New Sheriffs in Town


In the last week, four new commissioners were sworn in to their role as agency heads at the Federal Trade Commission, giving the FTC a full slate of commissioners for the first time in several years.  The new commissioners – Republicans Noah Phillips and Chairman Joseph Simons; Democrats Rebecca Slaughter and Rohit Chopra – join Maureen Olhausen to fill all five seats atop the FTC.  The fifth nominee by President Trump, Republican Christine Wilson, will take Maureen Olhausen’s seat pending Ms. Olhausen’s move to a judicial post at the Court of Federal Claims.  The commissioners bring a diverse set of experiences to the agency, but with the exception of Rohit Chopra, their specialty is primarily in antitrust law.  As a result, it will be interesting to see what kind of consumer protection agenda the new Commission sets.  For more information on the new commissioners’ backgrounds, you can check out our previous blog post here.

Additionally, Tara Koslov has been appointed interim Chief of Staff.  Ms. Koslov joined the Commission 1997 as a staff attorney in the Bureau of Competition, and since then she has served as an attorney advisor to three Commissioners.  Ms. Koslov moves to her new appointment from the position of Acting Director of the Office of Policy Planning.  Other changes are also likely in the coming weeks among senior FTC staff including the likely naming of a new Consumer Protection Bureau Director.

CPSC’s Revision of Age Determination Guidelines: Updates, New Technology, Enforcement, and Possible International Consequences

kids and laptopsLast week the International Consumer Product Health and Safety Organization (ICPHSO) and ASTM International held a workshop to discuss the recently-updated age determination guidelines from the Consumer Product Safety Commission (CPSC). The age determination guidelines are a resource provided by the Commission to help manufacturers and consumers understand the age ratings on children’s products and toys and to ensure that products are properly labeled. CPSC staff perform age determinations on toy samples to determine the age group for whom the product is commonly recognized. The Commission then devises a categorical list of recommended age ratings. The recommended ratings are used by manufacturers and help determine the type and severity of tests products undergo to detect hazards prior to market release.

The workshop featured remarks from Acting Chairwoman Buerkle as well as other leadership from the Commission and key industry stakeholders. In her opening remarks, Acting Chairwoman Buerkle stressed the importance of receiving comments on the draft guidelines from the public and particularly from those engaged in the marketing and/or manufacture of children’s products and toys. These statements underscore the Chairwoman’s commitment to increasing CPSC’s engagement with the broad stakeholder community.

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New Jersey Truth in Consumer Contract Warranty and Notice Act: New Jersey Supreme Court Holds That Injury Is Required

Over the past few years, class action plaintiffs have filed a slew of lawsuits against online retailers under the New Jersey Truth in Consumer Contract, Warranty and Notice Act (TCCWNA), which prohibits a seller from offering or entering into consumer contracts that contain any term that violates a “clearly established” New Jersey or federal law. Violations are punishable by a maximum civil penalty of $100, actual damages, or both, and private actions can be brought by “aggrieved consumers” (more on that later).

TCCWNA has been around for years, but class action plaintiffs started using the statute to sue online retailers based solely upon their website terms and conditions without suffering any other injury. From what many retailers can tell, the plaintiffs did this by searching for and then challenging indemnification clauses, limitations of liability, and disclaimers of warranties in website terms of use and terms of sale, merely for the purpose of filing lawsuits.

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Start Replying with “STOP”

Opting OutWe blogged in February about Epps v. Earth Fare, in which the Central District Court of California dismissed a lawsuit under the Telephone Consumer Protection Act (TCPA) because the plaintiff revoked her consent to receive text messages in an unreasonable manner. In that case, the plaintiff attempted to unsubscribe from further messages—in which case additional calls or texts would implicate the TCPA—but she did so with a verbose text message instead of simply replying “STOP,” as each of the defendant’s texts clearly instructed. The court found these allegations failed to state a claim under the TCPA because of the unreasonable nature of the plaintiff’s opt-out.

As further discussed in our February blog, the TCPA is a popular tool of serial plaintiffs, who have both a private right of action under the TCPA and the ability to bring about the alleged harm with relatively little effort by soliciting unconsented-to calls or texts. However, the District of New Jersey recently dismissed a case that was very similar, factually, to Earth Fare, adding to a growing body of decisions that disfavors plaintiffs who intentionally avoid the familiar supplied text message opt-out mechanism—i.e., replying “STOP.” In Rando v. Edible Arrangements International, LLC, No. 1:17-cv-00701 (D.N.J. Mar. 28, 2018), the plaintiff allegedly “withdrew consent” through wordy text messages instead of replying “STOP” as instructed. Here, the court determined that those actions, under the totality of the circumstances, were not a “reasonable means” of revoking consent. As a result, the plaintiff had no claim under the TCPA.

