Retailers and service providers should take note: the Federal Trade Commission (FTC) is increasing its scrutiny of negative option marketing activity to combat unfair or deceptive practices related to subscriptions, memberships and other recurring-payment programs. The FTC issued today a notice of proposed rulemaking as part of its ongoing review of its 1973 Negative Option Rule—one of the primary guides for the FTC’s enforcement focus. Negative option arrangements include “free trial” programs that automatically convert to paid subscriptions, and “automatic renewals” which allow sellers to u ..read more

Environmental marketing claims often present something of a Catch-22—companies that are doing actual good for the environment deserve to reap the benefits of their efforts, and consumers deserve to know, while at the same time, heightened scrutiny from the Federal Trade Commission (FTC), the National Advertising Division (NAD), state regulators and the plaintiffs’ bar have made such claims increasingly risky. In 2012, the FTC issued the Green Guides for the use of environmental marketing claims to protect consumers and to help advertisers avoid deceptive environmental marketing. Compliance wi ..read more

On August 9, the US District Court of Georgia ruled that the FTC had provided “broad and detailed evidence” for its allegations that a tech company and its CEO engaged in deceptive advertising and unfair fee practices in violation of Section 5 of the FTC Act. The FTC’s 2019 complaint alleged the defendants made deceptive representations to customers and charged hidden, unauthorized fees in connection with the company’s “fuel card” as well as through co-branded cards, to companies in the trucking and commercial fleet industry. The FTC’s factual allegations include the follo ..read more

On August 10, the CFPB issued an interpretive rule stating that digital marketing providers that are involved in the identification or selection of prospective customers or the selection or placement of content to affect consumer engagement including purchase or adoption behavior, are subject to the CFPB’s jurisdiction. The rule ostensibly clarifies the scope of companies that are “service providers” under the Consumer Financial Protection Act (“CFPA”) to include digital marketing providers, and thereby subjecting them to the CFPB’s authority to prohibit unfair, deceptive, abus ..read more

The FTC is seeking public comment on proposed changes to its Endorsement Guides. These changes aim to strengthen the guidelines against advertisers posting falsely positive reviews or by manipulating reviews by suppressing negative ones. The Endorsement Guides were enacted in 1980—and amended in 2009—to ensure that advertisements utilizing endorsements and testimonial reviews are truthful and not misleading. For example, the Guides require that advertisers disclose material connections between those endorsing products and sellers of advertised products. The Commission soug ..read more

“NFT” was 2021’s word of the year.  This isn’t too surprising—they’re everywhere!  The market cap for NFT transactions jumped from roughly $400 million at the beginning of 2021 to over $7 billion by year’s end.  What’s next and how can brands and other content creators leverage NFTs to bring value? What is an NFT? “NFTs” are non-fungible tokens, the ownership of which are recorded on a blockchain. NFTs are often associated with digital objects (for example, images or other digital works).  While the purchaser or acquirer gets ownership of the token, they often only get a l ..read more

Last week, Reps. Anna Eshoo (D-CA), Jan Schakowsky (D-IL) and Cory Booker (D-NJ) introduced the Banning Surveillance Advertising Act of 2022, a new bill that seeks to significantly restrict targeted advertising practices. The proposed legislation prohibits “advertising facilitators” (defined as entities who receive consideration for disseminating ads and collect or process personal information in connection with such dissemination) from targeting ads to individuals based on their personal information. In addition, the bill prohibits advertisers from targeting, or using an advertising facilita ..read more

The FTC has sent a strong message to industry that it plans to hold companies responsible for using endorsements and customer testimonials that deceive consumers.  The recent warning signals the FTC’s focus on fake reviews and endorsements and the agency’s intent to hold brands and advertising service providers accountable where necessary.  The agency is paying particularly close attention to how brands communicate with customers through third party influencers on social media. On October 13, 2021 the FTC issued a Notice of Penalty Offenses to over 700 companies.  Recipients of ..read more

In October 2021, Governor Gavin Newsom signed into law a sweeping package of six bills aimed at reducing plastic waste, improving recycling efforts, and clarifying labeling standards for recyclables and compostables.  These new laws will likely mean significant changes for many companies.  They come at a time when multiple states are passing similar environmentally focused bills, signaling a renewed effort to promote recycling and regulate green advertising. The package of bills included the following: SB 343: Truth in labeling for recyclables. Products and packaging must meet new ..read more

The Federal Trade Commission (“FTC”) recently settled an enforcement action against an advertiser for $753,000 for deceptive “Assembled in USA” product claims, the first such settlement following the FTC’s recent adoption of a new rule addressing unqualified “Made in USA” labeling claims.  (See Made in USA Labeling Rule.) Effective August 13, 2021, the new rule, codified at 16 C.F.R. Part 323, prohibits labeling any product as “Made in the United States” unless “the final assembly or processing of the product occurs in the United States,” “all significant processing that goes into the pr ..read more