On February 11, 2024, a new law went into effect in New York, establishing important limits and rules for surcharging. Enacted in December 2023, the new statute has a price disclosure component, detailing how surcharge prices are communicated, and a surcharge price cap component. The law also imposes a $500 civil penalty for each violation, and it can be enforced by municipalities and local governments.

Surcharge Price Disclosure: First, the law provides that any seller imposing a surcharge must “clearly and conspicuously post the total price for using a credit card in such transaction, inclusive of [the] surcharge[.]” This means that the final sales price of any such transaction cannot be greater than the posted price. It would not be sufficient to include a credit card surcharge warning on a price tag or menu, or on a sign by the register.

Surcharge Price Cap: Second, the law provides that any such surcharge may not exceed the amount of the surcharge charged to the business by the credit card company for such credit card use.

Continue Reading New York Implements a New Surcharge Law: What the Changes Mean for Shoppers and Businesses

Join us as we spotlight select chapters of Venable’s popular Advertising Law Tool Kit, which helps marketing teams navigate their organization’s legal risk. Click here to download the entire Tool Kit, and tune in to the Ad Law Tool Kit Show podcast, to hear the authors of this chapter dive deeper into the issue of lead generation in this week’s episode.

In the evolving world of lead generation and performance-based customer acquisition, the quest for profits can lead to big legal risks, some of them too large for advertisers that buy leads through third parties. Advertisers that harness the power of lead generation should consider the best practices listed below to mitigate legal risk.

Lead generation best practices:

Understand basic advertising law. Advertising must be truthful and not misleading. Marketers and lead generators should understand what can make an advertising claim “deceptive,” as well as the appropriate use of disclaimers.

Understand laws regulating communications with leads. The Telephone Consumer Protection Act, CAN‑SPAM Act, and state laws regulating commercial emails, such as California Business & Professions Code Section 17529, all regulate how advertisers can communicate with leads they purchased via outbound phone calls, text messaging, and commercial email.

Recognize the risk of noncompliance. The Federal Trade Commission (FTC) is cracking down on deceptive practices by affiliate marketers and lead generators. State attorneys general are examining the roles affiliates, merchants, and/or networks play in knowingly facilitating unfair and deceptive practices. On top of this, the Consumer Financial Protection Bureau (CFPB) is scrutinizing lead generation for consumer financial services. The consequences for noncompliance can include mandatory refunds, costly fines and civil penalties, consent orders with 20‑year reporting requirements, and/or outright bans from a specific practice. Likewise, private class action plaintiffs are pursuing costly money judgments for consumers nationwide, mostly relating to how lead purchasers are communicating with the leads they purchased.

Stay on top of online contract formation best practices. Website and app terms and conditions act as a legally binding contract with users and can include important defenses for lead generators (e.g., arbitration agreements and class waivers). Online contracts with consumers—including the “call to action” and how consumers manifest assent—should be considered when designing lead generation campaigns.

Understand vertical-specific laws. Debt relief services, mortgage assistance relief services, mortgage companies, small-dollar lending, auto service warranties, insurance, health and beauty, education, and other industries are subject to numerous industry‑specific laws and regulations. Marketers in these verticals should understand the applicable law, as should anyone selling leads to those marketers.

Know your leads. Know whom you are buying leads from and whom you are selling them to. Understand how the leads originated and were solicited. Developing qualification programs and standard operating procedures can help mitigate legal risks.

Comply with DNC. Calling a number on the Do Not Call Registry is forbidden unless an established business relationship exists. Whether such a relationship exists may require specific actions by the lead generator.

Be careful with upsells, cross-sells, and advance consent. These areas are favorite targets of regulators and class action plaintiffs. Know the federal and state laws and regulations governing these practices and stay up to date as they evolve.

Establish vendor contractual protections. Make certain written agreements are very clear regarding ownership, exclusivity, payment, terms, and liabilities in the event of a legal dispute or a government investigation/enforcement action. They also should clearly state the nature of the leads and whether they meet the specific requirements for which they are purchased (prior express written consent to text, for example).

