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Ellen T. Berge

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Ellen Berge provides counsel on regulatory compliance, government investigations, contract negotiations, and general business matters. Ellen focuses on advertising, marketing practices, payment processing, and merchant services. Her clients include major brand advertisers and direct-response retailers, and lead generators, telemarketers, media agencies, software providers, and others who serve them. On the merchant services side, she leads a practice that works with banks, processors, sales agents, payment facilitators, independent software vendors, and fintech and financial services businesses. Ellen also serves as the firm's managing partner of Professional Development and Recruiting.

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This week, the Federal Trade Commission (FTC) issued its long-awaited Final Rule on Unfair or Deceptive Fees. When the FTC released the proposed rule over a year ago, the rule covered any business that offered goods or services for sale. The Commission largely narrowed the rule’s application, which now focuses on live-event tickets and short-term lodging (defined as a hotel, motel, inn, short-term rental, vacation rental, or other place of lodging).

The Final Rule also covers third-party travel service providers, including online travel agencies and travel advisors. The FTC did not shed much light on its reasoning, but Republican Commissioner Melissa Holyoak’s concurring statement on the overly broad scope of the earlier version provides some indication of an effort to make the rule more palatable to the incoming Congress, which could repeal the rule through the Congressional Review Act.Continue Reading FTC Issues Scaled-Back Final Fee Rule Targeting Live-Event Tickets and Short-Term Lodging

As we previewed last week, industry and trade groups wasted no time in filing challenges against the Federal Trade Commission’s (FTC) Final Negative Option Rule.

The Michigan Press Association and the National Federation of Independent Businesses filed a petition challenging the rule in the Sixth Circuit Court of Appeals, while a separate petition was filed by multiple trade associations in the Fifth Circuit. Both cases have asked federal courts of appeals to determine whether the FTC’s issuance of the rule exceeded the agency’s authority and if the FTC’s processes were arbitrary, capricious, and an abuse of discretion under the Administrative Procedure Act. The petitions also ask the courts to determine if the FTC complied with the agency’s Magnuson-Moss rulemaking requirements, claiming the rule was “unsupported by substantial evidence” and based on determinations that did not allow for consideration of “disputed material facts.”

The petitions request that the courts vacate and set aside the rule. If either petition is granted, the FTC will not be able to enforce its Negative Option Rule.

Additional challenges to the FTC’s Negative Option Rule might continue. And similar challenges against FTC rules have found success; for example, the FTC’s Non-Compete Rule was set aside and ruled unenforceable nationwide. That decision is currently on appeal at the Fifth Circuit.Continue Reading Business Groups Rush to File Federal Court Challenges to the FTC’s Negative Option “Click-to-Cancel” Rule

By a 3-2 vote, the Federal Trade Commission (FTC) announced its Final Negative Option Rule that covers negative option programs for both consumer and B2B transactions in any media, including online, telephone, print, and in-person. The rule finalizes many of the requirements we previewed last year. Commissioner Melissa Holyoak’s dissent outlines many of the issues that those challenging the legality of the rule are likely to soon raise. 

Under the rule, companies selling goods or services with a negative option feature will be prohibited from:

  • Misrepresenting any material fact in advertising and marketing. The FTC expressly declined to limit this prohibition solely to elements of a negative option program and instead defined “material” to mean “likely to affect a person’s choice of, or conduct regarding, goods or services.” A non-exhaustive list of potential misrepresentations includes the cost, purpose, efficacy, and health or safety of the good or service.
  • Failing to disclose material terms clearly and conspicuously prior to obtaining the consumer’s billing information. The rule specifies that disclosures must be “unavoidable” and not contradicted or mitigated by, or inconsistent with, anything else in the communication.
  • Failing to obtain the consumer’s unambiguous affirmative consent before charging them. This must be done separately from any other portion of the transaction, and no other information may be included that detracts from, contradicts, or undermines the consumer’s ability to provide their express informed consent.
  • Failing to provide a simple mechanism to cancel and immediately stop charges

Continue Reading FTC Announces Final “Click-to-Cancel” Rule on Negative Options, Autorenewals, Free-to-Pay, and Subscription Services

Since July 1, when California’s “Honest Pricing Law” or “Hidden Fees Statute” became effective, the plaintiffs’ bar has filed more than a dozen complaints alleging violations of the statute. These complaints challenge alleged “junk fees” or “drip pricing” structures, including “service fees” charged by merchants through their websites, “processing fees” charged by third-party platforms, and various forms of credit card surcharges and debit card fees.

