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Leonard L. Gordon

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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.

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The FTC’s pursuit of companies purportedly engaged in telemarketing scams is nothing new, but its recent settlement with a company that allegedly assisted a fraudulent telemarketer by providing a Voice over Internet Protocol (VoIP) service is the first of its kind. VoIP is a technology that allows a company to make voice calls using a broadband Internet connection instead of a regular (or analog) phone line. VoIP services can make telemarketing more efficient and cheaper—particularly for autodialing and sending prerecorded messages. These features make it an attractive option for both legitimate and fraudulent telemarketers alike.

On July 29, 2019, the FTC and the Ohio attorney general sued Educare Center Services, Inc. (Educare), among other related entities and individuals, for engaging in an alleged telemarketing scheme that falsely promised consumers that Educare could significantly reduce the interest rate on consumers’ credit cards, along with a 100% money back guarantee. Educare collected payments from consumers using Remotely Created Payment Orders (RCPOs), in direct contravention of the Telemarketing Sales Rule.Continue Reading VoIP, Meet VoIR—FTC Settlement Signals That Voice over Internet Robocall Service Providers Are Fair Game

Given all the tumult with natural disasters, COVID-19, and other goings on in Washington, a memorandum directing government agencies to reform how they operate may have gone unnoticed. It’s worth considering. On August 31, 2020, the Office of Information and Regulatory Affairs (OIRA), a subagency within the Office of Management and Budget (OMB), issued Memorandum M-20-31 (the “Memo”), which elaborates on and implements directives from a prior executive order to consider and adopt certain best practices and procedures to promote fairness in administrative enforcement and adjudication. The Memo directs federal agencies to adopt measures aimed at according greater due process to individual and company targets for investigations and enforcement actions, and to promote transparency and accountability in the initiation and pursuit of administrative actions. The Memo’s directives usher in the potential for long-overdue substantive and procedural revisions to the rules of practice for independent agencies.

By way of background, the President signed Executive Order 13924, “Executive Order on Regulatory Relief to Support Economic Recovery,” on May 19, 2020, in response to economic impacts due to the COVID-19 pandemic. EO 13924 directs federal agencies to “address this economic emergency by rescinding, modifying, and waiving or providing exemptions from regulations and other requirements that may inhibit economic recovery” as enumerated in Section 6. The OIRA Memo sets forth specific best practices for implementing changes for the ten principles in Section 6 and sets a deadline of November 26, 2020 for agencies to engage in any necessary rulemaking to implement them.

The guidance will apply to all federal government departments and agencies, such as the Federal Trade Commission, the U.S. Securities and Exchange Commission, the Federal Reserve Board, the Consumer Financial Protection Bureau, and many others.Continue Reading The New Normal? Executive Guidance Asks Agencies to Reform Enforcement Policy

We have written previously about the FTC’s vigorous enforcement efforts relating to negative option marketing and its crackdown on alleged wrongdoing seeking to exploit the difficulties presented by COVID-19 (see blog posts here and here). Recently, the FTC continued its efforts with a complaint and settlement concerning negative option marketing to parents seeking online educational resources for their children.

On September 1, 2020, the FTC brought a complaint against online children’s education company Age of Learning, Inc., d/b/a as ABCmouse, alleging that it operated a deceptive negative option program between 2015 and 2018. The FTC alleged that ABCmouse’s actions violated both the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA) by (1) failing to adequately disclose that its 12-month memberships would automatically renew indefinitely; (2) failing to disclose that extensions on 30-day free trial memberships at reduced rates would automatically renew indefinitely; (3) advertising “easy cancellation,” but creating a myriad of procedural hurdles to prevent cancellation; and (4) embedding pitfalls in the cancellation process to mislead customers into extending their memberships, as opposed to cancelling them. Furthermore, in some instances, even if a customer successfully navigated the cancellation process, ABCmouse would still charge for the cancelled services.Continue Reading FTC Schools Marketers on the ABCs of Negative Option Marketing

In the wake of the Supreme Court’s opinion in Liu v. SEC, lower courts are starting to address the breadth of its applicability. On August 31, 2020, the District of Arizona welcomed the Supreme Court’s directives in Liu when denying Electronic Payment Solutions of America Inc.’s (EPS) bid for summary judgment against the FTC. To the extent other courts read Liu as similarly applicable, this could have broad implications for the FTC’s authority to obtain monetary relief.

In FTC v. Electronic Payment Solutions, No. 17-cv-2535-PHX-SMM (D. Ariz. Aug. 31, 2020), the FTC filed suit against EPS for playing a role in facilitating Money Now Funding’s alleged telemarketing scheme, and sought to recover approximately $4.67 million from EPS—the total amount EPS collected from credit card transactions for Money Now Funding minus refunds and chargebacks. EPS moved for summary judgment on the grounds that, in light of Liu, the FTC’s monetary claim should be limited to net profits. EPS argued that the FTC, despite alleging entitlement to several forms of monetary relief, was actually seeking disgorgement under several different names. Accordingly, EPS argued that Liu requires courts to limit disgorgement only to the amount of net profits that will be returned to consumers.Continue Reading Following the Mone(tary Relief): District Court Limits the FTC’s Authority Post-Liu