Protect and safeguard private information. Understand the promises about personal information made to consumers throughout the lead generation process and abide by those promises.

Watch endorsements and testimonials. Endorsers and marketers may be held liable for statements made by endorsers. Advise endorsers of their disclosure obligations. Monitor endorsements to ensure compliance with FTC guidance and take corrective action if needed.

To learn more about lead generation, contact Jonathan Pompan or Ari Rothman. For more insights into advertising law, bookmark our All About Advertising Law blog and subscribe to our monthly newsletter.

On January 29, 2024, Congressman Frank Pallone, Jr. introduced the Do Not Disturb Act, a bill that would amend the Telephone Consumer Protection Act (TCPA) and “fix” the Supreme Court’s ruling in Duguid that limited the definition of “automatic telephone dialing system” (ATDS).

Robocalls, the New ATDS

The bill would delete the term “automatic telephone dialing system” from the TCPA and would instead replace it with “robocalls.” The bill defines “robocalls” as calls and text messages sent using equipment that makes calls or sends text messages to stored telephone numbers or telephone numbers generated by a random or sequential number generator, or using an artificial or prerecorded voice or an artificially generated message.

Continue Reading New Bill to Modernize the TCPA Would Significantly Expand Potential Liability

On Tuesday, February 13, the Federal Trade Commission (FTC) held an informal hearing regarding the Proposed Rule on the Use of Consumer Reviews and Testimonials. Three interested parties each had the opportunity to submit 30 minutes of oral commentary on the proposed rule and generally voiced concerns about the rule’s ability to address the issues surrounding consumer reviews.

The FTC’s proposed rule seeks to prohibit certain unfair or deceptive acts involving consumer reviews and testimonials. Specifically, it would prohibit buying positive reviews, selling or obtaining fake reviews, suppression of negative reviews, and selling fake social media indicators. Perhaps most importantly, if the rule becomes final, the FTC would be able to seek civil penalties against those engaged in violative review and testimonial practices. Previously, the FTC has only been able to obtain injunctive relief when combating fake reviews, and would have to rely on state attorneys general to join a suit to obtain monetary relief.

Continue Reading FTC Contemplates Rule Aimed at Combating Deceptive Consumer Reviews

Episode 4 of the Ad Law Tool Kit Show, “Lead Generation,” is now available. Listen here, or search for it in your favorite podcast player.

In the realm of lead generation and performance-based customer acquisition, pursuing profits carries significant legal risks. In this episode, I talk to Venable partners Jonathan Pompan and Ari Rothman to talk about how advertisers should heed crucial best practices to mitigate these risks.

Venable’s Ad Law Tool Kit Show will help you and your organization identify and avoid potentially problematic advertising practices. Over the course of 12 episodes, we examine the increasingly complex regulatory landscape that governs the promotion of goods and services—from negative option marketing to copyright protection and influencer endorsements.

Continue Reading Listen to Episode 4 of Venable’s Ad Law Tool Kit Show – “Lead Generation”

Last month, New York quietly proposed a bill intended to protect children from advertising of unhealthy foods and the “disastrous health outcomes that follow the overconsumption of these products,” suggesting that such marketing is “inherently misleading.” While the law’s stated goal is to protect children from these negative health consequences, the law goes much further and would open the floodgates to litigation.

The law would expand New York’s Agricultural and Markets Law to state “[a]n advertisement concerning a food or food product shall not be false or misleading in any particular” and require courts to give special consideration to advertising directed at a child.

However, it would also amend New York GBL 350, New York’s general false advertising statute, by requiring courts to consider specific additional factors when determining whether any advertising is false or misleading. Specifically, a court would need to consider under GBL 350 such factors as “whether the advertisement targets a consumer who is reasonably unable to protect their interests because of their age, physical infirmity, ignorance, illiteracy, inability to understand the language of an agreement, or similar factor.”

