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

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

Webinar | June 28, 2022 | 2:30 – 3:00 p.m. ET | REGISTER

Venable partners Len Gordon and Alexandra Megaris will present “What You Need to Know About FTC’s Proposed Changes to Its Endorsement Guides.” The Endorsement Guides, first issued in 1980 and last amended in 2009, reflect the Commission’s interpretation of how the FTC

The Federal Trade Commission has requested public input about potential updates to its “Dot.Com Disclosures.” The guidance document was last updated nearly a decade ago and has not addressed much of the new technology that has emerged and the evolution in online advertising. As a result, the agency’s call for comments will allow those interested to provide feedback and suggestions to modernize the guides. Comments are due by August 2, 2022.

The FTC has asked for industry stakeholders’ input on many issues, including:

Continue Reading FTC Asks Online Advertisers to Weigh in on Dark Patterns, Calls for Comment on Its .Com Disclosures Guidance

Last week, the United States Department of Justice, acting on behalf of the Federal Trade Commission, took action against Twitter, Inc. for allegedly using private account security data to sell targeted advertisements without informing the platform’s users. To settle the matter, Twitter agreed to a stipulated order requiring the social media giant to pay $150 million in civil penalties, which the court entered a day after the complaint was filed.

Understanding the recent settlement warrants a quick history lesson on Twitter’s dealings with the FTC. In 2010, the FTC filed an administrative complaint against Twitter, asserting the company misrepresented the security measures it had in place to protect private user information from unauthorized access and to honor users’ privacy choices. This ultimately led to a 2011 FTC Order that barred Twitter from misrepresenting the extent to which it “maintains and protects security, privacy, confidentiality, or integrity of any nonpublic consumer information.”

Continue Reading Twitter Will Pay $150 Million to Settle Charges That It Misrepresented Its Privacy and Security Practices

“Free” must mean free?

Last week, the attorneys general for all 50 states and the District of Columbia announced a settlement with Intuit, Inc., the owner of TurboTax, which will require the company to hand over $141 million to consumers as restitution for allegedly tricking consumers into paying for tax-filing services when they qualified for free tax-filing services.

Recently, we wrote about the Federal Trade Commission’s legal action against Intuit for its advertisements regarding “free” tax-filing services. In that action, the FTC sought to definitively resolve that very question. As part of last week’s settlement agreement, Intuit will cease its advertising campaign promoting its “free, free, free” services in addition to paying the hefty restitution sum. The state settlement essentially ended the FTC action as well.

While the states’ investigation overlapped with the FTC’s action concerning Intuit’s alleged bait-and-switch advertising (i.e., representing the service is “free” but later requiring an upgrade to a paid version), their investigation also had another focus: “dark patterns,” which refers to a digital design feature that is intended to subtly influence a consumer’s online decisions.

Continue Reading Intuit Will Pay $141 Million in State Attorneys General Settlement Over Deceptive TurboTax Advertising

A lawsuit filed by the CFPB last week against a national credit reporting agency provides some insight into the types of website features and designs that regulators like the Consumer Financial Protection Bureau and Federal Trade Commission will target. As we covered previously, digital dark patterns—or website design, features, and interfaces used to allegedly deceive, steer, and manipulate users—are a priority for both rulemaking and enforcement actions by the FTC. Although the focus has been on website features that “trick or trap” consumers into subscriptions, the potential for broad and arbitrary application of this concept is worrisome. What is the line between a website that is acceptably optimized for conversion and one that is illegally steering users to make purchases?

In the highly detailed complaint, the CFPB alleged, among other things, that the net impression of various advertising messages, combined with the design of the webpage where users landed when clicking on the ads, obscured the nature of the offer (a month-to-month subscription of a credit-monitoring service and credit score), the status of a user’s enrollment in the service, and the purpose of collecting a user’s payment information.

More specifically, the complaint described how call-to-action buttons, email subject lines, font color and size, text placement, and website flow were employed to confuse consumers who were seeking information about or copies of their annual free credit report and steer them instead into unwittingly purchasing a subscription for credit monitoring.

Continue Reading Latest CFPB Lawsuit Sheds Light on Digital Dark Patterns

Last month, love was not all lost for the owner of Tinder and OKCupid when a Texas federal district court in FTC v. Match Group, Inc. granted in part the online dating service provider’s motion to dismiss. Specifically, the court agreed with Match that the FTC could not seek equitable monetary relief under Section 13(b) of the FTC Act and barred two claims based on Match’s immunity under the Communications Decency Act (CDA).

To set the scene, here is a recap of the legal landscape. In recent history, the FTC under Section 13(b) brought “proper cases” directly in federal courts without needing to conduct administrative proceedings. The agency also pursued permanent injunctions and equitable monetary relief.

In the past few years, courts have become increasingly less enamored with the FTC’s interpretation of its authority under Section 13(b). The first blow was FTC v. Shire Viropharma, Inc., in which the Third Circuit concluded that under Section 13(b), the FTC cannot base claims on “long-past conduct” alone, but must affirmatively plead facts that a defendant “is violating” or “is about to violate” the law, i.e., that there is “existing or impending conduct.”

Continue Reading FTC v. Match Group, Inc.: Court Gets Cold Feet on the Standard Set Forth in Shire