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This Argument Is No Longer in Service: Did FCC and FTC Drop the Issue of Reassigned Numbers as a Solution to Robocalls?

telemarketing lawsOn March 23, 2018, the FCC and FTC hosted a joint forum to discuss the issue of robocalls. Consisting of three panels and remarks from key leadership of both agencies, the event marked a significant step in agency cooperation to mitigate consumer frustration from unwanted calls. The panels focused on three issues: (1) challenges facing consumers and industry; (2) recent regulatory and enforcement efforts; and (3) tools and solutions for consumers. FCC Chairman Ajit Pai and FTC Acting Chairman Maureen Ohlhausen delivered opening remarks, with FCC Commissioners Mignon Clyburn and Brendan Carr, as well as FTC Commissioner Terrell McSweeny, also speaking.

Panelists identified number spoofing as the biggest issue magnifying the robocall problem. As a result of spoofing, consumers have lost trust in answering the phone, leading to a significant rise in call completions not occurring. Telephone providers have attempted to combat the spoofing problem by screening calls, but there is skepticism as to the long-term viability of screening mechanisms for fear that robocallers will learn to circumvent screens and consumer trust might further erode due to the lack of transparency in what calls are being blocked. Businesses in particular have felt the frustration of lost consumer trust, and panelists claimed that legitimate business calls have declined by 20-30%. Representatives from the communications industry called for technology that would provide an intercept code for businesses to receive notice that their calls had been blocked, but stressed that transparency on the consumer side, too, was paramount.

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It’s a Full Slate for the FTC

It appears increasingly likely that for probably the first time since the FTC was established, we will have five new Commissioners in the same calendar year. Just to quickly recap, the FTC has five seats, only two of which are currently filled. Commissioner McSweeny’s term has already expired, while Acting Chairman Ohlhausen has been nominated for a position on the federal bench. Commissioners are nominated by the President and confirmed by the Senate for a term of seven years, subject to the rule that no more than three Commissioners may be from the same political party. The President also designates who is to serve as Chairman. Note that the seven-year terms are set rather than running from when an individual is confirmed so that some of the nominees will fill remaining shorter terms.

Four individuals have been nominated and voted out of Committee while the Trump administration just announced its intent to nominate the fifth Commissioner. We provide a brief overview of each of the nominees below. As the overview indicates, it seems likely that the new Commissioners will bring little in the way of past consumer protection experience.

Christine Wilson has been nominated to fill the remainder of Ms. Ohlhausen’s term, and Ms. McSweeny’s term expired last year, but she has stayed on in the position until a replacement is confirmed. Her seat will be filled by Chairman nominee Joseph Simons. The Senate Commerce Committee will likely begin processing the current nominees in February, according to Chairman John Thune. When a fifth member will be nominated to the Commission is currently unclear.

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Is Product Safety a Partisan Issue? CPSC Announces $27.25M Penalty Settlement with Polaris and an Additional Polaris Recall of More than 100,000 ROVs

On April 2, 2018, the Consumer Product Safety Commission (CPSC) announced a $27.25 million civil monetary penalty (CMP) settlement agreement with Polaris for failure to report to CPSC immediately when it became aware of defects in certain models of RZR and Ranger Recreational Off-highway Vehicles (ROVs).

At the same time, CPSC and Polaris jointly announced the recall of more than 100,000 Polaris Model Year 2014 to 2018 RZR XP 1000 ROVs. According to CPSC’s press release, “if the exhaust silencer fatigues and cracks, the heat shield may fail to manage heat, which may lead to melting of nearby components or fire.” This is yet another recall to repair additional models of ROVs for potential fires.

