Disclosures

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teeing offWe love golf, cooking, and the Restore Online Shoppers’ Confidence Act (“ROSCA”), so when the FTC brings a case involving all of this, we are compelled to blog. As it is almost Masters time, please feel free to put on your green jacket and read on.

On March 24th, the FTC filed suit in California against a group of online marketers for violating the FTC Act and ROSCA based on the defendants’ free trial/negative option marketing for golf-related products and cooking gadgets. According to the Complaint, the defendants’ websites, TV infomercials, and emails deceive consumers into believing that the products and services advertised are free by failing to clearly and conspicuously disclose that consumers would be charged if they did not cancel the “free trial” or return the “free” product. For instance, according to the Complaint, the Tour Z Golf Balls’ website’s first page makes a prominent claim that consumers can try the golf ball for free. See below.Continue Reading There is No Such Thing as “Free Golf Balls”: The FTC Continues Crackdowns on Negative Option Marketers

Note: We have revised the description of the terms of the settlement in our recent blog post on the Carribean Cruise Line TCPA matter. Click here to read the corrected post.

paperworkHaving trouble sleeping and need something to read? Lucky for you the Consumer Financial Protection Bureau (the Bureau) recently released its 1700+ page final rule for prepaid accounts under the Electronic Fund Transfer Act and the Truth in Lending Act. On the other hand, if you’d rather spend your wakeless nights watching playoff baseball, we’ve got you covered with a brief summary of the rule and some implications for the prepaid industry.

What are the types of prepaid accounts subject to the rule? The final rule defines prepaid accounts to encompass a diverse group of products, including traditional general-purpose reloadable cards; non-reloadable prepaid cards; payroll cards; student financial aid disbursement cards; tax refund cards; government benefit cards; mobile wallets; person-to-person payment products; and other electronic prepaid accounts that can store funds. The rule excludes from coverage gift cards and gift certificates; accounts used for savings or reimbursements related to certain health, dependent care, and transit or parking expenses; and certain limited government program accounts.Continue Reading Sweeping New Federal Regulations for the Prepaid Industry

WorkshopThe Federal Trade Commission (FTC) just released its agenda for its September 15th workshop, “Putting Disclosures to the Test,” a full-day event aimed at improving the testing of disclosures by industry, academics, and the FTC.

The workshop will review testing methodologies and examine how consumers perceive disclosures. Information will also be presented on how to test disclosure effectiveness and what types of testing are most appropriate for a given disclosure type or medium. There will also be discussion on the costs and benefits of disclosure testing.

The full agenda can be viewed here.Continue Reading FTC Aims To Understand Disclosures Through Consumer Testing – Announces Workshop Agenda

DJ Khaled’s Snapchat account has quickly risen in profile over the past year, with his continuous snaps about meals, music, and the keys to success. But the tone of many celebrity social media posts, including Snapchat, may soon need to change. In recent days, the FTC has made clear that it will begin to more vigorously enforce celebrity endorsements where there was insufficient disclosure that the influencer was paid to post.

But, given the prevalence of these influencers with hundreds of thousands of followers, aren’t consumers starting to realize that they are being subjected to ads? Not according to the FTC. Unlike traditional media such as television, where the audience is likely to understand that the content is an advertisement, celebrities’ and influencers’ persistent tweets and snapchats may not be understood by consumers to be marketing content that the author was paid to post. In the case of many celebrities the line between personal and professional is not always so clear. For example, DJ Khaled often snaps his healthy meals and shoe collection, thus blurring the line between those products he was paid to endorse versus those that he simply wants to share with his audience, no strings tied.Continue Reading FTC Looks to Influence Disclosures

We’ve blogged several times about the need to disclose when social media posts by endorsers, particularly celebrities, have been paid for. And there has been lots of guidance and discussion about how best to do that, particularly in shorter form media such as Twitter. For example, “The FTC’s Endorsement Guides: What People Are Asking” provides broad direction. While the FTC does not mandate specific disclosure language, it suggests directing influencers to use “#sponsored,” “#promoted,” “#paidad,” or “#ad,” which eat up as few as 3 of your 140 characters. The FTC’s goal is for companies to provide clear and conspicuous disclosure of sufficient information for consumers to evaluate the true source of sponsored native advertising content.

Leave it to the Kardashian clan, however, to come up with an even more novel way of complying with the FTC’s disclosure requirements. This social media post by Scott Disick, the father of Kourtney Kardashian’s children caught our eye and we couldn’t resist blogging about it.Continue Reading Celebrity Endorsement Disclosures on Social Media

Last month, the U.S. District Court for the Southern District of Florida issued an opinion that serves as a powerful reminder of the risks of not taking telemarketing compliance seriously. In August 2014, the FTC sued the Partners in Health Care Association (“PIHC”), its principal Gary Kieper, and others for deceptively telemarketing medical discount cards.  According to the FTC, the defendants misled consumers into thinking the discount card was actually health insurance.  In last month’s decision, the court granted the FTC’s motion for summary judgment and entered judgment against Kieper in the amount of $8.7 million.

