Last week, the Federal Trade Commission (FTC) announced that it agreed to settle claims against Dun & Bradstreet (D&B), a business credit reporting agency engaged in deceptive and unfair practices with small and mid-sized business customers.

The FTC’s complaint primarily stemmed from businesses’ claims that error-ridden reports negatively affected business opportunities and that D&B’s offered

Senator Joe Manchin’s decision to torpedo the Build Back Better Act has wide-ranging consequences, including one that hits close to home, so to speak. Tucked in the bill was a provision to provide the FTC with authority to seek civil penalties for all violations of Section 5 of the FTC Act (something the FTC Act currently does not allow). This provision, which was vehemently opposed by a broad range of business groups, essentially has died on the vine. Although proposals to arm the FTC with such authority may be resurrected in future spending bills or standalone legislation, as of today, Congress’s focus appears to have narrowed on regulation of Big Tech, including the creation of a data privacy bureau within the FTC.

In the meantime, Senator Mike Lee, Republican of Utah, has introduced a new bill, the Consumer Protection and Due Process Act, which would provide the FTC with the authority to seek equitable remedies (including consumer restitution) under Section 13(b) of the FTC Act. This bill is a direct response to the April 2021 Supreme Court’s decision in AMG Capital Mgmt. finding the FTC did not have the authority to seek equitable remedies under current law (for more on that watershed case, click here and here). Notably, the bill has built-in guardrails to ensure the FTC does not “engage in substantial overreach.” Those guardrails include:


Continue Reading 2021 Capitol Hill Wrap-up

A hallmark of Chair Lina Khan’s tenure thus far at the FTC has been her effort to stoke fear to try to deter conduct that she does not like.  The FTC’s recent Penalty Offense Notices and the Enforcement Statement on Negative Option Marketing provide examples.  Last week, during the Commission’s open meeting on November 18 the Commission engaged in more sabre rattling by issuing a “Commission Statement Regarding Criminal Referral and Partnership Process.”  This statement outlines the FTC’s renewed commitment to continue to expand its criminal referral program.  At the open meeting, however, the Commissioners stressed that this is not a new policy and that the statement merely reflects what FTC Staff have already done for approximately the past 20 years.  Since 2003, the FTC’s Criminal Liaison Unit (CLU) has worked with federal, state, and local criminal law enforcement to refer those matters that implicate criminal activity.  On occasion, the FTC has even referred cases to international criminal law enforcement partners.

Chair Khan noted that the FTC is redoubling its efforts to deter corporate crime that most harms consumers because civil fines are not doing enough, and that major corporations are likely to be repeat offenders due to their resources and scale.  Also, Commissioner Slaughter mentioned that a lower stock price or a visit from the FTC are not the only things that these offenders should fear.  In other words, the Commission hopes that with the help of criminal law enforcement, a company will see the light of day that crime does not pay.


Continue Reading Chair Kahn says Don’t Do the Crime If You Can’t Do the Time

Last week two different bills were noticed by the House of Representatives that would provide additional remedial tools to the FTC to restore or replace some of what the agency lost when the Supreme Court struck down the agency’s ability to obtain equitable monetary relief under Section 13(b) of the FTC. Whether any of these

As the bustling holiday season quickly approaches, and in light of COVID-19’s impact on global supply chains, retailers face many challenges in their business operations, but also in maintaining regulatory compliance relating to shipping—and shipping representations. This is especially true for retailers selling goods online, by phone, or by mail, who must be mindful of both federal and state regulations.

Major state regulators are already cracking down. Four California county district attorneys recently filed suit against Kanye West’s Yeezy Apparel brand, alleging violations of California Business & Professions Code, Section 17538, which requires in pertinent part that businesses selling goods online (or by mail or telephone) to California customers must ship the goods within 30 days of a completed order or provide a full refund, send written notice of the delay and offer a refund, or provide substitute goods and offer a refund. The law allows the state to seek civil penalties of $2,500 for each violation.


Continue Reading ‘Tis the Season—to Update Your Shipping Representations

The Federal Trade Commission (FTC) recently issued Notices of Penalty Offenses regarding for-profit education, endorsements and testimonials, and money-making opportunities. Prior to this year, the FTC had used its Penalty Offense authority only once in this century. So why the sudden rebirth? In this webinar, Venable attorneys examined the FTC’s authority in this area, the substance of the notices, and their broad implications.

What Is a Penalty Offense?

Under the Penalty Offense authority, the FTC can seek civil penalties against a company or individual if it proves that they had actual knowledge that the FTC had already issued a written decision (after an administrative trial) against another entity that the same conduct was unfair or deceptive in violation of Section 5(m)(1)(b) of the FTC Act. Section 5 enables the FTC to hold the person, partnership, or corporation liable for a civil penalty of up to $43,792 per violation.

