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
The Deletion of “Legitimate Business Activity” from the FTC’s Strategic Plan
For decades, the FTC has explained that the omission of information can lead to liability. It is also a canon of statutory construction that an amendment helps reveal legislative intent. And of course, your mother put it simply: words that you say (and take back) have meaning.
Earlier this month, the Commission released its draft
Commissioner Christine Wilson Excoriates The FTC Chair’s Agenda in ABA Fall Forum Speech
Last week. FTC Commissioner Christine Wilson delivered a speech with a title that made clear she intended to speak her mind: The Neo-Brandeisian Revolution: Unforced Errors and the Dimunition of the FTC.
Predicting that the new FTC Leadership will fall far short of achieving its objectives — most of which she opposes — Commissioner Wilson
The Section 13(b) Fix: Stand-Still on the Hill?
Following House passage of 13(b) legislation this summer, Congressional Democrats seem to have lost some of the urgency with which they were moving to strengthen the FTC’s penalty authorities in the wake of the Supreme Court’s AMG decision. This is partly due to their preoccupation with a months’-long effort to move President Biden’s “Build Back Better” agenda and partly due to the need for some degree of bipartisan consensus in the Senate. With the caveat that Congress can – and often does – surprise us, the prospects for a 13(b) fix any time soon remain murky at best.
Beyond Democrats’ pending budget reconciliation legislation, Congress’s focus through the end of the year is on deadlines for several “must-pass” bills (e.g., government funding, the debt ceiling, and the annual defense authorization bill). While attaching policy riders to these year-end legislative initiatives is standard practice, it is unclear how hard Democrats may be pushing to include a 13(b) fix in the face of myriad legislative distractions, nor is it clear that Senate Republicans are ready to play ball.
Yes, there is always next year, but 2022 is projecting to be an even uglier legislative environment (if it could be imagined). And while this could work either way for 13(b) – Democrats may be more desperate to make a deal (if they think they won’t be in power come 2023) and Republicans may be less willing to compromise (for the same reason) – it is unlikely that any legislative fix will include the exact language preferred by the FTC. The end result could be that nothing happens here, with Republicans content to sit tight, and Democrats unwilling to beat their chests about 13(b) on the campaign trail.
Since most of our readers don’t regularly swim in these waters, let’s recap –
Continue Reading The Section 13(b) Fix: Stand-Still on the Hill?
NAD Updates Fast-Track SWIFT Process
Last month, we posted about the FTC’s warning letters to marketers reminding them that they need to ensure that influencer posts and incentivized reviews include appropriate disclosures. And, shortly after that, we posted about the FTC’s new policy statement warning marketers that they need to clearly disclose the terms of their subscription offers. Mindful of
Post-AMG Scorecard: The FTC Pivots to Other Statutory Bases for Monetary Relief
The Supreme Court in AMG foreclosed the FTC’s ability to pursue monetary remedies under Section 13(b) of the FTC Act. That, however, AMG has not stopped the FTC from pursuing monetary relief directly in court, while attempting to bypass the statutory prerequisite of an administrative proceeding. The FTC is continuing to use Section 13(b) of the Act to attempt to obtain preliminary and permanent injunctive relief. At the same time, the Commission is coupling its 13(b) requests for injunctive relief with other (sometimes creative) statutory requests for money.
Given the Commission’s newfound interest in exploring non-13(b) statutory avenues to obtain monetary remedies, we have expanded our Post-AMG chart to include a wider swath of ongoing cases in which the FTC is attempting to collect money absent the use of 13(b). The latest version of our expanded chart follows.
Continue Reading Post-AMG Scorecard: The FTC Pivots to Other Statutory Bases for Monetary Relief
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).
Continue Reading Next Up – Earnings Claims: Notice of Penalty Offenses Sent to 1,100 Direct Selling Companies and Others in the Gig Economy
Flexing the Agency’s Muscles: What FTC Notice of Penalty Offenses Really Means for Advertisers
Over the last ten days, 700 companies and 70 for-profit colleges received notice of the FTC’s intent to pursue civil penalties under Section 5(m)(1)(b), if these companies and colleges engage in certain conduct deemed by the FTC to be unfair or deceptive. The notices sought to achieve two important Agency objectives: first, force addressees to consider their marketing messages and compliance programs; and second, reintroduce (or reinforce) the threat of significant monetary penalties for those who need discipline. The warnings will undoubtedly alter the dynamic of new investigations as parties consider the costs and benefits of negotiating consent orders that include payment of consumer redress.
But what if parties resist and the Commission were forced to litigate? There, a third objective – to convince a court that the FTC’s Penalty Offense Authority entitles it to civil penalties based on these notices – is much less likely to be realized.
Continue Reading Flexing the Agency’s Muscles: What FTC Notice of Penalty Offenses Really Means for Advertisers
FTC Blankets Companies With Warning Letters Over Endorsements and Reviews
As we have noted in earlier posts, in the wake of the Supreme Court’s holding that Section 13(b) of the FTC Act does not allow for monetary restitution, the Federal Trade Commission has been attempting to creatively utilize other provisions of the Act in order to obtain money from the companies and individuals it
Pushing the Boundaries of Existing Authority: Section 19 Post-AMG Capital Management
It was an extraordinary week as the FTC continued to press the frontier of the post-AMG Capital Management landscape.
On Friday, the Commission, making good on promises to creatively explore all of its options for enforcement, announced by a 3-2 vote that it had reached a settlement pursuant to Section 19 of the FTC Act with Resident Home LLC and its owner Ran Reske. At issue were allegedly false claims that the company’s imported mattresses are made from materials fully manufactured in the United States. As part of the settlement, Resident Home and Reske agreed to pay $753,000.
This action follows the FTC’s announcement earlier in the week that it had notified 70 for-profit higher educational institutions that it intends to make use of its long dormant Penalty Offense Authority. As contemplated by the FTC, the Penalty Offense Authority would allow the Agency to obtain civil penalties when institutions make misrepresentations about their programs, and job and earnings prospects.
Continue Reading Pushing the Boundaries of Existing Authority: Section 19 Post-AMG Capital Management