Last month, Florida governor Ron DeSantis signed into law amendments to the Florida Telephone Solicitation Act (FTSA) that scale back the scope and reach of the statute, bringing it in line with federal TCPA standards and providing needed comfort to good faith marketing companies operating in Florida.

Since the last statutory changes in July 2021, the FTSA has severely impacted telemarketing and text marketing businesses marketing to Florida residents and otherwise conducting business in the state. Like the federal Telephone Consumer Protection Act (TCPA), the FTSA prohibits using automated dialers to call or text consumers without their consent.

The Florida law also enables consumers to recover $500 per call and provides for up to $1,500 in treble damages for willful or knowing violations, plus reasonable attorney’s fees and costs. To date, the FTSA has also had much more lenient standards for bringing a claim, resulting in Florida being a hotbed of state-level litigation in the area.

Continue Reading Florida Adopts Changes to the Florida Telephone Solicitation Act

In the wake of AMG Capital Management v. FTC and Liu v. SEC, uncertainty has loomed as to how courts should measure the consumer redress available to the FTC under Section 19 of the FTC Act. Earlier this month, a court in the District of Arizona squarely addressed this issue.

Before AMG, the FTC used its ability to obtain injunctive relief in federal court under Section 13(b) of the FTC Act for violations of Section 5 of the FTC Act to also obtain equitable monetary relief. As we’ve previously discussed, the Supreme Court’s decision in AMG put an end to that. As a result, the FTC turned to its authority under Section 19 to obtain redress for rule violations.

The Supreme Court’s decision in Liu, which we also previously covered, held that equitable monetary relief cannot exceed a defendant’s gains after legitimate business expenses. This results in the quandary of how to reconcile this with the text of Section 19, which provides for “such relief as the court finds necessary to redress injury to consumers.”

Continue Reading Addressing the Redress: District Court Limits the Scope of FTC Consumer Redress for Rule Violations

Starting June 27, operators of online marketplaces will need to comply with a new federal statute, the Integrity, Notification, and Fairness in Online Market Retail Marketplaces for Consumers Act or INFORM Act.

The purpose of the law, which passed in December as part of the appropriations bill, is to help combat e-commerce fraud and the sale of counterfeit goods online. Although the law directly applies to the operators of these marketplaces, individuals and companies that sell their products on the marketplaces will be impacted.

The INFORM Act requires online marketplaces to undertake specific due diligence of “high-volume third-party” sellers. The statute defines high-volume third-party sellers as sellers that, in any continuous 12-month period during the previous 24 months, (1) have entered into 200 or more discrete sales or of new or unused consumer products and (2) have an aggregate total of $5,000 or more in gross revenues on the marketplace. The law does not apply to used goods or to services sold via online marketplaces.

Continue Reading New Law Regulating Online Marketplaces Will Impact Sellers, Too

The Supreme Court’s opinion last week in National Pork Producers Council v. Ross raises more questions than it answers regarding what state laws might violate the dormant Commerce Clause. California prohibits the in-state sale of pork that comes from pigs raised in “cruel” conditions—even though nearly all the pork sold in California is raised in other states. The Court upheld that law in the face of a dormant Commerce Clause challenge. But the Court’s fractured reasoning makes it hard to predict how other laws might fare.

As a refresher, the Dormant Commerce Clause stems from Congress’s Article 1, Section 8 authority to regulate commerce “among the several States.” In contrast to preemption, which limits states’ authority in an area where Congress has acted, the Dormant Commerce Clause limits states’ ability to regulate even when there is no relevant congressional action. 

Continue Reading Could Texas Ban the Sale of Union-Made Goods? After <em>National Pork Producers</em>, We Still Don’t Know

Last week, the Federal Trade Commission issued a Notice of Penalty Offense regarding substantiation for product claims to 670 companies in the health-related marketing space. This new Notice is yet another signal from the FTC that it intends to aggressively pursue its enforcement agenda using all available tools, including previously long-dormant avenues, like its Penalty Offense Authority.

Using its Penalty Offense Authority, the FTC can seek civil penalties from a company or individual that engages in conduct the FTC has determined was unfair or deceptive in a litigated administrative enforcement proceeding, provided the FTC can prove they had actual knowledge that the conduct was unlawful. The purpose of the notice letter is to allow the FTC to argue that the recipients had the requisite “actual knowledge” to support civil penalties of up to $50,120 per violation.

Continue Reading New Notice of Penalty Offenses: Are You in the Danger Zone?

The U.S. Supreme Court’s landmark decision unanimously reversing the Ninth Circuit in Axon Enterprise v. Federal Trade Commission is likely to represent a monumental shift in pre-enforcement challenges to administrative enforcement proceedings brought by federal agencies, including the FTC.

