Upcoming FTC Hearings Include Several Topics Relating to Consumer Protection

Taking a page from Federal Trade Commission legend (and one of our mentors) Bob Pitofsky, the FTC recently announced that it plans to hold a series of public hearings modeled after the FTC’s 1995 “Global Competition and Innovation Hearings.” New FTC Chair Joe Simons said that the hearings will provide the FTC with an opportunity to engage in “self-examination and critical thinking” to ensure that the agency can keep pace with changes in the economy. Chairman Simons also recently told reporters that regardless of what the hearings may demonstrate, “Just in terms of priorities: our mantra is vigorous enforcement. That is what I did the last time I was here in the Bureau of Competition, and that is what I expect to do now not only in competition but also in consumer protection.”

Public comments may be submitted on any of the proposed topics until August 20 with hearings expected to take place in the fall and winter. Most of the topics are of more relevance to the Commission’s competition mission, but a few also relate to consumer protection. For example, the Commission is inviting comments on the state of consumer protection law and enforcement generally as well as consumer protection issues specific to the communications, information and media technology fields. Comments are also invited on the Commission’s investigation, enforcement and remedial processes as well as possible unfair or deceptive conduct in markets that feature “platform businesses.” Not surprisingly there are also a number of topics centered around data security including the extent of the Commission’s remedial authority.

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Exciting Questions and Opportunities for Advertising Through Self-Driving Cars

Self-driving cars have captured the imagination through television and movies (Knight Rider and Herbie the Love Bug, to name a few). Today, with advances in computing and other technologies, a number of technology and automotive companies are testing autonomous vehicles on public roads and expect to deploy such vehicles in the near future. Indeed, the potential of autonomous vehicles is promising— in terms of both mobility and safety. According to the National Highway Traffic Safety Administration (“NHTSA”)—the leading federal agency responsible for automotive safety—fully autonomous vehicles (“FAVs”) have the potential to drastically improve transportation safety and decrease crashes. Currently, there are over 37,000 fatalities on the roadways, and crash data shows that 94 percent of crashes have an element of driver error. Autonomous vehicles will not only impact transportation, but will also provide advertisers a new medium to advertise their products and brands, posing exciting questions about how the technology works and what role regulators will play.

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Keep the FCC on Your Radar

Most marketers are aware that the FCC has something to do with the regulation of computers and computing peripherals, products that are widely sold online.  Unfortunately, marketers sometimes do not realize that the FCC’s rules also apply to a host of household devices such as coffeemakers, electric razors, car battery chargers, jewelry polishing devices, and similar electronic products that are also widely sold online.  Even more problematic is that the FCC tends to take failure to comply with its rules governing these devices very seriously and can and does assess stiff fines for even innocent violations.

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The Rise of CGI Influencers

hashtagWhat if the influencer you had been following on Instagram—an influencer whose style choices you admired, and who supported social causes that you believed in—turned out to be…a robot?

This is what happened to followers of Lil Miquela, a 19-year old model from California who launched an Instagram account in 2016.  For the past two years, she’s been posting photos of herself in designer clothing, eating at trendy restaurants, and pitching beauty products.  Along the way, she managed to amass over a million followers.  Then, in mid-April, after getting hacked by a fellow influencer named Bermuda who refused to return her account unless she “[told] the world the truth”— Miquela revealed that she wasn’t human.  She is a CGI creation.  And so is Bermuda. Continue Reading

States Win and E-Retailers Lose as U.S. Supreme Court Alters Sales Tax Collection Standard

States can now require internet retailers to collect sales taxes even if the retailer has no physical presence in the state.

In South Dakota v. Wayfair, the Supreme Court overturned its 1992 decision in Quill Corporation v. North Dakota, which limited a state’s ability to impose its sales tax on an out-of-state retailer. In Quill the Court ruled that only a retailer that had a physical presence in a state by means of employees, stores, warehouses, or the like was required to collect such state’s sales tax. The Quill decision is one of the main reasons why many e-commerce retailers did not have to collect sales tax for sales to out-of-state residents.

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Congress Takes TCPA Action: Clarifying or Confusing?

Following confusion in both the courts and the FCC, Congress is now looking to step in and resolve disputed provisions of the Telephone Consumer Protection Act (TCPA). As readers of this blog know, earlier this year in ACA Int’l v. FCC, 885 F.3d 687 (D.C. Cir. 2018), the D.C. Circuit set aside the FCC’s interpretation of “automatic telephone dialing system” (ATDS) as it was defined in the FCC’s 2015 TCPA Order (2015 Order). In the same decision, the D.C. Circuit also vacated the 2015 Order’s approach to calling reassigned and wrong numbers. As a result, it’s now unclear what the relevant standard is for these provisions of the TCPA.

So far, courts have found addressing the fallout of the ACA Int’l decision to be Mission Impossible. They’re split as to whether the FCC’s prior 2003, 2008, and 2012 orders are still valid or whether the D.C. Circuit’s decision also vacated those rulings. One common question is whether all predictive dialers should be considered ATDS or if the definition should only encompass automatically dialed numbers that are randomly or sequentially generated. The District of Arizona, for example, has said that “this Court will not defer to any of the FCC’s . . . [earlier orders] regarding the first required function of an ATDS . . . .” Herrick v. GoDaddy.com, No. CV-16-00254, 2018 WL 2229131, at *7 (D. Ariz. May 14, 2018). See also Marshall v. CBE Group, Inc., No. 2:16-cv-02406, 2018 WL 1567852, at *4 (D. Nev. Mar. 30, 2018). The Northern District of Georgia, however, applied the 2003 Order in its decision on the issue. Maddox v. CBE Group, No. 1:17-cv-1909, 2018 WL 2327037, at *4–*5 (N.D. Ga. May 22, 2018). Meanwhile, the Southern District of Florida held that the FCC’s position is unclear and either interpretation of ATDS is acceptable. Reyes v. BCA Fin. Services, No. 16-24077, 2018 WL 2220417, at *9 (S.D. Fla. May 14, 2018). To sum it up, the ACA Int’l decision left courts confused as to what extent predictive dialers fall under the definition of ATDS and subsequently the TCPA.

