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Last week, Senators Al Franken (D-Minn) and Hank Johnson (D-Ga) revived the Arbitration Fairness Act (“Act”), which would ban arbitration provisions in consumer contracts, as well as employment, antitrust, and civil rights cases, and only allow the parties to agree to arbitration after the dispute arises.  The newfound interest in the Act demonstrates renewed opposition to arbitration as an alternative to litigation.

If passed, the Act would have a clear impact on marketers’ ability to avoid class actions and limit their liability in contracts with consumers.  Online marketers often implement binding arbitration provisions to reduce their exposure to class action lawsuits brought by consumers.  But the proposed Act would ban those provisions and only allow the parties to agree to arbitration after the dispute arises. 
Continue Reading Arbitrate-Shun: Congress’s Proposed Attack on Arbitration Clauses

keepcalmLast week, a federal judge in the Northern District of California denied AT&T’s motion to dismiss the FTC’s lawsuit against the company concerning its advertising and business practices for its mobile wireless data plans.

As we noted last fall, the FTC accused AT&T of misleading millions of its customers by marketing “unlimited” data plans, but then “throttling,” or reducing data speeds, for unlimited plan customers after they used a certain amount of data in a given billing cycle.  As a result of the throttling, customers’ smartphone applications, such as GPS, would not function as they would under higher internet speeds.  The FTC asserted that AT&T had been throttling data speeds for its unlimited data customers since 2011, and that it has throttled at least 3.5 million customers a total of more than 25 million times. 
Continue Reading Think You Are Exempt from FTC Jurisdiction? Think Again, Judge Says after Throttling AT&T’s Motion to Dismiss FTC Lawsuit

The Federal Trade Commission (“FTC” or “the Commission”) has clearly subscribed to enforcing ROSCA recently.  On Tuesday, the FTC filed a complaint against DIRECTV’s negative option program and contract pricing structure under Section 5 of the FTC Act and ROSCA.

In the complaint, the FTC alleged that DIRECTV required customers to agree to a mandatory 24-month contract to receive television programming; customers who canceled their subscriptions before 24 months were charged an early cancellation fee.  Although the rates were set at a specific monthly charge for the first year of a 2-year customer agreement, in the second year of the agreement, the FTC alleged that DIRECTV would increase the monthly charges by 50-70% higher than customers paid in the first year.  After the first year of the agreement, customers either had to pay significant cancellation fees or pay the higher monthly price.  
Continue Reading FTC Dishes Out ROSCA Complaint with Focus on Disclosures

The gift card saga in New Jersey looks like it has finally wrapped up with Governor Chris Christie tying a bow on the proceedings by signing NJ S-2235, eliminating data collection requirements for sellers of qualifying gift cards and gift certificates.  Those who have followed this story may recall that back in 2010 New Jersey passed a new gift card law, which made a number of changes including shortening the abandonment period and requiring gift card sellers to collect address information, or at a minimum zip codes, from gift card purchasers.  The law was the first of its kind and led many companies, such as Blackhawk Network and InComm, to pull their gift cards from the state.  In 2012, we reported that the Third Circuit upheld the law, including the data collection provision, but as we advised later that year, the state subsequently amended the law, extending the abandonment period to 5 years and delaying the collection requirement until July 1, 2016. 
Continue Reading Returned to Sender: New Jersey Repeals Zip Code Collection Requirement for Gift Card Sellers

New Jersey traditionally has had the most onerous state Do Not Call law, which prohibited all telemarketing sales calls to cell phones.  The law did not even allow such calls to be made with the consumer’s consent.  With 90% of Americans owning cell phones and 58.8% of households being either entirely or predominantly wireless today, that was particularly bad news for telemarketers.

However, on January 29, 2015, New Jersey Governor Chris Christie signed into law state Senate bill 1382, which significantly loosens the state’s restrictions on telemarketing to cell phones.  The bill clarifies the state’s Do Not Call law to prohibit only unsolicited telemarketing sales calls from being made to cell phones.  The amended law – which took in effect immediately upon Governor Christie’s signing – defines “unsolicited telemarketing sales call” as any telemarketing sales call other than a call made (1) in response to the express written request of the consumer called or (2) to an existing customer.  The New Jersey Senate Commerce Committee clarified that the latter carve-out from the state Do Not Call law permits the placement of collection calls and calls to follow up on customer’s contractual obligations “unless the customer has stated to the telemarketer that the customer no longer desires to receive the telemarketing sales calls of the telemarketer.”Continue Reading “Glory Days”: New Jersey Allows Certain Telemarketing Calls to Cell Phones

You’re sitting in the offices of your on-line business, going through your in-box.  Your mail includes a letter from the U.S. Postal Service.  The letter claims that you owe a six- or seven-figure sum—more than your profits last year—because you didn’t pay enough postage on parcels of merchandise that you mailed to consumers one, two or three years ago.  You have 30 days to appeal—to another Postal Service official—or pay up.  “We appreciate your business,” the letter ends.

