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Len Gordon, chair of Venable’s Advertising and Marketing Group, is a skilled litigator who leverages his significant experience working for the Federal Trade Commission (FTC) to help protect his clients’ interests and guide their business activity. Len regularly represents companies and individuals in investigations and litigation with the FTC, state attorneys general, the Department of Justice (DOJ), and the Consumer Financial Protection Bureau (CFPB). Len also represents clients in business-to-business and class action litigation involving both consumer protection and antitrust issues. He also counsels clients on antitrust, advertising, and marketing compliance issues.

At its most recent open meeting, the Federal Trade Commission voted unanimously to issue an Advance Notice of Proposed Rulemaking, seeking public comment on whether to modify or expand its Business Opportunity Rule.

The Business Opportunity Rule, first adopted in 2012, requires sellers of “business opportunities” to be able to substantiate any earnings claims they make, and to make certain enumerated disclosures pertaining to the potential transaction. These disclosures include:

  • The seller’s identifying information
  • Whether the seller is making earnings claims and, if so, substantiation for those claims
  • Whether the seller, affiliates of the seller, or its leaders have been involved in legal actions concerning misrepresentation, fraud, securities law violations, or unfair or deceptive practices in the previous 10 years
  • The terms of the seller’s cancellation or refund policy, if it has one
  • A list of people who have purchased the business opportunity in the previous three years


Continue Reading Proposed Rulemaking: FTC Dials in on Business Opportunities

Last week, the Federal Trade Commission (FTC) issued a press release, announcing a $100 million settlement with Vonage, an internet-based telephone service company, for alleged violations of the Restore Online Shoppers’ Confidence Act (ROSCA). The action underscores the FTC’s continued focus on “dark patterns” and illustrates the agency’s efforts to require companies to go beyond the plain requirements of ROSCA in enforcement settlements.  

The FTC’s complaint alleged that Vonage offered free trials to business and residential customers for telephone plans. Unless the customer took affirmative action to opt out before the trial ended, Vonage would enroll the customer in an autorenewing monthly phone plan.

Continue Reading Vonage, Autorenewals, and the FTC’s Ever-Expanding Interpretation of ROSCA

Supply chain disruptions and accompanying inflation for raw materials have challenged many businesses. A recent case involving paint retailer Sherwin-Williams shows how not to deal with these challenges. In a putative class action, plaintiffs accused Sherwin-Williams of surreptitiously adding a hidden “Supply Chain Charge” to every sales transaction. On October 24, the U.S. District Court for the Northern District of New York said the claims may proceed.

The plaintiffs allege they suffered economic injury as a result of a “deceptive bait-and-switch scheme” perpetrated by Sherwin-Williams. They asserted claims of deceptive acts or practices under New York General Business Law § 349, breach of contract, and unjust enrichment. On Sherwin-Williams’ motion to dismiss, the Northern District of New York tossed the unjust enrichment claim, but held that the Section 349 claim and breach of contract claim were plausibly alleged.

Continue Reading Supply Chain Surcharges? Plaintiffs Say You Better Not Conceal Them

At a Federal Trade Commission (FTC) event last week, Chair Lina Khan said children are more susceptible than adults to deceptive or harmful practices, especially those that blur the line between advertising and entertainment.

The event, “Protecting Kids from Stealth Advertising in Digital Media,” included legal and child development experts, researchers, members of industry, and consumer advocacy groups. Together they discussed children’s development and ability to detect and understand advertising, the potential harms to children from blurred, deceptive, or manipulative advertising practices as well as the ways to mitigate them, and the significance of effective disclosures.

In her opening remarks, Khan said children often are unable to understand the difference between advertisements and organic content. Without realizing it they may end up engaging in commercial transactions or provide companies with their personal information without comprehending the privacy risks. Khan also noted that the FTC is considering whether to update its Children’s Online Privacy Protection Act (COPPA) Rule, which has not been updated since 2013, and requested comments on its advanced notice of proposed rulemaking related to commercial surveillance.

Continue Reading FTC to Digital Media Advertisers: It’s Time to Protect Kids

The Consumer Financial Protection Bureau (CFPB) has once again been found to be unconstitutionally structured. The ruling is a win for CFPB critics and calls into question most actions taken by the agency.