The issue of what exactly is an autodialer, subject to the restrictions of the Telephone Consumer Protection Act (“TCPA”), may eventually be resolved. But for now, the outlook is much like the long-ago Brooklyn Dodger’s chance of winning the World Series: “Wait ‘Til Next Year.” On July 29, 2020, a divided, 2-1 panel in the Sixth Circuit issued its opinion in Allan v. Pennsylvania Higher Education Assistance Agency, deepening the circuit split over the breadth of the TCPA. Specifically, the Sixth Circuit held that any device that dials from a stored list of numbers is sufficient to constitute an “automatic telephone dialing system” (“ATDS” or “autodialer”). This decision comes on the heels of the Supreme Court granting certiorari in Facebook, Inc. v. Duguid, setting the stage for the high court to, hopefully, not only resolve the split among the circuits, but produce a definition of an autodialer that permits the responsible and efficient generation of calls for a broad array of legitimate reasons—indeed in some cases emergency. (Interestingly, in Allan, the defendant opposed the plaintiffs’ motion to stay the appeal pending Duguid. That’s likely because the defendant had previously prevailed on the ATDS issue in the Eleventh Circuit a few months earlier in a consolidated appeal.)

In Allan, the plaintiffs received hundreds of unwanted calls and automated voice messages regarding student loan debt after they had requested to no longer be called; many of these calls delivered a prerecorded message as well. Plaintiffs sued alleging that they did not consent to the unwanted calls; the district court granted summary judgment to the plaintiffs. On appeal, the Sixth Circuit addressed whether the Defendant’s calling platform constituted an ATDS where it created a calling list based on stored numbers and placed calls, connecting recipients to operators.Continue Reading Deepening the Divide: Will the Sixth Circuit’s Expansive Reading of the ATDS Definition Survive?

Proud that your products are “Made in the USA”? Before you wave the flag, know that an unqualified Made in USA claim means that your product must be “all or virtually all” made in the United States, and the Federal Trade Commission has bolstered its enforcement authority over deceptive Made in USA claims with a new proposal to allow civil penalties for violations of its Made in the USA standards.

We previously blogged about recent Made in USA actions and the FTC’s September 2019 Made in USA workshop to evaluate updates to the FTC’s long-standing Made in USA Enforcement Policy. The Enforcement Policy provides that to substantiate an unqualified Made in USA claim, a product must be wholly domestic or all or virtually all made in the United States — meaning that “all significant parts and processing that go into the product are of U.S. origin.” Qualified claims — for example, “Made in USA from imported leather” — may be acceptable if they include clear and conspicuous disclosure of the extent to which the product contains foreign parts, ingredients, components, and/or processing.Continue Reading Proposed FTC Rule to Allow Civil Penalties for Deceptive “Made in USA” Claims

Earlier this month, NAD issued its first decision under its Fast-Track SWIFT program, its expedited review track for single well-defined advertising issues. (Here are more details on NAD’s Fast-Track SWIFT program.) In its first substantive Fast-Track SWIFT decision, NAD dealt with a dispute between energy bar manufacturers Kind and Clif and reviewed the claim “A Better Performing Bar–Clif Bar For Sustained Energy,” which appeared as the top AdWords result for internet keyword searches for “Kind Bars” and “energy bars.”

Kind argued that this constitutes an express claim comparing the performance of Clif Energy Bars (either generally or with respect to sustained energy) to the performance of Kind Bars or all energy bars on the market, that must be supported by head-to-head product testing. Clif argued that the claim was not appropriate for SWIFT treatment because the challenged claim was too complex. Specifically, Clif argued that expert testimony and a consumer perception survey were necessary to determine whether the word “better” conveyed a comparative performance message or was merely an expression of the advertiser’s opinion of its product, and that these questions could not be obtained within the shortened SWIFT timeline. NAD concluded that the claims were appropriate for SWIFT treatment because they did not require NAD to evaluate complicated product testing (the advertiser did not argue that it had product testing to support a comparative performance claim), and any legal arguments were limited because the challenge involved a single claim in a single context.Continue Reading NAD Issues First Decision under Fast-Track SWIFT Program

On June 17, 2020, the Ninth Circuit Court of Appeals issued a published opinion affirming the dismissal of a consumer class action seeking $32,000,000 against Venable client Premier Nutrition Corporation. The Court held that federal equitable principles must apply to class actions pending in federal court, even where state law rules the underlying causes of action. See Sonner v. Premier Nutrition Corp., No. 18-15890, 2020 WL 3263043 (9th Cir. June 17, 2020).

Plaintiff-Appellant Kathleen Sonner sued Premier on behalf of a class of California consumers claiming that Premier’s product, Joint Juice, did not provide its advertised joint health benefits. Sonner sought damages, restitution, and injunctive relief under the Consumer Legal Remedies Act (CLRA), as well as restitution and injunctive relief under California’s Unfair Competition Law (UCL).Continue Reading Ninth Circuit Blocks Class Plaintiffs’ Efforts to End Run Jury Trial

Two weeks ago, the Supreme Court handed down its opinion in Liu v. SEC where it limited the SEC’s disgorgement authority to net profits returned to investors. Today, the Supreme Court granted certiorari in two FTC cases to decide whether Section 13(b) of the FTC Act providing for “injunctive relief” includes the authority to obtain…