The ink was barely dry on our Monday blog when a new skirmish broke out (both on Twitter and in official records) in the FTC’s long-brewing remedy wars. This time the battle took place in another unlikely location – three Made in USA settlements.

First to set the scene. The FTC generals announced that they had accepted surrenders from three combatants who were attempting to sell products allegedly mislabeled as Made in USA. In one instance there were hockey pucks, “Patriot Pucks” that were patriotic if you happened to be a citizen of China and that were marketed as “The Only American-Made Hockey Puck.” In another instance, mattresses that were wholly imported from China were labeled as “designed and assembled in the USA.” And finally, backpacks and wallets were sold on websites that claimed to feature “American-Made Products” and the wallets were specifically promoted as “American Made.”Continue Reading FTC Remedy Wars – Part Deux

No one in law school ever mentioned that social media was required professional reading. (Well, let’s be honest. There wasn’t social media when we were in law school). However, perhaps inspired by our President, Twitter has become quite interesting lately when it comes to the FTC. One of the more interesting tweet storms started as a result of the FTC’s recent action modifying a consent agreement reached with Speedway. The Speedway modification is itself a fascinating tale. In brief, fifteen years ago, Speedway agreed to refund $1 million to consumers as a result of allegedly deceptive statements about a fuel additive. Speedway was supposed to redistribute funds from checks that ultimately went uncashed but failed to distribute about $80,000 of the million that went uncashed. Fifteen years later, Speedway self-reported the violation and proposed sending the money to the U.S. Treasury in lieu of sending an additional $1 or so to each of the initial recipients. This practice, as the majority notes, also conforms to more recent Commission practice which allows for the remittance of uncashed funds to the Treasury. Four Commissioners approved this modification, noting, among other things, the cost of forcing Speedway to comply with the order as written and that had Speedway not self-reported the violation, it would have never been detected. Commissioner Chopra dissented, noting that allowing Speedway to now simply send a check to the U.S. Treasury saved it the expense of finding and sending checks to individual consumers and that Speedway should not profit from its order non‑compliance. As a side note, Commissioner Chopra also called for clearer guidance when it comes to any benefits associated with self-reporting a suggestion which the majority called “worth consideration.” (Currently, as a matter of enforcement discretion, the Commission will sometimes close investigations when a company corrects a violation prior to the initiation of a Commission investigation, which is, in a manner of speaking, a variation of self-reporting).
Continue Reading FTC on Steroids?

to be continuedThe FTC has been back at full capacity for little more than two weeks but is already making news on the consumer protection front. On the staffing side, the Consumer Protection Bureau is currently being run on an acting basis by long time FTC staffer Reilly Dolan. Numerous media outlets were reporting that Andrew Smith, a partner at Covington & Burling, would shortly be appointed as the permanent Bureau Director. Mr. Smith has represented numerous companies on consumer data issues, which according to the New York Times, include Facebook, Uber and Equifax, all of which have been or are under FTC investigation.

Of course, the need for recusals is not surprising for big law firm lawyers who first make the switch to public service, but in this case Mr. Smith’s client representations have caught the eye of three U.S. senators. On Monday Senators Warren, Blumenthal and Schatz wrote a letter to Chairman Simons asking him to delay a vote on Mr. Smith while they probe further into his background. The letter stated, “While Mr. Smith has every right to represent corporations that have harmed consumers, and those companies have every right to be represented by Mr. Smith, it is impossible to believe that the best candidate [to head consumer protection] is someone with a long record of representing companies that have been accused of hurting consumers.” Notwithstanding this letter, the Commission voted 3-2 yesterday in favor of Mr. Smith’s appointment. The Chairman and each of the two Democratic Commissioners issued separate statements in support of and in opposition to the appointment. (here, here and here). This is the first time we can remember a Bureau Director appointment attracting such attention, but perhaps it is not surprising in an era where virtually everything that happens in DC has political implications.Continue Reading New Commission Is in the News

Social Media AppsIn light of a new California decision interpreting California’s wage and hour law, brand companies should take a careful look at their influencer compliance programs not only for FTC compliance, but also potential employment law consequences. How a company establishes and maintains influencer compliance can potentially convert the influencer from an independent contractor to an employee.

We know the FTC’s view is that it takes a village to ensure influencers disclose any material connection to a brand company with which they have a relationship and that the Commission will hold brands, agencies, influencer networks, and influencers all responsible for compliance lapses. The basic expectation is that brands will train their influencers on the rules of the road, monitor for compliance, and enforce consequences for noncompliance. The consent orders in cases like CSGOLotto, Inc. lay out more detail as to what the FTC expects, including:

  1. Providing each influencer with a clear statement of responsibilities for including clear and conspicuous material connection disclosures and obtaining signed statements from each influencer acknowledging receipt and consent;
  2. Establishing, implementing, and maintaining a system to monitor and review influencer posts; and
  3. Immediately terminating and ceasing payment to any noncompliant endorser.