In the last few weeks, the FTC has sent out three different notices. The purpose of these notices was to allow the FTC to argue that the recipients had actual knowledge that the FTC had previously ruled certain acts or practices to be unfair or deceptive. Each of the letters specifies that the FTC is not singling out recipients or suggesting recipients are violating the law, which signifies that this is part of an effort to effect broad changes in industry behavior.


Continue Reading FTC’s Notice of Penalty Offenses: What Do They Mean for You?

With Halloween just days away, it is perhaps fitting that the FTC has issued a new enforcement policy statement warning companies not to employ dark patterns to trick customers into a subscription plan. As we covered previously, the FTC has identified dark patterns—or website design features used to deceive consumers—as a priority for both rulemaking and enforcement actions. The timing of the announcement is a bit curious as the FTC is in the middle of a rule making on negative option marketing. More below from Commissioner Wilson on that.

The enforcement policy statement in many ways reflects the requirements of the Restore Online Shoppers Confidence Act (ROSCA) and established FTC precedent regarding negative option marketing. The FTC has been active against companies who hide their subscription programs behind links, have made customers undergo several attempts to cancel their subscription, or companies who failed to disclose that the benefits of their subscription did not exist anymore.


Continue Reading FTC Issues Dark Forecast for Dark Patterns in Subscription Auto-Renewal

With the complexity of product safety requirements, the changing regulatory environment, and the ferocious plaintiffs’ bar, it is more important than ever for importers, manufacturers, and retailers to understand their obligation to comply with product safety laws and standards. In this recent webinarMelissa L. Steinman, a partner in Venable’s Advertising and Marketing practice, explored current developments in product safety and warranty laws and examined common issues and pitfalls that organizations need to be aware of relating to product standards and safety. She also addressed some follow-up questions.

Continue Reading You Asked, We Answered – Consumer Product Safety and Warranties

Just days after the FTC announced that it was resurrecting its Penalty Offense Authority to crack down on for-profit higher education institutions’ false promises about graduates’ career opportunities and earnings prospects, the FTC is invoking this authority to “blanket[] industry with a clear message” about fake online reviews and other deceptive endorsements.

The FTC has revived this dormant authority—the latest example of its creative use of different enforcement tools to obtain monetary relief in the wake of the Supreme Court’s AMG opinion—to hold companies accountable, via significant financial penalties, for unfair and deceptive business practices.

As we previously wrote, former FTC Commissioner Rohit Chopra had championed the use of this authority and identified for-profit colleges as one possible industry for use of this enforcement tool, while identifying other targets like multilevel marketing programs, gig economy networks, and fake review and influencer fraud.

The FTC now has quickly turned its attention to fake online reviews and other deceptive endorsements, sending a Notice of Penalty Offenses to more than 700 companies, representing an array of leading retailers, consumer product companies, and ad agencies. In doing so, the Commission advises recipients of significant potential civil penalties—up to $43,792 per violation—they could incur if they use endorsements in ways that were found to be illegal in FTC administrative decisions rendered in the 1940s through the 1980s. Under Section 5(m) of the FTC Act, the FTC can obtain penalties against other entities not party to the original proceeding if it can show the entity had actual knowledge that the act had been found to be unfair or deceptive. However, the FTC points out that a company’s inclusion on the list of recipients is not an indication the company has acted illegally.


Continue Reading FTC “Blankets Industry” with Notice of Penalty Offenses Concerning Deceptive Reviews and Endorsements

In the latest example of its creative use of different enforcement tools to obtain monetary relief in the wake of the Supreme Court’s AMG opinion, the FTC has resurrected a dormant authority to hold companies accountable, via significant financial penalties, for unfair and deceptive business practices.

This week the FTC announced that it has put 70 for-profit higher education institutions—including some of the largest for-profit colleges and vocational schools across the country—on notice that the agency is scrutinizing false promises made about graduates’ job opportunities, earnings prospects, and other career outcomes.

The FTC is resurrecting its Penalty Offense Authority, found in Section 5(m) of the FTC Act, “to deter wrongdoing and hold accountable bad actors who abuse students and taxpayers,” according to FTC Chair Lina M. Khan. Under this section of the statute, the FTC can obtain penalties against other entities not party to the original proceeding if it can show the entity had actual knowledge that the act had been found to be unfair or deceptive.


Continue Reading FTC Invokes Penalty Offense Authority to Crack Down on For-Profit Education Industry