You sit there in disbelief.  Your company has a dedicated in-house shipping department.  You’ve faithfully paid the postage on your outgoing parcels with a postage meter for several years—maybe even with a computerized meter and data link that enable the Postal Service to debit your postage instantly from your bank account whenever you mail.  None of the post office employees who deal with your shipping department have ever raised any underpayment issue before.  How are you going to reconstruct what you mailed several years ago?  And, if you owe more postage, how will you ever be able to get your customers to reimburse you?  This seems Kafkaesque.

How should you respond?
Continue Reading Please don’t, Mister Postman: How to respond when the Postal Service claims that you underpaid postage

cubanPresident Obama has created a lot of buzz about opening the Cuban market to Americans, but it is a long way from buzz to profits.  On December 17, 2014, the President and various members of his administration announced sweeping changes in the 50-plus year economic embargo against Cuba.  Normalization of diplomatic relations, increased travel, the ability to use U.S. debit and credit cards, increased commerce, and a number of other changes almost makes one want to break out a Cuban cigar right here in the nation’s capital and start ginning (or rumming, to create a word) up advertisements for the Cuban market.

But that would be premature given what the “buzz” currently allows.  Lighting up the Cubano is still illegal (indeed, even having it in the U.S. is illegal).  Although U.S. law currently allows limited commercial exports to Cuba (mostly agricultural goods and medicines), and the President has proposed expanding trade, a number of major hurdles stand in the way of full scale trade: 
Continue Reading Advertising in Cuba? Not Yet, Says Uncle Sam

infinityDefining unlimited is a metaphysical exercise worthy of a Cosmos or at least a Big Bang episode.  We have blogged before about the meaning of “lifetime supply” and “free.”  But the FTC is very literal when it comes to defining the bounds of limitless and concludes that, well, unlimited means unlimited. The FTC has just filed a federal court complaint against AT&T seeking redress for customers who signed up for unlimited data plans.  In its complaint, FTC charged AT&T with engaging in an unfair and deceptive data throttling practice that targeted customers on its unlimited data plans without providing customers adequate disclosure as to the nature of the practice.

According to the FTC, despite its “unequivocal promises of unlimited data,” AT&T allegedly began throttling data speeds for its unlimited data plan customers in 2011, in which “numerous customers” experienced slow-downs of up to 85-95 percent. The FTC’s complaint claims that AT&T violated the FTC Act by changing the terms of customers’ unlimited data plans while those customers were still under contract with AT&T, and by failing to disclose the extent of the throttling program to consumers who renewed their unlimited data plans with AT&T.Continue Reading FTC: Unlimited Means Unlimited

Consumer complaints are a fact of life for even the most scrupulous businesses.  When companies deal with consumers in a uniform yet large-scale manner, occasional lapses that generate ill-will are inevitable.  Upset customers can lead to lost sales and diminished reputation, but they can also affect more than just the bottom line.  Over the past decade, American businesses have seen an up-swell in consumer-driven class actions.  At the same time, federal and state regulatory agencies have aggressively pursued companies of all sizes and industry backgrounds for unfair and deceptive trade practices.  In many instances, businesses targeted by these lawsuits or regulatory investigations could have avoided them all together by more carefully monitoring what was upsetting their customers.

Today it is easier than ever for companies to track consumer sentiment beyond what they learn through phone calls, emails, and letters received directly from customers.  Organizations like the Better Business Bureau, Yelp, and Angie’s List solicit consumer feedback and make it widely available on the Internet for public consumption.  However, not all businesses are aware that the Federal Trade Commission—the nation’s top consumer protection watchdog—also maintains an enormous consumer complaint database known as the FTC Consumer Sentinel Network.  This secure online repository contains roughly 20 million consumer complaints, which the FTC uses to identify unlawful business practices and to build evidence for litigation.  The FTC carefully guards the contents of its Consumer Sentinel database, which it has long refused to make publicly available.  But a recent decision by the U.S. District Court for the District of Columbia suggests that businesses who want to peak into the FTC’s consumer complaint files may have an avenue for doing so via a carefully tailored Freedom of Information Act request.Continue Reading Keeping Watch Over the FTC’s Consumer Sentinel: How Businesses Can Use FOIA to Look Inside the FTC’s Hidden Complaint Database