Jay Prapaisilp

Subscribe to Jay Prapaisilp's Posts
Contact:Read more about Jay Prapaisilp

Following a recent uptick in influencer-related lawsuits, the Court of Appeals for the Eleventh Circuit recently affirmed a dismissal of a putative class action against apparel company Luli Fama. The complaint alleged that influencers had posted content promoting the company without adequately disclosing their material connections, such as payment.

Plaintiff Targets Influencer Marketing

In the case, the plaintiff alleged violations of Florida’s Deceptive and Unfair Trade Practices Act, arguing he was misled by multiple influencer posts on a social media platform because he believed those posts were unpaid endorsements when in fact Luli Fama paid those influencers for the content.

Continue Reading Influencer Disclosure Lawsuits Face Setback: Eleventh Circuit Rules for Luli Fama

As influencer marketing continues to dominate social media, the legal risks are catching up. In two recent class action lawsuits, companies and their social media influencers are facing allegations of deceptive advertising. Viewed in conjunction with a string of decisions coming out of the National Advertising Division (NAD), these cases reflect a trend of increasing scrutiny around influencer promotion and the question of whether consumers are being properly informed of these partnerships.

One class action complaint filed in California federal court, Dubreu v. Celsius Holdings, Inc. et al.,involves claims against an energy drink company. The complaint also names three of the brand’s influencers as defendants. The lawsuit alleges that the influencers violated federal and state law by promoting the company’s products on social media without properly disclosing that they were paid by the brand.

Continue Reading Paid Partnership Problems: Uptick in Influencer Class Actions and NAD Scrutiny

This week, the Federal Trade Commission (FTC) filed a lawsuit in federal court against rideshare and delivery company Uber for allegedly deceptive subscription practices, including making it unreasonably difficult to cancel.

In the accompanying press release, FTC Chair Andrew Ferguson made clear that regulatory scrutiny of negative option and continuity programs will remain a priority: “Americans are tired of getting signed up for unwanted subscriptions that seem impossible to cancel. The Trump-Vance FTC is fighting back on behalf of the American people.” The agency voted 2-0-1 to file the complaint, with Commissioner Mark R. Meador recused.

Continue Reading FTC Makes Clear It Will Continue Regulating Subscription Services and Signals Enforcement Priority for Negative Option Rule in Lawsuit Against Uber

The Trump administration transformed global trade policies by implementing a series of sweeping tariffs. Advertisers should ask the following questions.

1. How can I comply with pricing and transparency laws when my costs increase?

    Tariffs are typically calculated as a percentage of a product’s value, paid by importers, and collected by U.S. Customs and Border Protection (CBP). Although Trump now imposes a 10% across the board tariff on most countries, China’s total tariff rates can now exceed 145%. Because tariffs often increase the landed cost of imported products, companies might need to raise prices.

    When incorporating the tariffs into pricing, companies should monitor states’ tariffs announcements and state price gouging laws. (COVID-19 price increases resulted in aggressive enforcement.) Companies should follow “drip pricing” laws requiring the upfront advertised price to reflect all fees (including tariffs and surcharges). Companies should brace for class actions under California’s “Honest Pricing Law,” and challenges to “junk” fees.

    Continue Reading Eight Questions Advertisers Should Be Asking About Tariffs

    In one of the first settlements since the new administration took office, the Federal Trade Commission (FTC) announced a $17 million monetary judgment with Cleo AI to resolve allegations that Cleo violated Section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA). Cleo operated a personal finance mobile app that purportedly allowed consumers to take out “instant” or same-day cash advances. The vote to authorize the settlement was 2-0.

    According to the complaint, Cleo advertised that consumers could access same-day or instant cash advances in the hundreds of dollars. The FTC alleged that when consumers attempted to use Cleo’s services, they were required to enroll in an automatically renewing subscription service where they were charged a subscription cost of $5.99 or $14.99 monthly. Only after the consumers entered in their payment information and enrolled in the subscription service did Cleo disclose to consumers the cash advance they were eligible for.

    Continue Reading Cleo AI Settles with FTC for $17 Million for Alleged Misleading Practices and Autorenewal Violations

    Ending speculation and uncertainty about whether new leadership at the Federal Trade Commission (FTC) would repeal or continue to defend the agency’s Negative Option Rule, which regulates offerings such as autorenewal of subscription services, this week the agency filed a brief at the Eighth Circuit defending the rule—something of a surprise.

