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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.

With the end of the Supreme Court’s term in June, most eyes have been on the release of the last remaining merits decisions. In the midst of issuing the final opinions of the term, the Court also granted certiorari on a number of cases, one of which—Securities and Exchange Commission v. Jarkesy—might have implications for the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB).

In Jarkesy, the SEC sued talk radio host George Jarkesy and his two hedge funds (collectively, “the Jarkesy Parties”) through an administrative action before an SEC administrative law judge (ALJ). After an evidentiary hearing, the ALJ determined that the Jarkesy Parties committed securities fraud, and the Commission affirmed the ALJ’s decision, imposing a civil penalty, disgorgement of ill-gotten gains, and enjoining Jarkesy from various securities industry activities. The Jarkesy Parties proceeded to appeal the Commission’s decision to the U.S. Court of Appeals for the Fifth Circuit. The Jarkesy Parties appealed on several constitutional grounds previously raised and denied during the ALJ and Commission proceedings:Continue Reading Supreme Court Case Watch: Securities and Exchange Commission v. Jarkesy and Its Impact on Independent Agencies

Thirteen months after proposing sweeping changes to its Endorsements and Testimonial Guides (Guides), the Federal Trade Commission (FTC) has finalized its revised guidelines and released an updated set of FAQs to help guide the industry with respect to the proper use of customer reviews, influencer marketing, and traditional endorsements and testimonials. 

The new Guides are over 80 pages. We will dive into specific sections in greater depth in the coming weeks, but here are some highlights:Continue Reading FTC Finalizes Updated Endorsement and Testimonial Guides

In the wake of AMG Capital Management v. FTC and Liu v. SEC, uncertainty has loomed as to how courts should measure the consumer redress available to the FTC under Section 19 of the FTC Act. Earlier this month, a court in the District of Arizona squarely addressed this issue.

Before AMG, the FTC used its ability to obtain injunctive relief in federal court under Section 13(b) of the FTC Act for violations of Section 5 of the FTC Act to also obtain equitable monetary relief. As we’ve previously discussed, the Supreme Court’s decision in AMG put an end to that. As a result, the FTC turned to its authority under Section 19 to obtain redress for rule violations.

The Supreme Court’s decision in Liu, which we also previously covered, held that equitable monetary relief cannot exceed a defendant’s gains after legitimate business expenses. This results in the quandary of how to reconcile this with the text of Section 19, which provides for “such relief as the court finds necessary to redress injury to consumers.”Continue Reading Addressing the Redress: District Court Limits the Scope of FTC Consumer Redress for Rule Violations

Starting June 27, operators of online marketplaces will need to comply with a new federal statute, the Integrity, Notification, and Fairness in Online Market Retail Marketplaces for Consumers Act or INFORM Act.

The purpose of the law, which passed in December as part of the appropriations bill, is to help combat e-commerce fraud and the sale of counterfeit goods online. Although the law directly applies to the operators of these marketplaces, individuals and companies that sell their products on the marketplaces will be impacted.

The INFORM Act requires online marketplaces to undertake specific due diligence of “high-volume third-party” sellers. The statute defines high-volume third-party sellers as sellers that, in any continuous 12-month period during the previous 24 months, (1) have entered into 200 or more discrete sales or of new or unused consumer products and (2) have an aggregate total of $5,000 or more in gross revenues on the marketplace. The law does not apply to used goods or to services sold via online marketplaces.Continue Reading New Law Regulating Online Marketplaces Will Impact Sellers, Too

The Supreme Court’s opinion last week in National Pork Producers Council v. Ross raises more questions than it answers regarding what state laws might violate the dormant Commerce Clause. California prohibits the in-state sale of pork that comes from pigs raised in “cruel” conditions—even though nearly all the pork sold in California is raised in other states. The Court upheld that law in the face of a dormant Commerce Clause challenge. But the Court’s fractured reasoning makes it hard to predict how other laws might fare.

As a refresher, the Dormant Commerce Clause stems from Congress’s Article 1, Section 8 authority to regulate commerce “among the several States.” In contrast to preemption, which limits states’ authority in an area where Congress has acted, the Dormant Commerce Clause limits states’ ability to regulate even when there is no relevant congressional action. Continue Reading Could Texas Ban the Sale of Union-Made Goods? After National Pork Producers, We Still Don’t Know

The U.S. Supreme Court’s landmark decision unanimously reversing the Ninth Circuit in Axon Enterprise v. Federal Trade Commission is likely to represent a monumental shift in pre-enforcement challenges to administrative enforcement proceedings brought by federal agencies, including the FTC.

