The FTC is off to the races with another proposed rulemaking. On June 23, the FTC, by a 4-1 vote, issued a notice of proposed rulemaking (NPR) to combat what it perceives as “junk fees” and “bait-and-switch advertising tactics” in the auto sales industry. Congress gave the FTC the authority to write rules governing the retail sale of automobiles, using APA rulemaking and not the more cumbersome Magnuson Moss rulemaking that the FTC normally must follow in consumer protection rulemakings. This authority is no small matter, as on June 30, the Supreme Court issued its decision in West Virginia v. EPA, which will make rulemakings by the FTC and other government agencies more challenging.

The FTC’s proposed rule would prohibit certain misrepresentations, require certain disclosures, prohibit certain “add-ons,” and require more thorough recordkeeping. First, among a whole host of potential misrepresentations, the proposed rule includes prohibiting misrepresenting regarding vehicle costs; terms of purchasing, financing, or leasing; and the availability of vehicles at an advertised price.

Continue Reading FTC Starts the Engine on Car Sales Fees and Advertising Rulemaking, but Other Rulemaking Faces Major Questions

Constant connectivity through smartphones has ushered in a new way for small businesses to connect with potential customers and gig workers looking for flexible employment. The emergence of companies like Uber, GrubHub, AirBnB, DoorDash, TaskRabbit, and Angie’s List has allowed for greater participation in today’s booming gig economy, with 16% of all U.S. adults having reported earning money through an online gig platform in a 2021 survey.

But as more customers, small businesses, and workers rely on these platforms, scrutiny from regulators has also increased. For years, this scrutiny has been focused on how to legally classify workers participating in these platforms and whether the services being performed by gig workers should be subject to the same regulatory and licensing requirements as traditional businesses. More recently, however, the Federal Trade Commission (FTC) and state attorneys general have set their sights on the gig economy and practices they view as deceptive and unfair, which should put all gig platforms on high alert.

In Part I, we provide an overview of the gig economy’s legal landscape. In Parts II to IV, we discuss the agencies’ priorities in this area.

Continue Reading Gig Platforms, Wake Up. All Eyes Are Upon You.

Last week, the FTC brought and settled enforcement actions against two manufacturing companies for allegedly limiting customers’ right to repair purchased products under unlawful warranty terms. The FTC alleged that the two companies, Harley-Davidson Motor Company Group, LLC (a motorcycle manufacturer) and MWE Investments, LLC (a Westinghouse outdoor generator maker), acted illegally when using voidable warranties that required customers to use manufacturer-supplied parts and service instead of allowing customers to use independent dealers to either supply parts or perform repairs. In the settlements, the FTC ordered both companies to remove these warranty terms, admit to customers what they did, and ensure fair competition between dealers and independent third parties providing repair services and parts.

According to the FTC’s complaints against Harley-Davidson and MWE Investments, the companies’ unlawful warranty terms violated the Magnuson-Moss Warranty Act for conditioning warranty coverage on using the companies’ respective parts or services without either seeking the FTC’s waiver or providing the parts or services free of charge under the warranty. The FTC also alleged the manufacturers acted deceptively in failing to disclose these conditions properly. The FTC alleged that Harley-Davidson also violated the FTC’s Rule Governing Disclosure of Written Consumer Warranty Terms and Conditions (“Disclosure Rule”) when it failed to provide a single document containing the warranty terms, so customers would need to contact authorized dealers to understand the full terms of their warranties.

Continue Reading Repair Your Warranty Terms: FTC Takes Action Against Unlawful Repair Restrictions

Everyone remember that Alvarez v. Sunshine Life & Health Advisors LLC putative Florida Telephone Solicitation Act (FTSA) litigation we’ve covered? You know, the one where the plaintiff’s counsel argued that the FTSA extends to text messages, whereas its federal counterpart, the Telephone Consumer Protection Act (TCPA), “doesn’t even regulate text messages”?  It’s the case where the state trial court (wrongly) denied the defendant’s motion to dismiss—the first dismissal decision in an FTSA case, although it had virtually nothing to do with the substance of the statute—finding that the receipt of two allegedly unsolicited, autodialed marketing text messages was enough to confer standing under Florida law. Yeah, that Alvarez case.

Well, several weeks ago, the parties went to mediation. On June 13, 2022, the mediator filed his mediation disposition report noting that a settlement agreement had been reached. While other FTSA cases have settled on individual bases (a lot of them, in fact), word around the campfire is that the forthcoming settlement in Alvarez has been reached on a class basis. If this is true, it appears that this will be the first class settlement in an FTSA case. The parties apparently are in the process of formalizing the settlement agreement, and the motion for preliminary approval should be filed in relatively short order. Once that motion and the class settlement agreement hit the public docket, we will update this post with the details. So, stay tuned.

