Senate Banking Committee Holds Hearing on Virtual Currencies – Warns of Celebrity Endorsements

virtual currencyThe Senate Committee on Banking, Housing, and Urban Affairs held a hearing on Tuesday on virtual currencies and the role of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in overseeing the virtual currency industry. Witnesses included SEC Chairman Jay Clayton and CFTC Chairman Christopher Giancarlo.

A key takeaway of the hearing was a concern among regulators and Committee members of opportunistic fraud taking place amid the hype around virtual currencies, also commonly known as cryptocurrencies.

Among these concerns were those involving celebrity endorsements of token sales in Initial Coin Offerings (ICOs). In some cases these sales may be fraudulent. CFTC Chairman Giancarlo noted one example where his agency took action against a company that solicited customers for a virtual currency known as My Big Coin. Mr. Giancarlo stated that within the agency that coin came to be known as “My Big Con,” as the company used the funds to purchase personal luxury items rather than using the funds for their purported purposes.

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FDA, CPSC & the Need for Speed: Recent Actions Highlight Importance of Promptly Reporting Product Safety Issues

New compliance rulesOn consecutive days last month, both the Consumer Product Safety Commission (CPSC) and the U.S. Food and Drug Administration (FDA) made clear that delays in reporting potential product hazards or defects could significantly damage a company’s reputation and bottom line. The message from these agencies is clear—manufacturers and distributors of products regulated by CPSC and/or FDA would be wise to ensure their product quality processes and compliance programs enable swift communication to regulators and the public. On January 18, FDA Commissioner Scott Gottlieb announced the publication of a draft guidance that “better describes the FDA’s policy on public warning and notification of recalled products as part of [the agency’s] effort to ensure better, more timely information reaches consumers.” The next day, the U.S. Department of Justice announced that a federal district court awarded $5 million in civil penalties in an action brought on behalf of the CPSC against a pharmaceutical company for alleged violations of the Poison Prevention Packaging Act (PPPA) and Consumer Product Safety Act (CPSA), including its failure to “immediately” notify the CPSC once it discovered that its products were not compliant with the PPPA.

The FDA’s draft guidance applies to voluntary recalls of all products under FDA’s purview, including food, drugs, medical devices, and cosmetics. It comments on a variety of issues associated with product recalls, including whether the general public should be informed, and, if so, what the content and method for communication should be. With respect to timing, the draft guidance notes that the agency’s expectations will be driven largely by the nature of the risk presented by the individual recall, although it generally expects firms to issue a public warning within 24 hours of FDA notifying the firm that it believes a public warning is appropriate.

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Big Game Fun Includes Viking Disclaimers and Fake News

football and foam fingersThis may have been the first year we were more into the game than the ads as it was a well-matched nail biter right to the end, but this is advertising’s biggest night of the year as well as football’s and we were once again not disappointed. While views is likely the best measure of an ad’s success, here is the annual “All about Advertising Law Round Up”.

Our favorite campaign was the Australian Tourism ad featuring Chris Hemsworth and Danny McBride. The campaign encouraged tourism under the rubric of filming of a Crocodile Dundee sequel. The movie has its own IMDb page and related Twitter hype. But there is no movie. It is all part of the tourism ad campaign. This is fake news without the political baggage, creating buzz and interest for the product offering. Well played!

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CFPB’s Constitutionality Affirmed in En Banc DC Circuit Ruling

Sitting en banc, the U.S. Court of Appeals for the DC Circuit ruled that the Consumer Financial Protection Bureau’s (CFPB) structure is constitutional. By a vote of 7 to 3, the full panel of judges reversed an earlier panel decision that took issue with the independent agency’s single-director structure. The en banc decision left intact the DC Circuit panel’s interpretation of the Real Estate Settlement Procedures Act (RESPA). Ultimately, the court remanded the case back to the Bureau for further proceedings consistent with the RESPA-related holdings of the court.

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Say Goodbye to Credit Card Signature Requirements

credit cardsThe days of signing your grocery receipt may be over soon, as the four major credit card brands (American Express, Discover, Visa, and Mastercard) are each making efforts to do away with signatures for various credit card transactions. The extent and geographic reach of these changes, however, are different for each brand, but one commonality is that the changes will begin in April 2018. In particular,

  • MasterCard will no longer require signatures for purchases in the U.S. and Canada;
  • Discover is doing away with the requirement in the U.S., Canada, Mexico, and the Caribbean;
  • American Express is eliminating the requirement globally; and
  • Visa is making the signature requirement optional for EMV contact or contactless chip-enabled merchants in North America.

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“Everyone Does It” Doesn’t Fly at NAD

ticket stubsWhen a widespread industry practice comes under regulatory scrutiny, companies that end up in the crosshairs sometimes fall back on the “everyone does it” defense. This argument has an intuitive appeal in the consumer-protection context—consumers are presumably aware of practices that are common across an entire industry, the thinking goes, and they make purchasing decisions with knowledge of these practices.

