gift boxThere’s been a lot of talk about the one eensy weensy Supreme Court vacancy, but nary a word about the not one but TWO FTC vacancies. Indeed, if any of you were out and about recently, say at the theater perhaps, you might have been sitting near a future FTC Commissioner. So, let’s imagine for a second that we were talented enough to appear in the theater (ok, truth be told, Amy is, but that’s a blog for another day) and that all of you are wealthy enough to be able to afford Hamilton tickets and sit among possible future FTC appointees. What would we say to all of you about the possible future direction of the FTC? What might be on a new administration’s wish list? We’ll explore these questions in a few upcoming blogs. We’d love to hear your thoughts as well.

First off is consumer redress. Over the past eight years or so, the FTC has largely enshrined the idea that consumer redress is a typical rather than an extraordinary remedy. Having accomplished that fact, we think now is the time to begin consideration of fine tuning that remedy in some respects.

To begin with, should there be an explicit recognition that, in calculating consumer redress, the FTC should consider the value of other, legitimate benefits provided by the product or service to consumers.  For example, suppose a company makes a health claim for a food that the Commission believes to be deceptive, but the food provides other uncontested health and nutritional benefits.  Contrast that with a supplement that makes just one claim, weight loss, that the FTC believes is unsubstantiated.  Should the standard for calculating consumer redress be the same for both products?  Of course, we recognize that the FTC has, on occasion, exercised discretion in this regard in its calculation of appropriate redress, but should this question be denigrated to an appeal to the agency’s discretion or be more formalized?

Second, should consumer redress take into account how many consumers have been misled?  In some cases, all, or virtually all, consumers may have been misled and there is little, if any, mismatch, between seeking a complete divestiture of sales proceeds and impacted consumers.  However, the Commission has been clear that an advertisement is misleading even if it misleads a reasonable minority of consumers.  In a situation where reliable survey evidence indicates that, at most, 20 or 25% of consumers have been misled, should any redress demand be adjusted significantly downward?  Is there any reason why a company shouldn’t be able to retain the revenue from those 75 or 80% of consumers who were not misled and got exactly what they expected?

Finally, speaking of a reasonable minority of consumers, should there be more clarity around exactly what percentage of consumers have to be misled for an advertisement to violate Section 5?  The case law, some of which is quite dated, would suggest that the percentage is anywhere from approximately 10-20%.  That’s quite a significant range.  Indeed, has anyone ever done a consumer survey where at least ten percent of respondents weren’t confused by something?  In any case, if an advertiser has gone to the time and expense of doing a consumer survey, should they be entitled to know with more certainty what the applicable standard for consumer confusion is?

So, that’s the first item (or more like item with sub-items) on our “to be considered” list.  We’ll be back with more.