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FTC Publishes Guidance on Online Giving Portals

The Federal Trade Commission (FTC) continues its oversight of charitable fundraising conduct. This month, the FTC issued guidance for both donors who donate to charities through online giving portals and businesses that offer such portals. The agency also warned consumers to be wary of potential charity scams in the wake of recent natural disasters that trigger solicitations for money to help victims of those disasters. Earlier this year, we noted that the U.S. Department of Justice, at the FTC’s behest, filed a law enforcement action against a national charity fundraiser for allegedly violating telemarketing laws.

Although the FTC lacks jurisdiction to regulate legitimate charitable organizations directly, it can—and does—regulate the activities of for-profit entities that help charities with their fundraising activities, such as professional fundraisers, fundraising counsel, and commercial co-venturers. The FTC’s attention to online giving portals reflects its recognition that charity fundraising is gravitating toward the use of newer platforms that may raise consumer protection issues similar to those that arise with traditional fundraising methods (e.g., telemarketing and direct mail). Tracy Thorleifson, the lead FTC attorney for charitable fundraising issues, tells Venable that “the FTC’s guidance underscores the Commission’s desire to encourage businesses to be transparent with donors and make compliance a priority.”

Nonprofit organizations that have turned to online giving portals as a fundraising option, or are considering doing so, should note the FTC’s compliance expectations as they vet potential online platforms with whom to partner. In addition, nonprofits should be aware that the receipt of charitable donations through online giving portals may raise tax issues as well.


Qualified Immunity and the FTC: LabMD Loses Its Case Alleging Violation of its Constitutional Right

gavelWe blogged recently on the 11th Circuit’s decision that the FTC’s order against LabMD is unenforceable. If you enjoyed that blog, then you’re in luck because we have more LabMD versus FTC content coming your way. In a separate case, LabMD and its chief executive Michael Daugherty sued individual FTC attorneys, arguing that they ramped up the Commission’s investigation into LabMD in retaliation for public criticisms of the FTC made by Daugherty. Whether that’s true or not ultimately proved unimportant because the D.C. Circuit found that the FTC employees held qualified immunity protecting them from suit.

What is qualified immunity? It’s an immunity from civil suits covering a public official who is alleged to have violated a person’s rights while he or she was performing discretionary office duties. To determine whether qualified immunity may be granted, courts need to answer two questions: (1) Did the officer’s conduct violate a constitutional or statutory right? If so, (2) was that right clearly established at the time of the violation? For the right to be “clearly established,” the precedent has to put the right’s existence beyond debate. But even if there is no case law on point, if every reasonable official would know that he or she is violating the right, then such official would be stripped of the immunity. The Supreme Court cautioned against defining such right in general terms in Ashcroft v. al-Kidd. In that case, such claimed rights as “the general proposition . . . that an unreasonable search or seizure violates the Fourth Amendment” or “the general right to be free from retaliation for one’s speech [under the First Amendment]” were dismissed as too general.

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NAD Okays Use of Non-Industry Standard Test

video projectorMany of you are no doubt familiar with ANSI testing, which is often touted as the gold standard in assessing product performance. However, other types of third-party tests exist, even if they have not risen to the level of being an “industry standard.” A recent NAD decision sheds some light on when and how advertisers can use such tests in their advertising.

Epson America, Inc. was challenged by Texas Instruments, Inc. (TI) for advertising its 3-chip 3LCD projectors as superior to TI’s 1-chip DLP imagers. 3LCD and 1-chip DLP are the two leading types of projectors and compete based on a number of attributes. TI alleged that Epson improperly relied upon Color Light Output (CLO) as a measure of brightness performance. (CLO is a relatively new method of assessing the brightness of individual colors which can then be compared to the overall lumens, or white brightness of a projector. (Still with us?)). TI also alleged that Epson made overall image superiority claims even though it only tested specific performance attributes. Finally, TI also alleged that Epson inadequately disclosed its affiliation with native advertising websites.

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FTC and House Start Working Together to Address CPSC-related Connected Technology Issues – Stakeholders Should Prepare for Future Government-Wide Cooperation

Internet connected devicesRobust conversations about IoT, smart technology, and product safety continue across the federal government. On May 16, 2018, the Consumer Product Safety Commission (CPSC) held a public hearing on the Internet of Things (IoT) and consumer product hazards. (See previous related blog posts here and here about the hearing.)

On June 13, the House Energy and Commerce Committee’s Subcommittee on Digital Commerce and Consumer Protection (SDCCP) voted to send H.R. 6032, the State of Modern Application, Research, and Trends of IoT Act (SMART IoT Act), to the full committee for consideration. The SMART IoT Act directs the Secretary of Commerce to conduct a study on the state of the internet-connected devices industry and is authored by SDCCP Chairman Latta and Rep. Peter Welch. It will be interesting to see whether or how quickly the SMART IoT Act actually becomes a law. Smart IoT technology is one of the hottest topics these days other than blockchain and bitcoin. Many different stakeholders have vested interests in how the government chooses to engage on this issue. The SMART IoT Act is a first step for Congress to actively engage and survey the federal government on this issue.

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