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John E. Villafranco

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The FTC took unprecedented action yesterday when it moved to impose what it describes as a “blanket prohibition” preventing the company from monetizing young people’s data.  The FTC contends that this prohibition is warranted as a result of repeated violations of Meta’s 2020 consent order (“Proposed Order”).

In taking this action, the FTC is relying on its administrative authority to “reopen and modify” orders to address alleged order violations, rather than to press its compliance case in federal court under the FTC Act.  In doing so, the FTC seeks to significantly expand the scope and duration of the existing order to cover new conduct.  Even against recent examples of aggressive FTC action (see examples here, here, and here), this one markedly stands out.  And, in the face of mounting agency losses in challenges to its enforcement authority in Axon and AMG and its aftermath, the Proposed Order is extraordinary. 

The Commission voted 3-0 to issue the Proposed Order and accompanying Order to Show Cause.  Commissioner Bedoya issued a statement expressing reservations about the “monetization” restrictions described below, specifically questioning whether the provision related to minors’ data is sufficiently related to either the 2012 or 2020 violations or order.  Meta has 30 days to answer the FTC’s proposal.…

Continue Reading FTC Attempts End Run to Ban Meta from “Monetizing” Minors’ Data

The FTC sent out new penalty offense notices to 670 companies today, warning them that failure to substantiate product claims could result in civil penalties of more than $50,000. The companies also received copies of the FTC’s previously-issued penalty offense notices regarding endorsements and testimonials. This represents the FTC’s fourth round of penalty offense notices…

As we count down the last days of March, we mark the end of Christine Wilson’s tenure at the Federal Trade Commission. Set to resign March 31, Commissioner Wilson will have served four and a half years at the FTC – a little longer than a single presidential term. What many probably don’t know, however, is that she had prepared for this job her entire professional life.    

Back in the ‘90s, Christine and I were associates together and office neighbors during the glorious run of years when Jim Rill and the Collier Shannon Rill & Scott Antitrust Group were at the very top of the competition bar. Christine quickly became a go-to associate for the senior partners in the group, due to her pluck and intelligence and willingness to go the extra mile (one unconfirmed rumor at the time had her walking Mr. Rill’s dog while he was away on vacation). 

It was clear from the beginning that Christine was driven by a Tracy Flick-like ambition that would propel her to the very top of her profession: she was a model associate, smart and confident beyond her years, and unintimidated by the Professor Kingsfield treatment that was a part of the partner-associate dynamic at the time.   

I remember one early morning as a junior associate when Mr. Rill summoned me to his office. He told me to return in two hours and tell him everything I had learned in those two hours about Venezuelan competition law.  This, in the pre-Google days of yellow pads and dusty digests.  Christine would have nailed it and included an overview of merger control practices in neighboring Andean countries.  My pathetic summary and Mr. Rill’s reaction were akin to the trembling Scarecrow before the Great and Powerful Oz.  I even remember thinking as I left his office — if I only had a brain.…

Continue Reading Thank you, Commissioner Wilson

Last week, NAD released a decision in a case involving a Molson Coors ad that has received more press attention than any NAD decision in recent memory. In the ad, athletes are celebrating the completion of a difficult workout by opening a can labeled “Extremely Light Beer” and pouring the liquid over their heads while an announcer says “Light beer shouldn’t taste like water. It should taste like beer.”

Anheuser-Busch filed a challenge using NAD’s Fast-Track SWIFT process, arguing that the videos falsely disparage Michelob Ultra and other light beers by claiming that consumers find them to taste like water. Molson Coors pointed out that no competitors were named and the tagline was simply “a subjective opinion about what beer should and should not taste like, which cannot be objectively proved or disproved.” In other words, mere puffery “because it is not sufficiently specific and material enough to create expectations in consumers.” But NAD didn’t agree. It deemed Coors’ claim measurable and objective and found it to be unsupported by evidence.