Continue Reading New York Proposes Bill Targeting Unhealthy Food Advertising to Children, with Broader Implications

It’s that time of year again! The 12th edition of Venable’s popular Advertising Law Tool Kit is now available for download. This annual resource compiles a broad spectrum of marketing-related topics, background information, and checklists into an easy-to-access guide, authored by some of the most experienced attorneys in the industry. New and updated sections include marketing to children, telemarketing and texting, internet-based advertising, and many more.

Download this year’s Tool Kit or bookmark the link to our e-book for quick access to these industry best practices.

If you have specific questions after reading any of the Tool Kit‘s 40 helpful chapters, don’t hesitate to contact our authors to arrange a conversation or to suggest a topic for future editions.

We also invite you to tune in to the Ad Law Tool Kit Show, our new podcast that examines the increasingly complex regulatory landscape, and secure your seat for Venable’s 10th Advertising Law Symposium on March 21 in Washington, DC. Finally, if you haven’t already, be sure to subscribe to this award-winning blog.

Join us as we spotlight select chapters of Venable’s popular Advertising Law Tool Kit, which helps marketing teams navigate their organization’s legal risk. Click here to download the entire Tool Kit, and tune in to the Ad Law Tool Kit Show podcast, to hear the authors of this chapter dive deeper into the issue of negative option and continuity marketing in this week’s episode.

The Federal Trade Commission (FTC), state attorneys general, and class action plaintiffs continue to scrutinize negative option and continuity offers. Negative option marketing can include pre-notification negative option plans, continuity programs, automatic renewals, and free-to-pay (or discounted price-to-pay) conversions.

The key to success in avoiding investigations and liability can be as simple as making clear and complete disclosures (prominent, clearly explained, and placed where they will be read and where consumers’ attention is focused); obtaining consumers’ express, informed affirmative consent to the negative option offer; providing a simple cancellation mechanism; sending post-order confirmations and renewal reminders; and ensuring that refunds and cancellations are processed in accordance with disclosed policies.

Continue Reading Negative Option and Continuity Marketing: An Excerpt from the Advertising Law Tool Kit

Moving at rapid speed, the Federal Communications Commission (FCC) has just announced its unanimous adoption of a new Declaratory Ruling finding that voice calls using artificial intelligence (AI)-generated voices fall under the Telephone Consumer Protection Act (TCPA).

The ruling takes effect immediately and gives state attorneys general powerful new tools to go after voice cloning scams. Under FCC rules, telemarketers that use robocalls subject to the TCPA are required to obtain prior express written consent from the consumer unless an exemption applies. The TCPA has always prohibited the use of both prerecorded and artificial voices but advances in AI-generated voices have prompted the FCC to specifically address their use.

In recent years, scammers and other parties have begun using AI to create fake and even “cloned” artificial voices, including those of celebrities, politicians, and even a call recipient’s family member. In this election season, there has been increasing concern about the use of voice clones to engage in voter suppression schemes.

Continue Reading FCC Clarifies TCPA Rules to Affirmatively Restrict Use of AI-Generated Calls

Episode 3 of the Ad Law Tool Kit Show, “Negative Option and Continuity Marketing,” is now available. Listen here, or search for it in your favorite podcast player.

Negative option and continuity offers have been under the microscope lately as the Federal Trade Commission (FTC), state attorneys general, and class action plaintiffs continue to scrutinize them.

In this episode, I talk to Venable partner and my co-host on this podcast, Shahin Rothermel, about how, in order to avoid investigations, marketers must ensure clear, prominent disclosures about offer terms, gain express consent from consumers, simplify cancellation processes, send confirmations and reminders … the list goes on. For companies that employ these marketing tools, what are the keys to avoiding liability?

Continue Reading Listen to Episode 3 of Venable’s Ad Law Tool Kit Show – “Negative Option and Continuity Marketing”