The decision held that agencies, including the FTC, are not empowered to decide whether their own enforcement procedures are constitutional, removing the thumb from federal agencies’ side of the scale. The Supreme Court emphatically ruled that such authority is reserved for the courts, and that collateral challenges to the constitutionality of administrative proceedings are appropriate.

As background, the FTC can elect to litigate a party’s alleged wrongdoing in an administrative proceeding overseen by an FTC-appointed administrative law judge (ALJ) or in a federal district court. Until the Supreme Court’s decision in AMG two years ago, the FTC’s favored enforcement path was to proceed straight to federal district court. With that avenue significantly constrained by AMG, the FTC is more frequently bringing enforcement actions in administrative proceedings before ALJs. Administrative proceedings, however, include several components that heavily favor the FTC. First, the fact finder in an FTC proceeding is appointed by the FTC. Second, the party subject to the enforcement proceeding is forced to wait until the proceeding ends to challenge the result in a federal appeals court. Moreover, the reviewing federal appeals court’s scope of review is limited to the record that the FTC produced.Continue Reading U.S. Supreme Court Justices Thomas and Gorsuch Skeptical of ALJ Proceedings in Axon Enterprise v. Federal Trade Commission Decision

The Federal Trade Commission’s recent settlement with Dalal A. Akoury and AWAREmed Health & Wellness Resource Center provides a good overview of how today’s FTC approaches medical claims it believes are unsubstantiated. The case also serves as a reminder that if medical claims sound too good to be true, they probably are.

According to the complaint, filed by the Justice Department on behalf of the FTC, defendants, under Khoury’s leadership, engaged in deceptive acts or practices in violation of Sections 5 and 12 of the FTC Act and the Opioid Addiction Recovery Fraud Prevention Act (OARFPA). The complaint states that defendants deceived reasonable consumers into believing that the medical clinic’s treatments could cure cancer, chronic diseases such as Alzheimer’s and Parkinson’s, and a range of addictions, including to opioids, sex, food, and gambling.

The FTC had previously warned defendants on numerous occasions that making unsubstantiated addiction treatment claims is against the law. Khoury and AWAREmed, a set of companies Khoury controls that operate as a medical clinic, apparently ignored such warnings, causing the Justice Department to try and permanently halt defendants’ deceptive advertising and recover civil penalties. With this complaint the FTC continues its aggressive use of the Opioid Act to fill the hole in its remedial authority after AMG.Continue Reading In AWAREmed Settlement FTC Says Opioid and Chronic Disease Ad Claims Must Be Backed by Science

Earlier this month, New York Attorney General Letitia James issued a Notice of Proposed Rulemaking aimed at setting greater guardrails against price increases during emergencies. The action comes exactly one year after James first initiated the rulemaking process by seeking comment regarding potential price gouging during the COVID-19 pandemic.

After amending the price gouging statute to expand its scope, in 2020 the New York legislature granted James rulemaking authority. In March 2022, James launched the first rulemaking process with an Advance Notice of Proposed Rulemaking, which sought public comment on whether and how the attorney general might provide regulatory guidance in the area of price gouging. Advocacy groups, consumers, industry representatives, and academics submitted comments, which have informed James’s proposed rules. The proposed rule tightens the screws on companies the AG believes are taking unfair advantage of market disruptions.Continue Reading New York AG Proposes New Price Gouging Rules

The Ninth Circuit has never been shy about declining to compel arbitration, and the Court has issued multiple cases outlining what constitutes sufficient notice of certain provisions in consumer-facing terms and conditions, including website terms and conditions.

Just last year, in Berman v. Freedom Financial Network LLC, the Court agreed that a motion to compel arbitration should be denied where the plaintiff alleged that he did not see a notice stating, “I understand and agree to the Terms & Conditions which includes mandatory arbitration.”

The Court noted that the text that purported to notify users that they were agreeing to a mandatory arbitration provision was displayed “in a tiny gray font considerably smaller than the font used in the surrounding website elements, and indeed in a font so small that it is barely legible to the naked eye.” The Court further criticized how the notice was “further deemphasized by the overall design of the webpage, in which other visual elements draw the user’s attention away from the barely readable critical text.”Continue Reading Ninth Circuit Rejects Dark Patterns Challenge to Arbitration Agreement

On February 27, 2023, the Supreme Court granted the certiorari petition of the Consumer Financial Protection Bureau (CFPB) to hear a case that could cast doubt on all of the regulations that have been promulgated by the bureau to date, as well as all pending investigations and litigation brought by the agency.

The Court will consider in Consumer Financial Protection Bureau (CFPB) v. Community Financial Services Association of America (CFSA) whether the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution, which says, “no money shall be drawn from the Treasury, but in consequence of appropriations made by the law.”Continue Reading Supreme Court Agrees to Hear Case Involving CFPB Funding