Relying on consumer complaints and FTC undercover calls, the Court found that PIHC and the telemarketers it hired had deceived consumers by telling them that the discount cards were, in fact, health insurance cards.  The court found Kieper was well aware of the deceptions based on several state investigations into the telemarketing, numerous BBB complaints, and internal documents.  The court rejected a variety of arguments raised by Kieper as to why the calls were not deceptive or that summary judgment should not be granted. 
Continue Reading Recent Opinion Highlights – The Risk of Unhealthy Telemarketing Practices

By Wikidata (www.wikidata.org) [CC BY-SA 3.0], via Wikimedia Commons

Website disclosures are a hot topic these days, and are not new. And yet, you should still be paying attention to the law as it evolves around this important component of your website. There are nuances to consider, and, in California, we now have some clarity on how to analyze a browsewrap agreement.

In Long v. Provide Commerce, Inc., 245 Cal. App. 4th 855 (Cal. Ct. App. Mar. 17, 2016), the California Court of Appeal considered a trial court’s denial of a motion to compel arbitration. Defendant sought to compel arbitration based on a provision in the website’s terms of use, which provision was viewable via a hyperlink at the bottom of each page of the operative website (i.e., the “browsewrap agreement”). Plaintiff opposed the motion to compel arbitration. The trial court denied the motion and the court of appeal affirmed. Ultimately, the courts concluded that the terms of use were too inconspicuous to impose constructive knowledge on Plaintiff.Continue Reading Coast-to-Coast Harmony over Browsewrap Agreements

It doesn’t take a genius to know that health claims are on the FTC’s radar.  In fact, at last year’s NAD conference, Commissioner Brill said that the FTC will prioritize enforcement of unsubstantiated health claims, such as cognitive claims.  We have blogged about learning claims before, including the Word Smart case.  However, Lumosity, which created a program marketed to train the brain, improve memory, and delay cognitive impairment, was cast into the spotlight this week when it settled a case with the FTC.

According to the FTC’s complaint, Lumosity, which contains 40 games ostensibly designed to improve brain function, advertised that training on its program for 10 to 15 minutes three or four times a week could help users achieve their “full potential in every aspect of life.”  The FTC alleged that Lumosity claimed that scientific studies showed that users would improve performance on everyday tasks, in school, at work, and in athletics; delay age-related cognitive decline and protect against dementia and Alzheimer’s disease; and reduce cognitive impairment associated with health conditions, including stroke, traumatic brain injury, PTSD, ADHD, the side effects of chemotherapy, and Turner syndrome. 
Continue Reading FTC Settlement Sheds Light on Claims of Increased Cognition

A couple of years ago it felt like we were blogging about developments in cases involving “up to” claims up to 3x more often than just about any other topic.  To summarize the upheaval, for many years there were cases allowing an up to claim if an “appreciable number” of consumers could enjoy the claimed maximum benefits.  There are also state and local pricing laws requiring for sales claims that 10-15% of the sale goods be available at the highest advertised discount.  Then the FTC brought cases involving savings claims for installing new windows, which included some rather sobering consumer research in which consumers appeared not to understand even relatively clear disclosures regarding “up to” claims.  The cases settled with orders requiring that all or almost all of consumers be likely to achieve the maximum claimed savings.  As a result the advertising legal community was thrown into a frenzy not knowing if the upper limit in an up to claim had to be something everyone could attain or 10% could attain or something in between.  NAD largely stuck to its old standard, but in cases where the purchase required a significant investment seemed more aligned with the FTC’s view in the windows cases. But things seemed to settle down somewhat back to normal when the FTC did not follow with a flurry of new cases. 
Continue Reading NAD Ups the Ante on “Up To” Claims

Risk-Free-TrialAs we’ve mentioned before, and as this year is unfolding, it looks like the Federal Trade Commission (“FTC”) is even more desperate to enforce the Restore Online Shoppers’ Confidence Act (“ROSCA”) than we are to find good skin care products.  The FTC has begun expanding its enforcement of ROSCA into various industries, including now the skin care industry.  Perhaps more importantly, the FTC is increasing the stakes on what constitutes adequate disclosures, forcing many marketers to spend less time looking in the mirror and more time looking at their online disclosures.

Last week, the Central District of California entered a Temporary Restraining Order and the FTC issued a complaint, alleging that since at least 2010, a number of defendants had marketed and sold skin care products on a variety of websites that ran afoul the ROSCA, the FTC Act, and the Electronic Funds Transfer Act (“EFTA”). 
Continue Reading Court Attempts to Smooth out ROSCA Violations