A unanimous three-judge panel of the U.S. Court of Appeals for the Fifth Circuit held on Wednesday that the CFPB’s funding mechanism, funded by fees generated by Federal Reserve Board not through Congressional appropriations, is unconstitutional. According to the court, the CFPB’s funding is double insulated from Congress and, thus, is unaccountable to both Congress and the public. As such, the CFPB’s funding mechanism violates the Constitution’s separation of powers design and, specifically, the Appropriations Clause.

Continue Reading Federal Appeals Court Finds CFPB Unconstitutionally Funded, Structured

The FTC’s ears must have been burning. Yesterday, just hours after we finished a webinar discussing the latest developments in the FTC’s push for more rulemaking, the FTC announced an upcoming open meeting where it will propose issuing three advanced notices of proposed rulemaking (ANPR).

First, the FTC will consider whether to initiate rulemaking to

On Monday the U.S. Securities and Exchange Commission issued a cease-and-desist order to Kim Kardashian for failing to disclose that she received $250,000 to promote EthereumMax’s digital tokens, “EMAX tokens,” on social media.

The SEC considers the EMAX token to be an investment contract, a type of security under the SEC’s jurisdiction. EMAX tokens are available for public trading on cryptocurrency exchanges, and the SEC found that purchasers would have had a reasonable expectation of profits from their investment in EMAX tokens as a result of the efforts of the company behind the token.

Continue Reading Keeping Up with Disclosures: SEC Punishes Kim Kardashian for Crypto Promotion

Last week, the Federal Trade Commission turned its attention to the mortgage relief industry once again. In its most recent enforcement action, the FTC joined forces for the first time with the California Department of Financial Protection and Innovation (DFPI).

On September 12, 2022, the agencies jointly filed a complaint in the U.S. District Court for the Central District of California against several companies alleged to have operated a mortgage relief scam. Two days later, the court issued a temporary restraining order (TRO) appointing a receiver and freezing the defendants’ assets until the parties can be heard on whether to issue a preliminary injunction.

The defendants consist of various corporate entities doing business as Home Matters USA, Academy Home Services, Atlantic Pacific Service Group, and Golden Home Services America, and two individual defendants who own the companies.

Continue Reading FTC Joins with California DFPI to Obtain Asset Freeze Against Mortgage Relief Business

By a unanimous 5-0 vote, the Federal Trade Commission last week released a staff report that sheds light on the agency’s enforcement positions and priorities regarding digital “dark patterns,” which the FTC defines as interface designs used to manipulate consumers into making decisions about purchases and personal data that they otherwise would not have.

Stemming from a public workshop the FTC hosted in April 2021, the report, “Bringing Dark Patterns to Light,” uses examples and illustrations to catalog and criticize numerous commonly seen practices in e-commerce, and includes an appendix describing types of dark patterns, while also stressing that dark patterns have a stronger effect, and by extension cause greater consumer harm, when they are used in combination, rather than in isolation.

Given Chair Lina Khan’s ambitious enforcement and policy goals for the agency, which we’ve previously discussed, anyone who engages with consumers online should consider the report both a reference and a warning.  

Continue Reading The FTC Brings More Light to Dark Patterns in New Staff Report

The buzz around gig economy protections continued as the Federal Trade Commission took yet another action to safeguard gig workers. Last week, the FTC adopted a policy statement asserting its authority to address unfair and deceptive practices and anticompetitive conduct that harms workers in the gig economy.

The statement highlights data from several studies concerning the gig economy, including that it is expected to generate $455 billion in annual sales by 2023, and that 16% of Americans report earning income through an online gig platform. The statement also reports that, while gig work has already established itself in food delivery and transportation, it is now expanding into healthcare, retail, and other segments of the economy. The FTC noted that the decrease in demand for transportation during the COVID-19 pandemic illustrates “the precarious nature of gig work.”

The FTC statement focuses on three features of the gig economy “that implicate the Commission’s consumer protection and competition missions:”

Continue Reading New FTC Policy Statement: Agency Continues to Ramp Up Gig Worker Protections