The decision held that agencies, including the FTC, are not empowered to decide whether their own enforcement procedures are constitutional, removing the thumb from federal agencies’ side of the scale. The Supreme Court emphatically ruled that such authority is reserved for the courts, and that collateral challenges to the constitutionality of administrative proceedings are appropriate.

As background, the FTC can elect to litigate a party’s alleged wrongdoing in an administrative proceeding overseen by an FTC-appointed administrative law judge (ALJ) or in a federal district court. Until the Supreme Court’s decision in AMG two years ago, the FTC’s favored enforcement path was to proceed straight to federal district court. With that avenue significantly constrained by AMG, the FTC is more frequently bringing enforcement actions in administrative proceedings before ALJs. Administrative proceedings, however, include several components that heavily favor the FTC. First, the fact finder in an FTC proceeding is appointed by the FTC. Second, the party subject to the enforcement proceeding is forced to wait until the proceeding ends to challenge the result in a federal appeals court. Moreover, the reviewing federal appeals court’s scope of review is limited to the record that the FTC produced.

Continue Reading U.S. Supreme Court Justices Thomas and Gorsuch Skeptical of ALJ Proceedings in <em>Axon Enterprise</em> <em>v. Federal Trade Commission</em> Decision

Last week, the Federal Trade Commission announced that its proposed rule replacing its Prenotification Negative Option Rule would result in new, expansive requirements for all forms of negative option offers, including automatic renewals, continuity plans, and free-to-pay conversations, made in all media, including Internet, telephone, in-person, and printed material.

Still subject to another round of comments, the proposed Rule Concerning Recurring Subscriptions and Other Negative Option Plans also features a federal requirement to provide an online cancellation mechanism to consumers who enroll in the negative option program online. That requirement is already imposed by laws in California, New York, and other states, and may be the least consequential of the proposed changes.

If enacted, the proposed rule would reach far beyond the scope of usual disclosure, consent, and cancellation requirements. Among other things, it would prohibit misrepresentations related to the underlying product or services, impose restrictions on “save” efforts when a consumer attempts to cancel, and require annual reminders for negative option features not involving physical products.

Continue Reading Click to Cancel: FTC Proposes New Rule Regulating Subscription Services and Negative Option Programs with Broad Implications

The Federal Trade Commission’s recent settlement with Dalal A. Akoury and AWAREmed Health & Wellness Resource Center provides a good overview of how today’s FTC approaches medical claims it believes are unsubstantiated. The case also serves as a reminder that if medical claims sound too good to be true, they probably are.

According to the complaint, filed by the Justice Department on behalf of the FTC, defendants, under Khoury’s leadership, engaged in deceptive acts or practices in violation of Sections 5 and 12 of the FTC Act and the Opioid Addiction Recovery Fraud Prevention Act (OARFPA). The complaint states that defendants deceived reasonable consumers into believing that the medical clinic’s treatments could cure cancer, chronic diseases such as Alzheimer’s and Parkinson’s, and a range of addictions, including to opioids, sex, food, and gambling.

The FTC had previously warned defendants on numerous occasions that making unsubstantiated addiction treatment claims is against the law. Khoury and AWAREmed, a set of companies Khoury controls that operate as a medical clinic, apparently ignored such warnings, causing the Justice Department to try and permanently halt defendants’ deceptive advertising and recover civil penalties. With this complaint the FTC continues its aggressive use of the Opioid Act to fill the hole in its remedial authority after AMG.

Continue Reading In AWAREmed Settlement FTC Says Opioid and Chronic Disease Ad Claims Must Be Backed by Science

Earlier this month, New York Attorney General Letitia James issued a Notice of Proposed Rulemaking aimed at setting greater guardrails against price increases during emergencies. The action comes exactly one year after James first initiated the rulemaking process by seeking comment regarding potential price gouging during the COVID-19 pandemic.

After amending the price gouging statute to expand its scope, in 2020 the New York legislature granted James rulemaking authority. In March 2022, James launched the first rulemaking process with an Advance Notice of Proposed Rulemaking, which sought public comment on whether and how the attorney general might provide regulatory guidance in the area of price gouging. Advocacy groups, consumers, industry representatives, and academics submitted comments, which have informed James’s proposed rules. The proposed rule tightens the screws on companies the AG believes are taking unfair advantage of market disruptions.

Continue Reading New York AG Proposes New Price Gouging Rules

Last month, the National Advertising Division of BBB National Programs reviewed Pier 1’s subscription rewards program and recommended that the company provide clearer disclosures of the automatic renewal program.

The case, brought as part of NAD’s monitoring activities, analyzed the Pier 1 Rewards program, a subscription-based customer loyalty program through which customers are charged a recurring monthly or annual fee. The membership provides a 10% discount sitewide and free shipping and returns on eligible items.

Continue Reading The National Advertising Division Recommends That Pier 1 Modify Subscription Disclosures