Last week, a federal judge in the Northern District of California ruled on Uber’s motion to dismiss a case brought by the Federal Trade Commission (FTC) alleging deceptive practices in connection with its Uber One subscription program. The complaint alleged violations of the Restore Online Shoppers’ Confidence Act (ROSCA) and deceptive advertising and marketing misrepresentations in violation of Section 5(a) of the FTC Act and numerous state laws.

FTC Uber Lawsuit and ROSCA Claims

The court granted in part and denied in part the motion to dismiss. The court granted the motion to dismiss as to only two discrete aspects of the complaint. First, it dismissed the FTC’s subclaim challenging Uber’s “$0 delivery fee” representation, holding that the statement was not misleading as a matter of law because it was expressly limited to “eligible” orders and therefore would not lead a reasonable consumer to believe all orders qualified.

Continue Reading FTC v. Uber: California Court Allows Claims against Uber One Subscription to Proceed

On March 13, the Trump administration issued an executive order (EO), “Ensuring Truthful Advertising of Products Claiming to be Made in America,” aimed at ensuring products advertised as “Made in America” or “Made in USA” are actually made in the United States.

The EO directs the Federal Trade Commission (FTC) to prioritize enforcement of unfair or deceptive “Made in America” or “Made in the USA” or any similar U.S.-origin claims and to consider proposing regulations that would require online marketplaces to establish procedures for verifying country-of-origin claims.   

Additionally, the EO requires agencies with oversight of country-of-origin labeling, in consultation with the FTC, to consider promulgating regulations that promote voluntary country-of-origin labeling for products made or manufactured in the U.S.

Continue Reading FTC Targets “Made in USA” Claims Under New Executive Order

Join us as we offer a sneak peek into select chapters from the newly released 14th edition of Venable’s Advertising Law Tool Kit, which helps marketing teams navigate their organization’s legal risk. Want more? Click here to download the entire Tool Kit.

Advertising Claims Substantiation

Objective advertising claims must be supported by prior substantiation. These claims—whether express or implied—generally concern measurable or otherwise verifiable attributes of a dietary supplement, food, device, or cosmetic. When an advertisement includes such claims, marketers must have a “reasonable basis” for them. As a general guideline, a reasonable basis means possessing the level and type of substantiation that experts in the relevant field would consider adequate to support the claim. Extra caution is required for health-related claims, including structure/function claims, or other assertions that consumers cannot readily assess for themselves (such as statements that a product “supports normal cholesterol levels”) which must be supported by competent and reliable scientific evidence. The amount and type of evidence needed will depend on the nature of the claim and what experts in the field would deem appropriate. This is a flexible standard and does not necessarily require a product-specific clinical study

Continue Reading Inside the Ad Law Tool Kit: Advertising Claim Substantiation

On March 20, the Fifth Circuit Court of Appeals held that the administrative adjudication of deceptive advertising claims by the Federal Trade Commission (FTC) violates the constitutional separation of powers, which grants exclusive judicial authority to Article III courts. Without deciding on the merits of the FTC’s deceptive advertising argument, the court concluded in Intuit v. FTC that the FTC must argue its claims in federal court, not in front of an in-house administrative law judge (ALJ).

FTC Administrative Adjudication Faces Constitutional Limits

This case extends the Supreme Court’s reasoning in Jarkesy, which held unconstitutional the Securities and Exchange Commission’s (SEC) use of ALJs to adjudicate securities fraud claims. Although the Intuit court’s ruling is limited to deceptive advertising cases, Jarkesy and Intuit raise significant doubt as to the FTC’s ability to issue administrative cease-and-desist orders under the FTC Act.

Continue Reading Intuit v. FTC Reshapes Deceptive Advertising Enforcement Authority

On March 12, Venable’s Advertising and Marketing Group hosted its 12th Advertising Law Symposium in Washington, DC, bringing together in-house counsel, marketing executives, and industry professionals to examine the legal and regulatory landscape facing advertisers. The panels focused on a range of the latest topics in advertising law, including FTC enforcement priorities, pricing transparency, artificial intelligence, class action trends, and more.

In case you were unable to attend, here are some key themes that emerged from the day’s discussions.

