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At its most recent open meeting, the Federal Trade Commission voted unanimously to issue an Advance Notice of Proposed Rulemaking, seeking public comment on whether to modify or expand its Business Opportunity Rule.

The Business Opportunity Rule, first adopted in 2012, requires sellers of “business opportunities” to be able to substantiate any earnings claims they make, and to make certain enumerated disclosures pertaining to the potential transaction. These disclosures include:

  • The seller’s identifying information
  • Whether the seller is making earnings claims and, if so, substantiation for those claims
  • Whether the seller, affiliates of the seller, or its leaders have been involved in legal actions concerning misrepresentation, fraud, securities law violations, or unfair or deceptive practices in the previous 10 years
  • The terms of the seller’s cancellation or refund policy, if it has one
  • A list of people who have purchased the business opportunity in the previous three years

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Continue Reading Proposed Rulemaking: FTC Dials in on Business Opportunities

Last week at its monthly open meeting, the Federal Trade Commission (FTC) unveiled two new rulemaking proceedings: the first deals with deceptive customer reviews and endorsements and the second with so-called junk fees. 

Both rulemakings are in their nascent stages. Last week’s actions—the issuance of two advance notices of proposed rulemaking (ANPRs)—simply request information from the public on the consumer harms caused by fake and paid reviews and junk fees. The road from ANPR to final trade rule is a long and winding one, particularly given the number of new rulemakings upon which this FTC has embarked, which Commissioner Christine Wilson has termed “Ruleapalooza.”…

Continue Reading FTC Issues New Rulemaking Proceedings on Customer Reviews and “Junk Fees”

The FTC’s ears must have been burning. Yesterday, just hours after we finished a webinar discussing the latest developments in the FTC’s push for more rulemaking, the FTC announced an upcoming open meeting where it will propose issuing three advanced notices of proposed rulemaking (ANPR).

First, the FTC will consider whether to initiate rulemaking to…

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

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

By a unanimous 5-0 vote, the Federal Trade Commission last week released a staff report that sheds light on the agency’s enforcement positions and priorities regarding digital “dark patterns,” which the FTC defines as interface designs used to manipulate consumers into making decisions about purchases and personal data that they otherwise would not have.

Stemming from a public workshop the FTC hosted in April 2021, the report, “Bringing Dark Patterns to Light,” uses examples and illustrations to catalog and criticize numerous commonly seen practices in e-commerce, and includes an appendix describing types of dark patterns, while also stressing that dark patterns have a stronger effect, and by extension cause greater consumer harm, when they are used in combination, rather than in isolation.

Given Chair Lina Khan’s ambitious enforcement and policy goals for the agency, which we’ve previously discussed, anyone who engages with consumers online should consider the report both a reference and a warning.  …

Continue Reading The FTC Brings More Light to Dark Patterns in New Staff Report

The buzz around gig economy protections continued as the Federal Trade Commission took yet another action to safeguard gig workers. Last week, the FTC adopted a policy statement asserting its authority to address unfair and deceptive practices and anticompetitive conduct that harms workers in the gig economy.

The statement highlights data from several studies concerning the gig economy, including that it is expected to generate $455 billion in annual sales by 2023, and that 16% of Americans report earning income through an online gig platform. The statement also reports that, while gig work has already established itself in food delivery and transportation, it is now expanding into healthcare, retail, and other segments of the economy. The FTC noted that the decrease in demand for transportation during the COVID-19 pandemic illustrates “the precarious nature of gig work.”

The FTC statement focuses on three features of the gig economy “that implicate the Commission’s consumer protection and competition missions:”…

Continue Reading New FTC Policy Statement: Agency Continues to Ramp Up Gig Worker Protections

When the COVID-19 pandemic began, and consumers swarmed the stores for disinfectant sprays, masks, and household items, state price-gouging laws grew increasingly relevant as sellers sought to cash in on the heightened demand.

In May 2020, New York Attorney General Letitia James took action against Quality King Distributors, Inc., a wholesaler that, according to James, illegally increased its prices to sell Lysol disinfectant products to neighborhood grocery and discount stores in New York. A New York state court tossed the case a few months later, finding that Quality King did not “uniformly raise their prices on Lysol products to these customers.” This week, a New York appellate court disagreed.…

Continue Reading The Pandemic May Be Over, but Price-Gouging Laws Live On

Through a new interpretive rule announced this week, the Consumer Financial Protection Bureau (CFPB) has declared that digital marketing providers can be held liable under the Consumer Financial Protection Act (CFPA) if they engage in or substantially assist unfair, deceptive or abusive practices in advertising financial products on behalf of banks and nonbanks covered by the CFPA.

While service providers to “covered persons” under the CFPA are already subject to the Act, Congress carved out an exception for service providers offering or providing to covered persons “time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media.” The CFPB’s new rule limits the applicability of that exemption to digital marketing providers such that the “electronic media” prong is very nearly void.…

Continue Reading CFPB Warning to Consumer Financial Services Digital Marketing Providers

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…