    We previously discussed the arguments raised by industry groups that are challenging the rule. Broadly, the challengers assert that the rule exceeds the FTC’s statutory authority, is procedurally defective, and is arbitrary and capricious. The Eighth Circuit previously denied petitioners’ request to stay the rule from taking effect pending litigation.

    Continue Reading FTC Files Brief Defending “Click to Cancel” Negative Option Rule

    The National Advertising Division (NAD) recently issued a series of decisions addressing influencer and third-party marketing. The NAD is a self-regulatory body that assesses the truth and accuracy of claims made in national advertising and refers matters to the Federal Trade Commission (FTC) if an advertiser refuses to comply with its decisions.

    Influencer’s Lash Claims

    NAD reviewed videos posted on social media featuring a teen influencer self-described as a brand ambassador for the cosmetic company NuOrganic. The influencer made express and implied claims about NuOrganic’s eyelash serum, including “naturally grown long lashes” and “safe for young eyes.” NuOrganic argued that it could not control statements made by the influencer, but that it does monitor posts for content that may violate its guidelines. However, NAD investigated and identified certain Instagram posts where NuOrganic and the influencer had tagged each other about the same product, making substantially similar claims. NAD concluded these posts lacked the disclosures needed to inform viewers about the material connection between the influencer and NuOrganic. NAD recommended that the company take immediate steps to discontinue the videos containing the unsupported claims.

    Continue Reading National Advertising Division Targets Celebrity, Influencer, and Third-Party Marketing in Recent Decisions

    Last week, President Trump issued two executive orders aimed squarely at upending the long-accepted authority and independence of certain federal agencies. The first order, Ensuring Accountability for All Agencies, derides “so-called independent regulatory agencies” that traditionally promulgate rules and regulations without requiring preclearance by the president.

    The order declares such actions to be unaccountable to the American people and contrary to the Trump administration’s position that all executive power must be supervised and controlled by the president. Relatedly, the order declares that the opinions of the president and the attorney general are the only authoritative interpretations of law for the executive branch, without exception.

    The order requires all executive agencies to submit all proposed and final significant regulatory actions to the Office of Information and Regulatory Affairs (OIRA), which sits within the Executive Office of the President, before publication in the Federal Register. Notably, the order carves out the Federal Reserve, perhaps indicating the administration is cognizant of the potential ramifications for the broader economy if the Federal Reserve’s independence were to come into question.

    Continue Reading New Executive Orders Declare “So-Called” Independent Agencies No Longer Independent

    With much of the administrative state in turmoil, the Federal Trade Commission (FTC) appears to be holding steady and continuing to litigate its current cases.

    We previously discussed the FTC’s lawsuit against Grand Canyon University (GCU) and its president, in particular the court’s granting of GCU’s motion to dismiss, finding that the FTC could not bring claims against GCU because it was a nonprofit organization and not a “person, partnership, or corporation” within the FTC’s jurisdiction.

    The court held that the FTC could bring claims against GCU only if it could establish that GCU was a “corporation,” which the act defines as either organized to carry on business for the profit of its “members” or organized to carry on business for its “own” profit. The court found the FTC had not pleaded facts to satisfy this burden, but gave the FTC leave to amend its complaint.

    Continue Reading FTC Forges Ahead in Court Battle on FTC Act’s Scope Over Nonprofit Institutions (And Loses)

    This week, the U.S. Court of Appeals for the Fifth Circuit vacated the Federal Trade Commission’s (FTC) Combatting Auto Retail Scams (CARS) rule. Industry groups had challenged the rule, arguing that:

    • The FTC violated Section 18(b) of the FTC Act by failing to issue an advance notice of proposed rulemaking (ANPRM) before promulgating the CARS rule.
    • The FTC arbitrarily and capriciously failed to articulate a reasoned basis for the rule.
    • The FTC’s cost-benefit analysis was arbitrary and capricious.

    The decision highlights the Fifth Circuit’s hostility to the “Administrative State” and the two different rulemaking schemes under which the FTC operates.

    Continue Reading The Fifth Circuit Slams the Brakes and Vacates FTC CARS Rule