Regulatory and Litigation Developments for Advertisers and Marketers
On Friday, the Federal Trade Commission voted to defer the compliance deadline for the amended Negative Option Rule by 60 days. The Commission issued a statement on the new deadline.
The delay reflects the FTC’s response to various commenters who expressed concern that, “given the complexities” of these provisions, it would take a substantial…
Last week, the Federal Trade Commission (FTC) published a set of Frequently Asked Questions (FAQ) aimed at helping businesses and consumers understand the agency’s Rule on Unfair or Deceptive Fees, which takes effect on May 12, 2025. The new guidance signals the FTC’s continued focus on ensuring price transparency in industries where hidden fees have become common—and increasingly controversial.
The rule, which the commission approved in a 4-1 vote in December 2024, is designed to curb misleading fee practices, particularly in the live-event ticketing and short-term lodging sectors. The rule is also part of a broader effort to implement President Donald Trump’s Executive Order on Combating Unfair Practices in the Live Entertainment Market.Continue Reading FTC Staff Issues Guidance Ahead of New Rule Targeting Deceptive Fees
This week, the Federal Trade Commission (FTC) issued a proposed order requiring Workado, a company specializing in artificial intelligence (AI) detection tools, to stop advertising the accuracy of its AI detection tools unless it has suitable evidence that the detection tools are as accurate as claimed. The proposed settlement is yet another indication of the FTC’s continued emphasis on tackling deceptive AI technology under a new administration.
The complaint alleged that Workado marketed its AI Content Detector as being “98 percent” accurate when detecting whether text was written by AI or humans, but the complaint alleged that in reality, the accuracy rate was much lower. The complaint also alleges the AI detection tool was trained and built in such a way as to effectively analyze only academic content, rather than all of the various forms of marketing content Workado customers were submitting, thus making the 98% claim impossible. When independent testing was conducted, measuring the tool against various forms of marketing media, the accuracy rate dropped to just 53%.Continue Reading AI Detection or AI Deception? FTC Says Be Ready to Back It Up
This week, the Federal Trade Commission (FTC) filed a lawsuit in federal court against rideshare and delivery company Uber for allegedly deceptive subscription practices, including making it unreasonably difficult to cancel.
In the accompanying press release, FTC Chair Andrew Ferguson made clear that regulatory scrutiny of negative option and continuity programs will remain a priority: “Americans are tired of getting signed up for unwanted subscriptions that seem impossible to cancel. The Trump-Vance FTC is fighting back on behalf of the American people.” The agency voted 2-0-1 to file the complaint, with Commissioner Mark R. Meador recused.Continue Reading FTC Makes Clear It Will Continue Regulating Subscription Services and Signals Enforcement Priority for Negative Option Rule in Lawsuit Against Uber
Join us as we spotlight select chapters of Venable’s popular Advertising Law Tool Kit, which helps marketing teams navigate their organization’s legal risk. Click here to download the entire Tool Kit.
Telephone and text message marketing is subject to complex litigation risks and regulatory challenges, requiring careful compliance. Federal laws like the Telephone Consumer Protection Act (TCPA) and state-specific laws regulate marketing calls and texts, focusing on the use of autodialers, prerecorded messages, and consent requirements.Continue Reading Telemarketing and Texting
Join us as we spotlight select chapters of Venable’s popular Advertising Law Tool Kit, which helps marketing teams navigate their organization’s legal risk. Click here to download the entire Tool Kit.
The Federal Trade Commission, state attorneys general, and class action plaintiffs continue to scrutinize negative option and continuity offers, including automatic renewals, free-to-pay conversions, and continuity programs.
The FTC’s updated Negative Option Rule mandates clear disclosures, unambiguous affirmative consent, and simple cancellation mechanisms. Marketers must disclose material terms such as price, frequency, and cancellation details prominently and understandably, including on mobile devices. Consumers should give informed consent and receive post-transaction confirmations and renewal reminders. Companies must honor cancellation and refund policies and address complaints effectively.Continue Reading Negative Option and Continuity Marketing
In one of the first settlements since the new administration took office, the Federal Trade Commission (FTC) announced a $17 million monetary judgment with Cleo AI to resolve allegations that Cleo violated Section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA). Cleo operated a personal finance mobile app that purportedly allowed consumers to take out “instant” or same-day cash advances. The vote to authorize the settlement was 2-0.
According to the complaint, Cleo advertised that consumers could access same-day or instant cash advances in the hundreds of dollars. The FTC alleged that when consumers attempted to use Cleo’s services, they were required to enroll in an automatically renewing subscription service where they were charged a subscription cost of $5.99 or $14.99 monthly. Only after the consumers entered in their payment information and enrolled in the subscription service did Cleo disclose to consumers the cash advance they were eligible for.Continue Reading Cleo AI Settles with FTC for $17 Million for Alleged Misleading Practices and Autorenewal Violations
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
Ending speculation and uncertainty about whether new leadership at the Federal Trade Commission (FTC) would repeal or continue to defend the agency’s Negative Option Rule, which regulates offerings such as autorenewal of subscription services, this week the agency filed a brief at the Eighth Circuit defending the rule—something of a surprise.
We previously discussed the arguments raised by industry groups that are challenging the rule. Broadly, the challengers assert that the rule exceeds the FTC’s statutory authority, is procedurally defective, and is arbitrary and capricious. The Eighth Circuit previously denied petitioners’ request to stay the rule from taking effect pending litigation.Continue Reading FTC Files Brief Defending “Click to Cancel” Negative Option Rule
On March 18, President Trump fired the two Democratic commissioners of the Federal Trade Commission (FTC). The removals of Alvaro Bedoya and Rebecca Kelly Slaughter are the latest in a series of executive actions that will limit the agency’s independence.
They also present a direct challenge to Humphrey’s Executor v. United States, the Supreme Court’s 1935 decision holding that Congress may limit the president’s authority to remove members of the FTC without good cause. Both Slaughter and Bedoya stated that they had been “illegally fired.” If the commissioners challenge their terminations, the Supreme Court may be forced to confront the question of whether Humphrey’s Executor should be overruled—an issue the Court has avoided in several recent cases that significantly limited the decision’s application to other agencies, without overruling it. Continue Reading Trump Fires Democratic FTC Commissioners, Setting Up a Direct Challenge to Humphrey’s Executor
