Revisiting Telemarketing Record Retention Requirements

The Federal Trade Commission (FTC) is seeking comment on the disclosure, recordkeeping, and reporting requirements of its Telemarketing Sales Rule (TSR). The deadline for public comment is June 13, 2016.

The FTC’s recent notice invites public comments on four issues:

  1. Whether the TSR’s disclosure, recordkeeping, and reporting requirements are necessary, and whether the resulting information is useful;
  2. The accuracy of the FTC’s estimates regarding the burden that such information collection requirements impose on covered entities;
  3. How the FTC can improve the quality, utility, and clarity of the disclosure requirements; and
  4. How to minimize the burden of providing the required information to consumers.

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Walgreens’ Settlement—Beware How you Describe Your Deals

The Office of the New York Attorney General entered into a $500,000 settlement with Walgreens last week over false pricing information in its Walgreens and Duane Reade stores in New York.

By kolijoriverhouse [CC BY-SA 4.0], via Wikimedia Commons

The New York Attorney General began investigating Walgreens’ advertising and pricing practices in early 2014. Investigators visited a sampling of Walgreens and Duane Reade New York stores and reportedly found a series of pricing errors and misleading advertisements in violation of New York law. Some of the alleged practices are run-of-the-mill mistakes—price tags displaying expired pricing information and consumers paying more at the register than the advertised price.

Other alleged practices involved overhyping deals. For example, some products were advertised as “Smart Buy” or “Great Buy” when in reality the advertised price was no different than the original selling price. In other instances items were advertised as “Last Chance” or “Clearance” implying the items would be on sale for only a limited time when in fact that was not case. Finally, the complaint alleges that some of the advertisements implied that consumers would receive an immediate cash discount on certain items by stating “like paying . . .” or “like buying . . .” when the discount could only be applied to future purchases and came with conditions.

The settlement terms themselves are also worth noting. Walgreens agreed to conduct employee training and to submit to internal and external compliance audits.

So in an era when it is increasingly harder to rise above the clutter, make sure your marketers steer clear of overdramatizing deals.

Don’t Import Compliance Troubles—New Supply Chain Law Goes into Effect

In March, a new federal law quietly went into effect that places additional pressure on importers to develop compliance systems for their supply chains, including identification of items potentially made with forced labor. The Trade Facilitation and Trade Enforcement Act of 2015 (Trade Act) prohibits the import into the United States of goods, wares, articles, and merchandise mined, produced, or manufactured in a foreign country by convict, forced, or indentured labor.

The new law comes at a time when federal and state regulators are turning their focus to supply chain management as a way to combat forced labor overseas. At the National Association of Attorneys General (NAAG) 2016 Winter Meeting, for example, Attorney General Loretta Lynch gave a speech noting that the Department of Justice would prioritize human trafficking for law enforcement at all levels. Susan Coppedge, Ambassador-at-Large to Monitor and Combat Trafficking in Persons and Senior Advisor to the Secretary of State, also presented to the AGs at NAAG. Given this scrutiny, any company—regardless of industry—that imports goods from overseas should review its supply chain management policies to ensure that they are appropriately tailored to address this issue.

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It’s Not Nice to Fool Mother Nature: FTC Takes Aim at “All Natural” Claims

By m01229 from USA [CC BY 2.0], via Wikimedia Commons

While the Food and Drug Administration (FDA) is still considering whether to issue guidance over the use of the term “natural” in food products, the Federal Trade Commission (FTC) is steamrolling ahead this week with a flurry of settlements and a complaint over deceptive use of the terms “all natural” and “100% natural” in the advertising of sunscreens, shampoos, and other styling/beauty products. However, while there have been vigorous debates in the courts and elsewhere over whether natural ingredients must be non-GMO, and whether certain highly processed natural ingredients such as high fructose corn syrup qualify as “natural,” the FTC’s cases went after some low-hanging, not very natural, fruit. The FTC’s four proposed settlements and new administrative complaint over the use of the phrase “all natural” all involved products that appear to contain clearly synthetic ingredients. (In this regard the FTC’s actions parallel the warning letter FDA issued to Alexis Foods and their frozen potato product.)

The four proposed settlements are with Trans-India Products, Erickson Marketing Group, ABS Consumer Products, and Beyond Coastal.

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FinTech and Marketplace Lenders under Scrutiny

FinTech and marketplace lenders are fast realizing that the Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC), and even state regulators are focused on their activities. Recent announcements that the CFPB is taking consumer complaints on marketplace lenders and has established an office of small business lending means that lenders and service providers should prepare for the possibility of investigations and examinations in the not too distant future. At the same time, the FTC has announced a “Financial Technology Forum on Marketplace Lending” series, starting on June 9, 2016, to explore the growing world of marketplace lending and its implications for consumers. And, at the state level, the California Department of Business Oversight recently released a survey on marketplace lending in California finding that consumer and small business lending increased by 936% from 2010-2014, to $2.3 billion.