Webinar | June 28, 2022 | 2:30 – 3:00 p.m. ET | REGISTER

Venable partners Len Gordon and Alexandra Megaris will present “What You Need to Know About FTC’s Proposed Changes to Its Endorsement Guides.” The Endorsement Guides, first issued in 1980 and last amended in 2009, reflect the Commission’s interpretation of how the FTC Act applies to endorsements and testimonials in advertising. This webinar will cover how the FTC’s proposals could impact social media marketing and use of customer reviews.

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Webinar | June 23, 2022 | 2:00 – 3:00 p.m. ET | REGISTER

Effectively marketing your company’s charitable giving efforts requires not only the application of creative advertising principles, but an underlying familiarity with applicable responsibilities under federal, state, and even local laws. From sweepstakes and contests, to commercial coventurers’ charitable sales promotions, customer donation programs, and more, various legal requirements will affect how your company structures its next giving campaign, what you say to the public about it, and where you trigger regulatory obligations as a result.

In this program, Melissa Steinman and Cristina Vessels, whose practices focus on the related areas of prize promotions, corporate giving, and charitable marketing campaigns, will explain this constantly evolving area of law so that when your company considers its strategic relationships with nonprofits, you will be well equipped to navigate this highly regulated space quickly, efficiently, and effectively.

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Last week, the Federal Trade Commission filed a lawsuit in federal court in California against Gravity Defyer Medical Technology Corporation alleging the company made unsubstantiated claims that its footwear reduces knee, back, ankle, and foot pain and helps with conditions such as plantar fasciitis, arthritis, joint pain, and heel spurs.

But the FTC’s case is less about footwear than it is about the imaginative ways the agency continues to find ways to pursue monetary relief in the wake of AMG Capital Management LLC v. FTC. There are a few things here worth discussing.

First, the FTC is seeking civil penalties. How, you might ask? The complaint alleges that Gravity Defyer’s owner, Alexander Elnekaveh, violated a 2001 FTC consent order involving his former business, Gadget Universe, which sold an automotive aftermarket fuel-line magnet device. Under the order, Elnekaveh and Gadget Universe agreed to “not mispresent, in any manner, expressly or by implication, the existence, contents, validity, results, conclusions, or interpretations of any test, study or research.”

Continue Reading Tied Up with the FTC: Agency Dusts Off 20-Year-Old Settlement to Pursue Civil Penalties

The Federal Trade Commission has requested public input about potential updates to its “Dot.Com Disclosures.” The guidance document was last updated nearly a decade ago and has not addressed much of the new technology that has emerged and the evolution in online advertising. As a result, the agency’s call for comments will allow those interested to provide feedback and suggestions to modernize the guides. Comments are due by August 2, 2022.

The FTC has asked for industry stakeholders’ input on many issues, including:

Continue Reading FTC Asks Online Advertisers to Weigh in on Dark Patterns, Calls for Comment on Its .Com Disclosures Guidance

On March 10, Atrium Hospitality LP entered into a consent decree with the Federal Communications Commission. The agreement included a burdensome compliance plan and a $35,000 penalty for the hotel and asset management company. Atrium is just the most recent organization whose primary area of work extends beyond telecommunications to be investigated and ultimately penalized by the FCC.

In many industries, cell phones still have not replaced hand-held radios, which are often used for internal communications by security services, cleaning staff, and maintenance teams. These radios are used at manufacturing and industrial facilities, hotels, golf courses, athletic stadiums, and many other facilities that rely on private radios for staff communication.

Continue Reading Use of Private Radios by Industry Increases Risk of FCC Non-Compliance

As readers of this blog know, several states recently amended (or attempted to amend) their telemarketing laws, especially as they relate to regulating autodialers. While they don’t affect autodialing, telemarketers should take notice of the amendments to Washington state’s telemarketing statutes (available here), which go into effect June 9. And both houses of the New York General Assembly have passed a bill amending its Do Not Call Law (although it has not yet been signed by the governor).

About a week ago, Oklahoma passed its Telephone Solicitation Act of 2022, which goes into effect at the beginning of November. The Oklahoma law is patterned after the Florida Telephone Solicitation Act (FTSA), which was amended in July 2021 to allow for a private right of action. After the July 2021 FTSA amendments went into effect, hundreds of class actions were filed alleging violations of Florida’s law, prompting the Florida legislature to volley about several additional proposed amendments earlier this year. However, in March 2022, at the end of the legislative session, the various proposed FTSA amendments were “indefinitely postponed and withdrawn from consideration.” At least for the time being . . .

Back to Washington and New York. There are several changes to those states’ laws that are of importance to telemarketers. Washington’s amendments include, among other things:

Continue Reading Washington State and New York Join the State Telemarketing Law Amendment Fray