Background

California’s Honest Pricing Law requires “Total Price” disclosures and prohibits merchants from misrepresenting the nature and purpose of any charges or fees. Under the statute, “Total Price” means that the advertised prices of goods and services must include all mandatory charges and fees other than either government-imposed taxes or fees or postage or carriage charges “reasonably or actually incurred” to ship the physical good to the consumer.Continue Reading A Variety of Fees and Surcharges Implicated in Early Cases Enforcing California’s Honest Pricing Law

One of the questions that remains uncertain among looming federal and state “junk fee” and “drip pricing” bans in 2024 concerns the impact these rules will have on credit card surcharges. Surcharges are added to sale transactions by some retailers when the buyer uses a credit card to make a purchase. Is this a mandatory fee that must be incorporated in the total price under the new laws? Or does the consumer’s choice to use a credit card to pay make the convenience of paying by credit card an optional service or feature that need not be included in the advertised price?

We may need to wait for further clarification from regulators or a lawsuit to know how junk fee bans impact surcharging, but understanding the possible arguments and pitfalls may help you decide how you will address this question in the short-term. Contact us if you need guidance or advice on these junk fee bans or surcharge rules.Continue Reading Drip Pricing, Surcharging, and the Push for “Total Price” Disclosures

Late last week, the California attorney general released Frequently Asked Questions regarding California’s “Honest Pricing Law” or “Hidden Fees Statute,” which will take effect July 1, 2024. The law is anticipated to have a sizeable impact, given its breadth, and will vastly change how businesses disclose the price of their goods and services to the public. When “advertising, displaying, or offering” a price, the law requires businesses to include all required fees and charges other than certain government taxes and shipping costs.

The Advertised Price Is a Single Price, No Exceptions

The FAQs make clear that the intent of the law is to force businesses to display a single price that includes all required fees and charges that a consumer would pay at the end of the transaction. This is similar to the Federal Trade Commission’s Proposed Rule that businesses display the “Total Price” for goods and services.Continue Reading California Releases FAQs on Complying with Impending Drip Pricing Law

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 an author of this chapter dive deeper into telemarketing and texting in this week’s episode.

Telephone and text message marketing poses private litigation risks and regulatory hurdles that should be considered before any campaign. The Federal Trade Commission (FTC), the Federal Communications Commission (FCC), and states enforce do-not-call (DNC) laws and impose multiple other requirements regarding calling manner, disclosures, consent, opt-out, calling hour limits, caller identification, and telemarketer registration. Calls and texts made to cell phones, using certain types of dialing technology (including autodialers) and prerecorded messages (so-called robocalls), require particular attention, as much of the enforcement and litigation in this area involve texting and robocalling.Continue Reading Telemarketing and Texting: An Excerpt from the Advertising Law Tool Kit

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 an author of this chapter dive deeper into state AG inquiries in this week’s episode.

State attorneys general (AGs) are the chief legal officers of their states or territories and can bring actions to protect the “public interest” in almost any area of law. They represent the state government and the general public and have broad jurisdiction over everything from public corruption to consumer protection.Continue Reading State Attorney General Inquiries: An Excerpt from the Advertising Law Tool Kit

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 payment processing in this week’s episode.

Establishing a solid merchant processing relationship for the acceptance of card and other forms of payment for your sales is a key back-end function that no retailer should neglect. In addition to processing payments through the credit and debit card and automated clearing house (ACH) networks, payment processors can provide helpful analytical tools, dispute resolution, data security assistance, and other products or services related to payment processing.

Merchant processing can be complex, however, as the payments ecosystem has multiple layers of stakeholders, including card-issuing banks, the card and ACH networks, merchant-acquiring banks, processors, independent sales organizations, payment facilitators, third-party senders, and software providers.Continue Reading Payment Processing: An Excerpt from the Advertising Law Tool Kit

Is a product recyclable if it is made of recyclable materials? Or is it recyclable when it can be recycled by waste management facilities? Last month, the United States District Court for the Northern District of California attempted to tackle these questions in response to a motion to dismiss in Della v. Colgate.

The plaintiff alleged that Colgate-Palmolive Company engaged in false and misleading advertising claims about the recyclability of its toothpaste tubes with claims like “First of Its Kind Recyclable Tube” and images of the universal recycling symbol. The plaintiffs claimed these statements were misleading because the products cannot be recycled at most waste management facilities. Colgate argued that since the tube is made from recyclable material—specifically a material that can be recycled at most facilities—the “recyclable” claim was not misleading.Continue Reading California Court Cites FTC Green Guides, Allowing Plaintiff’s Challenge of Colgate Toothpaste Tubes “Recyclable” Claims to Proceed