Everyone always says that product safety should be nonpartisan. But as evidenced by CSPC actions, there are often votes on key policy and enforcement actions that fall right down party lines. Recently, some have even suggested that the current Democratic voting majority is heavily influencing enforcement and compliance efforts. Acting Chairwoman Buerkle has, in fact, been the lone holdout in a recent provocative vote. In February, CPSC commissioners voted 3-1 to sue Britax to recall its jogging strollers. Acting Chairwoman Buerkle voted against suing for the recall. Before the Britax case, the last time the CPSC sued for a mandatory recall was in 2012, and thus the Britax case was a surprise to many stakeholders. Moreover, Acting Chairwoman Buerkle is on record as opposing record-high CMP settlements. (See Statement of Commissioner Ann Marie Buerkle on the Commission’s Growing Civil Penalty Settlements.)

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IoT and Smart Technology: CPSC Wants to Connect with Stakeholders about Connected Products

Internet connected devicesOn May 16, 2018, the Consumer Product Safety Commission (CPSC) will hold a public hearing on the Internet of Things (IoT) and consumer product hazards. The CPSC has previously voiced concern about (or, at least the need to evaluate) the harms IoT technology and smart products may cause to consumers.

In 2016, former Chairman Kaye asked “CPSC technical, compliance, and information technology staff to research what new and potential consumer products may become available, or gain wider use, in the next 3 to 5 years, and to identify potentially new, increased, or decreased consumer hazards associated with these emerging technologies.” The result of that project was published in a January 2017 staff report, Potential Hazards Associated with Emerging and Future Technologies, which discussed the possible harms from IoT products. In the summer of 2017, Commissioner Robinson traveled to Israel to discuss with academic experts, business leaders, and industry stakeholders the “many possible consumer product safety consequences to new, innovative, and technologically advanced products” including smart technology. Her goal was to inspire Israeli scientists and technologists to find technical solutions for many of the emerging product safety hazards resulting from IoT and smart technology. In February 2018 at both the International Consumer Product Safety and Health Organization’s Annual Symposium and The New York Toy Fair, Acting Chairwoman Buerkle further reiterated the CPSC’s commitment to figuring out solutions to the potential hazards that connected products bring to the marketplace by working with CPSC stakeholders.

This upcoming hearing presents an opportunity for all stakeholders to help shape CPSC’s policy related to IoT and smart technology products. CPSC has broad jurisdiction over 15,000 product lines, including toys, cribs, power tools, ATVs, cigarette lighters, small appliances, furniture, electronics, and household products. For companies that sell, manufacture, or import consumer products connected to the Internet, the CPSC is requesting your direct input in this process. CPSC views concerns related to consumer products with IoT capability in two categories:

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Is Past Prologue for FTC Jurisdiction?

A recent decision in an antitrust case brought by the FTC in the U.S. District Court for Delaware could significantly limit the FTC’s ability to bring consumer protection cases in federal court and return the FTC to an enforcement model that it largely abandoned in the early 1980’s. In that case, the court held that the FTC can only sue in federal court where it is able to allege that the defendant is violating or about to violate a law the FTC enforces. This decision, if broadly accepted, could severely limit the ability of the FTC to pursue cases in federal court for companies that are only accused of past violations by the FTC.

The FTC routinely brings enforcement actions in federal court pursuant to Section 13(b) of the FTC Act, seeking permanent injunctions and equitable monetary relief (redress and disgorgement). Under the first proviso of Section 13(b), the FTC is authorized to seek preliminary injunctive relief where the FTC has “reason to believe” that a defendant “is violating, or is about to violate” a law enforced by the FTC. Under the second proviso, the FTC may seek a permanent injunction. The FTC traditionally relied on the second proviso of Section 13(b) for access to the federal courts. In FTC v. Shire ViroPharma, Inc., the District Court for Delaware considered the statute’s procedural requirements, ultimately concluding that to adequately plead jurisdiction under Section 13(b), the FTC must also satisfy Section 13(b)(1) by alleging sufficient facts to demonstrate that the defendant was “violating, or is about to violate” a law over which the FTC has enforcement authority.

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The Federal Election Commission Proposes Rules for Online Political Advertising

The Federal Election Commission (FEC) this week issued a Notice of Proposed Rulemaking, asking for public comment on proposals for requiring “disclaimers” on online ads and fundraising. Under each of two similar proposals, paid Internet ads that expressly advocate for candidates or that solicit political donations must state who paid for the ad and whether it was authorized by a candidate. The rules would impact websites, blast emails, and ads paid for by a political committee, regardless of their content.

The FEC rulemaking responds to mounting concerns about the influence of Russian-linked social media activity during the 2016 presidential election, as well as years of ambiguity about when and how the agency’s rules apply to emerging platforms and technology.

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