Penalty Offenses Sent to 1,100 Direct Selling Companies and Others in the Gig Economy
In its third recent Penalty Offense Authority notice, the FTC today notified more than 1,100 companies offering “money-making opportunities” that it intends to pursue civil penalties of up to $43,792 per violation for misrepresentations related to potential earnings and related characteristics about the opportunity. Recipients of the notice include virtually every major direct selling company and others in the gig economy such as Amazon, DoorDash, Lyft, and Uber.
That makes more than 1,800 companies that have been put on notice of penalty offenses in the past month. It also crosses another alleged deceptive practice off the list laid out in the October 2020 paper authored by current Bureau Director Sam Levine and former FTC Commissioner Rohit Chopra, entitled The Case for Resurrecting the FTC Act’s Penalty Offense Authority. Next up? Well, if the Chopra/Levine paper points the way (and it appears to), we should expect future notices that focus on allegedly unfair and deceptive data harvesting and targeted marketing.
In addition to the eight categories of misrepresentations in today’s notice ranging from the amount of earnings possible to the amount of training provided, the sample cover letter published online also includes a section on endorsements and testimonials. This means that each company receiving today’s notice also will receive the notice published last week on endorsements and testimonials, which over 700 companies also received (with some minimal overlap in that list).
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