Disclosures

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On March 21, a federal judge in Washington state denied Doxo Inc.’s motion to dismiss a complaint brought by the Federal Trade Commission (FTC) regarding Doxo’s alleged deceptive advertising practices. The FTC’s complaint alleges that Doxo, a third-party online bill pay platform, violated the FTC Act and the Gramm-Leach-Bliley Act (GLB). Doxo provides a third-party bill-paying platform that touts that customers can “pay and manage all [their] bills with one login.”

The FTC alleged Doxo deceived consumers by giving the false impression it was the official payment channel for consumers’ billers and failing to adequately disclose fees being charged. The complaint also alleged Doxo violated the Restore Online Shoppers’ Confidence Act (ROSCA) by failing to clearly and conspicuously disclose material transaction and subscription terms and by failing to obtain informed consent from consumers before signing them up for a subscription service.Continue Reading Do You Know Who You’re Paying? FTC Lawsuit Against an Online Bill Pay Platform to Proceed

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

On February 11, 2024, a new law went into effect in New York, establishing important limits and rules for surcharging. Enacted in December 2023, the new statute has a price disclosure component, detailing how surcharge prices are communicated, and a surcharge price cap component. The law also imposes a $500 civil penalty for each violation, and it can be enforced by municipalities and local governments.

Surcharge Price Disclosure: First, the law provides that any seller imposing a surcharge must “clearly and conspicuously post the total price for using a credit card in such transaction, inclusive of [the] surcharge[.]” This means that the final sales price of any such transaction cannot be greater than the posted price. It would not be sufficient to include a credit card surcharge warning on a price tag or menu, or on a sign by the register.

Surcharge Price Cap: Second, the law provides that any such surcharge may not exceed the amount of the surcharge charged to the business by the credit card company for such credit card use.Continue Reading New York Implements a New Surcharge Law: What the Changes Mean for Shoppers and Businesses

With the holiday shopping season in full swing, companies will soon begin the annual fight for every consumer dollar. But before companies can make the sale, they will face an even more daunting task: grabbing customer attention in the crowded world of online shopping.

As social media companies integrate shopping features into their base platforms, an industry shift often called “social commerce,” influencer marketing becomes an increasingly important method for driving sales.

As innocuous as those 30-second influencer marketing social media clips may seem to be, companies and influencers should be aware that the Federal Trade Commission (FTC) is keeping a watchful eye. This month, the agency issued dozens of warning letters to influencers for the lack of adequate disclosures in their social media posts as required by the recently updated FTC Endorsement Guides.Continue Reading Influencers on Notice: FTC Issues Warning Letters for Inadequate Disclosures

This week, a federal court in California issued an 80-page opinion that painstakingly walks through claims made against several celebrities who had promoted the Ethereum Max (EMAX) cryptocurrency, also called tokens.

The lawsuit was filed last year against Kim Kardashian, Floyd Mayweather, and former professional basketball player Paul Pierce, challenging their EMAX endorsements and social media posts. Since then, the plaintiffs have amended the complaint multiple times.

Among other issues it addressed, this week’s court decision provided a helpful reference point showing where a court aligned with and diverged from the Federal Trade Commission’s Endorsement Guides.

First, the court found that the “#AD” disclaimer in the following post made clear that Kardashian was being paid, even though it appeared toward the bottom of the post.Continue Reading Court Provides Guidance on Social Influencer Advertising in Ethereum Max Crypto Lawsuit

Customer reviews and ratings are powerful, low-cost marketing tools. Technology now allows marketers to harness this power on a scale that was unimaginable even five years ago. The ability to solicit, capture, and post reviews and ratings is virtually seamless. But it is just as easy to seek shortcuts or abuse the system. In response, the Federal Trade Commission (FTC) has devoted resources to addressing consumer review fraud, including through public education. Early in the year, it issued nonbinding guidance for both marketers and online review platforms, warning against potentially deceptive acts, such as faking, manipulating, or suppressing online reviews, as well as paying for higher rankings from purportedly “independent” consumer ranking websites. Online reviews should reflect customers’ honest opinions. So how does the FTC suggest you get there?Continue Reading A Sign of the Times: Federal Trade Commission Releases Guidance on Consumer Reviews

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 National Advertising Division (NAD) held its annual conference. The wide array of speakers covered a broad range of topics, from the metaverse to dark patterns, social justice, environmental claims, and (as always) substantiation and disclosures. Multiple speakers from the Federal Trade Commission also presented and gave insight into the FTC’s current priorities.

The regulators. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, made clear that the agency is closely tracking practices it believes result in consumer economic harm and consumer surveillance and privacy issues. He made clear that the Commission is not shying away from seeking big ticket monetary relief against national well-known advertisers, and intends to hold individuals and executives responsible for their companies’ advertising practices. In addition, Serena Viswanathan, FTC’s Associate Director in the Division of Advertising Practices, highlighted the Commission’s focus on disclosure issues as well as endorsements and reviews, such as review solicitation and aggregation, and product ranking websites.Continue Reading Takeaways from NAD 2022: The FTC’s Enforcement Priorities, New Technologies, Dark Patterns, and the Usual Suspects

Webinar | July 19, 2022 | 2:00 – 3:00 p.m. ET | REGISTER

Although the concept is not new, challenges to “dark patterns” are rising all over the country.  The Federal Trade Commission, Consumer Financial Protection Bureau, state attorneys general, and class action plaintiffs increasingly cite this phrase in such complaints as deceptively enrolling consumers…

The FTC is off to the races with another proposed rulemaking. On June 23, the FTC, by a 4-1 vote, issued a notice of proposed rulemaking (NPR) to combat what it perceives as “junk fees” and “bait-and-switch advertising tactics” in the auto sales industry. Congress gave the FTC the authority to write rules governing the retail sale of automobiles, using APA rulemaking and not the more cumbersome Magnuson Moss rulemaking that the FTC normally must follow in consumer protection rulemakings. This authority is no small matter, as on June 30, the Supreme Court issued its decision in West Virginia v. EPA, which will make rulemakings by the FTC and other government agencies more challenging.

The FTC’s proposed rule would prohibit certain misrepresentations, require certain disclosures, prohibit certain “add-ons,” and require more thorough recordkeeping. First, among a whole host of potential misrepresentations, the proposed rule includes prohibiting misrepresenting regarding vehicle costs; terms of purchasing, financing, or leasing; and the availability of vehicles at an advertised price.Continue Reading FTC Starts the Engine on Car Sales Fees and Advertising Rulemaking, but Other Rulemaking Faces Major Questions