Hmmm. Do consumers really expect Molson Coors to have a well-designed test establishing that some unnamed light beers taste like water? Such jabs have long been a staple of American advertising. Isn’t this akin to Wendy’s iconic “Where’s the beef” campaign? Or Dunkin Donuts’  slogan, “friends don’t let friends drink Starbucks”? These taglines were never controversial. And yet, one can only imagine the conversations that might ensue if these slogans crossed NAD’s desk today. Wendy’s might be asked to provide to-the-millimeter measurements of competitors’ burger-to-bun ratios. And Dunkin might be asked to supply a robust, geographically diverse, well-conducted survey of three hundred “friends.”…

Continue Reading NAD’s Molson Coors Decision: The Watering Down of the Objective Claim Standard

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…

Yesterday, the FTC’s Bureau of Consumer Protection released its Health Products Compliance Guidance—a sweeping overhaul of the 1998 Guidance, Dietary Supplements: An Advertising Guide for Industry.  Unlike the recently announced effort to review its Green Guides, the FTC did not seek public comment prior to issuing this update. 

According to an FTC blog post that accompanied its release, the new Guidance purports to “correct misunderstandings” and “urban myths” that have circulated about FTC substantiation standards.  In actuality, however, the new Guidance represents a recitation of some of the positions the agency has taken in health-related enforcement matters over the last decade, continuing a stark departure from the prior “flexible” approach to substantiation set forth in the 1998 Guidance.

While FTC guidance does not have the force and effect of law, if a person or company fails to comply with a guide, the Commission might bring an enforcement action alleging an unfair or deceptive practice in violation of the FTC Act.  This makes the new Guidance a must-read for any company operating in the food, supplement, personal care, health equipment or app, or related industries. 

While there is quite a bit of material to digest in this new Guidance, including a new definition of what constitutes a clear and conspicuous disclosure and an entirely new section addressing advertisers’ mischaracterization of FDA approval, here are two main takeaways: 

First, the 2022 Guidance encompasses a far wider industry scope than its predecessor.  While the 1998 Guidance was, by title and content, focused on dietary supplement products, the 2022 Guidance purports to guide advertising practices for “any health-related product,” including dietary supplements, foods, over-the-counter (OTC) drugs, homeopathic products, devices, health equipment, diagnostic tests, and health-related apps.” …

Continue Reading Misguided:  The FTC Attempts to Redefine the Law with its Health Products Compliance Guidance

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…

On September 21, Rep. Gus Bilirakis, R-Fla., cited the Kelley Drye article “The Deletion of ‘Legitimate Business Activity’ from the FTC’s Strategic Plan” during a House Energy & Commerce Committee hearing before entering it into the record. From the transcript:

*Mr. Bilirakis.

For years, the FTC has been tasked with the critical  …

On Wednesday, we described draft legislation circulating in the Senate Commerce Committee that would have given the Federal Trade Commission almost unfettered authority to enjoin permanently any act, practice or method of competition that did not meet its approval. https://www.adlawaccess.com/2022/05/articles/senate-commerce-committee-chair-pushes-one-sided-13b-fix/  All the Commission would need to do is show that a reasonable person had fair…

The one-year anniversary of the Supreme Court’s decision in AMG Capital Management, LLC v. FTC has renewed calls for Congressional action to expand and codify the Federal Trade Commission’s enforcement authority under Section 13(b) of the FTC Act. Last Thursday, we wrote here about the agency’s most recent open meeting, during which Commissioners heard from a key Senate staffer that Senate Commerce Committee Chair Maria Cantwell (D-WA) intended to introduce what she hoped would be a bipartisan fix. Yesterday, Chair Cantwell’s bill was made public, and its terms render any hope of bipartisan support a long-shot, at best, with little likelihood of garnering the Republican support needed to clear the chamber.

The bill’s release followed the May 2 release of a Senate Commerce Committee report entitled Restoring the Federal Trade Commission’s Authority to Protect Consumers and the Marketplace – an 80-page report, more than 50 pages of which purported to list dollar amounts received in each state due to “FTC cases resulting in significant refunds” (many of which were settlements never actually litigated under Section 13(b)). The report echoed much of what we heard from Commissioners last week – that AMG has created an enforcement void for the agency and no alternative enforcement approaches come close to 13(b)’s ability to protect consumers and provide monetary redress. The report couched the court’s decision as particularly damaging to the agency’s efforts to curtail “Big Tech and Pharma’s ability to harm consumers and fledgling businesses.”…
Continue Reading Senate Commerce Committee Chair Pushes One-Sided 13(b) Fix