Continue Reading Walking the Line with Influencers: How to Satisfy the FTC without Your Influencers Becoming Employees in California

In the last week, four new commissioners were sworn in to their role as agency heads at the Federal Trade Commission, giving the FTC a full slate of commissioners for the first time in several years.  The new commissioners – Republicans Noah Phillips and Chairman Joseph Simons; Democrats Rebecca Slaughter and Rohit Chopra –

It appears increasingly likely that for probably the first time since the FTC was established, we will have five new Commissioners in the same calendar year. Just to quickly recap, the FTC has five seats, only two of which are currently filled. Commissioner McSweeny’s term has already expired, while Acting Chairman Ohlhausen has been nominated for a position on the federal bench. Commissioners are nominated by the President and confirmed by the Senate for a term of seven years, subject to the rule that no more than three Commissioners may be from the same political party. The President also designates who is to serve as Chairman. Note that the seven-year terms are set rather than running from when an individual is confirmed so that some of the nominees will fill remaining shorter terms.

Four individuals have been nominated and voted out of Committee while the Trump administration just announced its intent to nominate the fifth Commissioner. We provide a brief overview of each of the nominees below. As the overview indicates, it seems likely that the new Commissioners will bring little in the way of past consumer protection experience.

Christine Wilson has been nominated to fill the remainder of Ms. Ohlhausen’s term, and Ms. McSweeny’s term expired last year, but she has stayed on in the position until a replacement is confirmed. Her seat will be filled by Chairman nominee Joseph Simons. The Senate Commerce Committee will likely begin processing the current nominees in February, according to Chairman John Thune. When a fifth member will be nominated to the Commission is currently unclear.Continue Reading It’s a Full Slate for the FTC

The FTC seeks to combat deceptive practices in the United States generally, but often it pays particularly close attention to the elderly, which it views as a vulnerable demographic. Last year for example, the FTC testified before the Senate Judiciary Committee on Aging that it’s taking action specifically against those fraudulent schemes that affect the elderly. It makes intuitive sense that the people asking their grandchildren how to turn on the computer would be more likely to fall for online scams than those glued to technology 24/7. For millennials, however, hubris may be their downfall, as a new report from the FTC shows that Americans in their twenties and early thirties are more likely to be scammed than the elderly. Specifically, 40% of this age group who reported fraud also reported losing money, while only 18% of those 70 and older who reported fraud also reported a loss. It is worth noting, however, that when these older adults did report losing money to a scammer, the median amount lost was greater. That is, the median reported loss for people age 80 and older was $1,092 compared to $400 for those aged 20-29.
Continue Reading FWIW: Millennials More Likely to Be Victims of Fraud

football and foam fingersThis may have been the first year we were more into the game than the ads as it was a well-matched nail biter right to the end, but this is advertising’s biggest night of the year as well as football’s and we were once again not disappointed. While views is likely the best measure of an ad’s success, here is the annual “All about Advertising Law Round Up”.

Our favorite campaign was the Australian Tourism ad featuring Chris Hemsworth and Danny McBride. The campaign encouraged tourism under the rubric of filming of a Crocodile Dundee sequel. The movie has its own IMDb page and related Twitter hype. But there is no movie. It is all part of the tourism ad campaign. This is fake news without the political baggage, creating buzz and interest for the product offering. Well played!Continue Reading Big Game Fun Includes Viking Disclaimers and Fake News

As we reported a few months ago, the FTC has increased its enforcement of its “Made in USA” requirements – typically through warning letters rather than formal administrative or legal proceedings. This week’s proposed Consent Order against Bollman Hat Company and SaveAnAmericanJob, LLC demonstrates that if companies will not informally agree to corrective action to qualify or discontinue “Made in USA” claims that don’t meet the standard, the FTC will not blink but will go forward to bring a formal enforcement action.

Despite touting its brand as “Made in the USA since 1868” and “Made in in the USA for 100 Years or More,” the FTC alleged that over 70% of Bollman’s hat styles were wholly imported as finished hat products, and many of the remaining styles also contained significant imported content.

Bollman also created an “American Made Matters – Choose American” (AMM) seal to apply to its products, and then began licensing the seal to other companies through its wholly owned subsidiary SaveAnAmericanJob, LLC.

The qualifications to “earn” the seal fell far below the “all or virtually all” standard needed to make a “Made in USA” claim. AMM members were required to self-certify that at least 50% of the cost of at least one of their products was incurred in the U.S., and further that final assembly or transformation took place in the U.S. After self-certifying and paying the $99 annual licensing fee, Bollman and SaveAnAmericanJob would feature those third-party products and brands on its AMM website. The FTC alleged numerous problems with this seal.Continue Reading FTC Orders – Doesn’t Warn – Bollman Hat Company to Cease Deceptive “Made in USA” Claims, Licensing “American Made Matters” Seal to Others without Proper Vetting

We don’t like to toot our own horn in blog posts too often, but the arrival of Heather Capell Bramble in Venable’s Washington, DC office was a development we thought worthy of some tooting and something important to all of you as well.

Heather joins Venable from the U.S. Consumer Product Safety Commission (CPSC), where she served as chief counsel and policy advisor to Commissioner Marietta Robinson. During her time at the CPSC, she was involved in a wide range of issues, including providing advice and counsel on all proposed consumer product regulations, and mandatory standards, as well as product recalls, Section 15(b) reporting, administrative litigation, and enforcement and settlement agreements.Continue Reading Addition of Heather Capell Bramble Strengthens Venable’s Consumer Products and Product Liability Practices