All of these developments point to the potential for increased federal and state regulatory scrutiny of marketplace lending and their service providers. Below are five tips for managing enforcement and compliance risk, along with several hyperlinks to relevant articles and presentations. Continue Reading

Comings and Goings at the FTC and an Interesting Supreme Court Opinion on Asset Freezes

Tug McGraw

Photo by slgckgc [CC BY 2.0] via flickr

Folks tend to stay at the Federal Trade Commission’s (“FTC”) Bureau of Consumer Protection for a long time.  One notable example is Steve Baker, who just ended a 27-plus-year run as the Director of the Midwest Regional Office in Chicago (“MWRO”).  Prior to that Steve was an attorney advisor to Daniel Oliver.  Under Steve’s leadership, the MWRO was a zealous enforcer of consumer protection laws, especially in the telemarketing and Internet marketing areas.  Steve also worked tirelessly to build ties between the FTC and state and local law enforcement entities.  On a personal note, Steve was generous with his time and experience with me when I was trying to learn how to be a regional director.  Todd Kossow now leads the MWRO.

Also moving on from the FTC is Rob Kaye, who had been serving as the Bureau of Consumer Protection’s first Director of Litigation.  Rob moves to the Department of Education (“DOE”) as the Chief Enforcement Officer for Federal Student Aid.  Rob’s arrival at DOE probably signals that DOE will likely continue to be actively involved in policing alleged deception in the student aid arena.  Liz Tucci succeeds Rob. Continue Reading

Don’t Browse Over Your Website Disclosures

Litigation surrounding the enforceability of website terms isn’t new.  Indeed, back in 2014, we blogged about the Nyugen case. Yet, courts continue to grapple with the question of what constitutes an adequate disclosure and binds website visitors to the terms and conditions of a service agreement.

Last month, the Seventh Circuit decided in Sgouros v. Transunion Corp. that an online browsewrap contract was not binding because it did not provide notice that the customer was subject to the agreement.  The plaintiff had purchased a credit score from a website, but claimed that he later found out that the credit score he purchased was 100 points higher than one he later received.  As a result, he filed a putative class action alleging violations of the Fair Credit Reporting Act and state deceptive business practice laws.  TransUnion sought to compel arbitration based on its website terms.

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The Phone Keeps Ringing . . . But is it a Residential Line and Was an Autodialer Used?

As the weather changes and I reach for the allergy medicine in my bottom desk drawer, I’m reminded of that old proverb, “March winds and April showers bring forth May flowers.”  March winds also bring plenty of pollen and, apparently, a flurry of activity on the Telephone Consumer Protection Act (“TCPA”) front regarding what constitutes an autodialer and how to determine whether a telephone number is a residential one as opposed to a business line.
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FTC Creates Compliance Tool for Mobile Health App Developers; Simultaneously Releases Business Guidance

The Federal Trade Commission (FTC or the Commission) announced yesterday that it has created a web-based guidance tool for developers of health-related mobile applications (health apps).  FTC did not take this action alone, but rather developed the tool in conjunction with the Department of Health and Human Services’s (HHS) Office of the National Coordinator for Health Information Technology (ONC), Office for Civil Rights (OCR), and the U.S. Food and Drug Administration (FDA).  As some readers will recall, FDA is not new to this space, having released a seminal guidance document on mobile medical apps early last year.  In its guidance document, FDA addresses, among other things, those apps that FDA intends to regulate as medical devices under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and those for which the agency intends to exercise its enforcement discretion.  OCR has also recently issued guidance in this area, providing examples of scenarios where the Health Insurance Portability and Accountability Act (HIPAA) regulations might apply to health information created, managed, or organized through the use of health apps.

The FTC’s new health apps tool asks developers a series of high-level questions about the nature of the app, including questions about its function, the data it collects, and the services it provides to users.  These questions include the following:  Continue Reading

Consumer’s Green Tea Class Action De-Caffeinated

Image by lungstruck [CC BY 2.0] via flickr

Image by lungstruck [CC BY 2.0] via flickr

C.S. Lewis once wrote that “[t]ea should be taken in solitude.”  A California federal court agrees, ruling Tuesday that a consumer’s false labeling claims against tea manufacturer R.C. Bigelow could not proceed as a class action due to the lack of an acceptable classwide damages model as well as standing.

The consumer’s complaint targeted two antioxidant claims on Bigelow’s green tea product labels: “Healthy Antioxidants” and “Mother Nature gave us a wonderful gift when she packed powerful antioxidants into green tea.”  Plaintiff alleged that these were unlawful and unapproved health claims under California law because Bigelow’s green tea products “fail[ed] to meet the minimum” nutritional and antioxidant requirements to make such claims.  According to plaintiff, he based his purchase decision “in substantial part” on these claims.

Plaintiff moved to certify a statewide class of all persons in California who purchased a variety of Bigelow’s green tea products, which Bigelow opposed.  The court denied the motion, concluding that plaintiff had failed to show that damages were capable of being measured on a classwide basis. Continue Reading