The online ticket reseller StubHub recently tried this approach at NAD. It didn’t go over so well.

NAD launched an inquiry into StubHub’s fee-disclosure practices to determine whether consumers were being misled about the total cost of tickets sold on the site because StubHub does not disclose the service fees when it initially displays the ticket price. StubHub discloses the fees, which can range from 24% to 29% of the ticket cost, only at the time of checkout, after the consumer has already made the decision to buy the tickets. NAD was concerned that consumers do their comparative shopping when they see the initial price display—not at the time of checkout, when the true cost of the ticket is revealed—and thus are misled into believing that the StubHub tickets are cheaper than they are.

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FTC Orders – Doesn’t Warn – Bollman Hat Company to Cease Deceptive “Made in USA” Claims, Licensing “American Made Matters” Seal to Others without Proper Vetting

As we reported a few months ago, the FTC has increased its enforcement of its “Made in USA” requirements – typically through warning letters rather than formal administrative or legal proceedings. This week’s proposed Consent Order against Bollman Hat Company and SaveAnAmericanJob, LLC demonstrates that if companies will not informally agree to corrective action to qualify or discontinue “Made in USA” claims that don’t meet the standard, the FTC will not blink but will go forward to bring a formal enforcement action.

Despite touting its brand as “Made in the USA since 1868” and “Made in in the USA for 100 Years or More,” the FTC alleged that over 70% of Bollman’s hat styles were wholly imported as finished hat products, and many of the remaining styles also contained significant imported content.

Bollman also created an “American Made Matters – Choose American” (AMM) seal to apply to its products, and then began licensing the seal to other companies through its wholly owned subsidiary SaveAnAmericanJob, LLC.

The qualifications to “earn” the seal fell far below the “all or virtually all” standard needed to make a “Made in USA” claim. AMM members were required to self-certify that at least 50% of the cost of at least one of their products was incurred in the U.S., and further that final assembly or transformation took place in the U.S. After self-certifying and paying the $99 annual licensing fee, Bollman and SaveAnAmericanJob would feature those third-party products and brands on its AMM website. The FTC alleged numerous problems with this seal.

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Vegas Golden Knights Brand in Free-Fall?

It looks like the Vegas Golden Knights will need their own parachute, in the form of a strong trademark attorney, to escape potential brand free-fall. While U.S. government agencies have not always been the most effective in policing trademark rights, it appears the Vegas hockey team is now in their sights.

Earlier this month, the United States Army instituted trademark oppositions against two applications filed by the Las Vegas Golden Knights hockey team. The Army is alleging likelihood of confusion with the brand of its Golden Knights parachute demonstration team, as well as dilution and false suggestion of a connection.

The opposition is the culmination of a dispute that started with the unveiling of the NHL expansion team’s name in November 2016. At that time, the Army indicated it was evaluating the name for potential likelihood of confusion concerns; however, the NHL Golden Knights dived into their first season without changing the name.

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Does Your Company Website Comply With Title III of the ADA?

Is your website covered by the Americans with Disabilities Act? The short answer is: possibly. This area of the law continues to evolve, with differences from jurisdiction to jurisdiction based on the type of website. But make no mistake: lawsuits alleging lack of website accessibility are hot. The most common allegation is that the company website is inaccessible to visually-impaired customers, although some cases now involve mobile apps. Such customers often rely on screen-reader software like JAWS or NVDA to interact with and access a site’s content. If the website is not compatible with this or similar screen-reader technology, most visually-impaired customers will not be able to use the website.

Companies seeking to navigate these issues should start by addressing two basic questions: (1) Does your website engage in commercial activity for the benefit of the general public; and if so (2) Will the law treat your website as a public accommodation, or the service of a public accommodation? If your website sells goods or services directly to the public, or if it engages in sufficient commercial activity, it may be covered as a “sales” or “service” establishment under the ADA. If it is covered, many jurisdictions will require you to provide a website that is accessible to visually-impaired consumers and other individuals with disabilities, particularly if your website has a “nexus” to the goods or services sold out of a brick-and-mortar store.

Here are the basics of what you need to know to assess whether your website is covered and, if so, what you should do about it.

Addition of Heather Capell Bramble Strengthens Venable’s Consumer Products and Product Liability Practices

We don’t like to toot our own horn in blog posts too often, but the arrival of Heather Capell Bramble in Venable’s Washington, DC office was a development we thought worthy of some tooting and something important to all of you as well.

Heather joins Venable from the U.S. Consumer Product Safety Commission (CPSC), where she served as chief counsel and policy advisor to Commissioner Marietta Robinson. During her time at the CPSC, she was involved in a wide range of issues, including providing advice and counsel on all proposed consumer product regulations, and mandatory standards, as well as product recalls, Section 15(b) reporting, administrative litigation, and enforcement and settlement agreements.

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