Continue Reading Event in Review | 12th Advertising Law Symposium

Last week another court used McKesson and Loper Bright to limit requirements under the Telephone Consumer Protection Act (TCPA). Following the Fifth Circuit decision we discussed earlier this month, a federal court in Maryland held that the Federal Communications Commission (FCC) lacks the authority to require businesses to obtain prior express written consent to send autodialed and prerecorded calls and texts under the TCPA.

In Bradley v. DentalPlans et al., the district court cited recent case law from the Fifth and Eleventh Circuits that has curtailed the FCC’s ability to interpret the TCPA’s “prior express consent” requirement.

FCC Authority Challenged in TCPA Interpretation

The court also noted recent case law in which the Fourth Circuit emphasized that that an agency must be delegated clear authority to both implement and interpret the statute at issue. Aligning with the Fifth Circuit’s decision, the Maryland court determined that Congress has only required prior express consent, and the FCC could not take a more expansive interpretation and impose a prior express written consent requirement.

Continue Reading TCPA Decision Weakens FCC Written Consent Requirement for Telemarketing

Last week, attorneys general from 13 states filed a federal lawsuit in the Southern District of New York against OneMain Financial (OneMain) and affiliated companies, alleging deceptive and unfair practices related to the sale of its loan “add-on” products.

Led by New York Attorney General Letitia James, the multistate coalition asserts that OneMain’s practices violate the federal Consumer Financial Protection Act (CFPA) and state consumer protection and banking laws. The case serves as an important reminder that while the CFPB’s enforcement activity has waned during the Trump administration, the states continue to have the ability to enforce the CFPA, and certain states are willing to try and fill the enforcement gap left by the CFPB’s retreat. 

Alleged Deceptive Loan Add-On Practices

The complaint alleges that OneMain offered these optional add-on products, such as credit insurance and membership services, and incorporated their cost into the loan principal, resulting in undisclosed interest charges for the add-ons. In some cases, the complaint alleges, OneMain added these products without borrowers’ consent, charging customers for add-ons even after they declined them.

Continue Reading State AGs Sue OneMain Financial Over Deceptive Loan Add-Ons 

Last week, the Federal Trade Commission (FTC) announced it is sending warning letters to 97 auto dealership groups nationwide, reminding them that the price they advertise to consumers must reflect the total price consumers will be required to pay for the vehicle—including all mandatory fees but excluding taxes.

According to the FTC, advertising a price that does not include all required fees or other mandatory costs may constitute a deceptive practice under Section 5 of the FTC Act. The agency stated that transparent pricing is a current enforcement priority to ensure that the marketplace “functions efficiently and competitors are transparently competing on price.”

The letters encourage dealerships to review their advertising and pricing practices to ensure that advertised prices match the actual prices charged to consumers. The FTC also stated that it will continue monitoring the marketplace and may take additional enforcement action where appropriate.

Continue Reading FTC Warns Auto Dealers: Advertised Vehicle Prices Must Include Mandatory Fees

On Wednesday, the Federal Trade Commission (FTC) issued a call for comments in response to its Advance Notice of Proposed Rulemaking Regarding Negative Option Marketing Practices.

The call for comments comes after the Eighth Circuit struck the FTC’s previous amended Negative Option Rule because the FTC did not issue a preliminary analysis of the benefits and effects of the proposed rule and any reasonable alternatives, because it initially failed to treat the rule as “economically significant” to the national economy.

The FTC has not abandoned the proposals in the previous rule. Instead, the FTC’s primary goal appears to be to remedy the issues the court raised when invalidating the previous rule (which the FTC refers to as the “Vacated Rule”). 

The FTC has asked what requirements from the Vacated Rule are needed to address unlawful negative option practices prevalent in the marketplace? The FTC’s other questions seek information on the current costs for complying with existing laws on negative options and how those costs will change if the agency adopts all or part(s) of the vacated rule, and whether and what exemptions should be imposed. 

The FTC also asks for evidence supporting the Final Regulatory Analysis, the Final Regulatory Flexibility Act Analysis, and the Paperwork Reduction Act Analysis in the final rule document for the vacated rule.

To learn more about the Negative Option Rule or autorenewal programs, or if your organization would like to submit comments, please contact the authors.

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