On December 20, 2023, New York Attorney General Letitia James filed a Petition in state court alleging Sirius XM Radio’s autorenewal practices violated New York’s autorenewal law. In the lawsuit, New York alleges that Sirius XM, an audio entertainment company headquartered in New York, made it difficult for customers to cancel their subscriptions.

New York’s automatic renewal law requires any business that makes an automatic renewal offer or continuous service offer to provide a cost-effective, timely, and easy-to-use mechanism for cancellation. The AG alleges that Sirius violated this requirement by:

Continue Reading New York Attorney General: Sirius XM Customers “Frustrated” When Trying to Cancel Subscriptions

Last week, the Fifth Circuit handed down an across-the-board rejection of four constitutional challenges raised by gene sequencing company Illumina in defending against the Federal Trade Commission’s merger challenge. Bah! Humbug!

In previous years around the holiday season, we’ve had better news to report to those under the FTC’s thumb. With our coverage of the panoply of constitutional challenges that the FTC has been facing recently, there was a chance that tradition would continue. Alas, that is not the case with the Fifth Circuit’s decision in Illumina v. FTC.

First the Fifth Circuit rejected Illumina’s argument that Congress impermissibly delegated legislative authority by allowing the FTC to choose whether to bring enforcement actions in federal court or in an administrative proceeding. Specifically, the Court based its reasoning on the fact that the FTC’s authority under Section 13(b)—providing for federal action to obtain injunctive relief—and its authority under Section 5(b)—providing for administrative action, after which the FTC can obtain monetary relief such as damages—are two separate and distinct enforcement mechanisms.

Continue Reading FTC Constitutional Challenge Update: Fifth Circuit Delivers Illumina a Stocking Full of Coal

The Federal Communications Commission (FCC) adopted a revised rule to restrict forms of lead generation involving texts and calls to consumers on December 13, 2023. The revised rule implementing the Telephone Consumer Protection Act (TCPA) will require one-to-one consent for certain types of regulated calls and texts—so-called robotexts and robocalls.

The new rule will take effect 12 months after publication in the Federal Register, or 30 days after announcement in the Federal Register of the Paperwork Reduction Act approval of the restrictions on information collection prescribed by this new rule, whichever is later, around January 2025.

The rule requires that, to obtain “prior express written consent” under the TCPA, consumers must give their consent to receive calls and texts from the specific sellers they wish to contact them (i.e., “one-to-one consent”). According to the FCC, this requirement ensures that consumers consent only to contact by sellers they wish to hear from.

Continue Reading FCC Adopts Rule Closing the Lead Generator Loophole

If your business offers a loyalty program in conjunction with a gift card, you likely already know that Section 520-e of New York’s General Business Law took effect December 10, 2023. This new law gives consumers a set grace period to use their credit card reward points when certain changes (e.g., modification, cancellation, closure, or termination) are made to a “reward, loyalty, or other incentive program.”

Specifically, under the new law, “[i]f any credit card account or rewards program is modified, cancelled, closed or terminated,” the issuer must provide notice to the card holder as soon as possible, but no later than 45 days of the action. Then, unless the customer has engaged in fraud or misuse of the account, starting with the date on which the notice is sent, the holder shall have 90 days to redeem, exchange, or otherwise use any accumulated credit card points, subject to the availability of rewards.

The new provision defines “modification,” as one that has the effect of “eliminating points, reducing the value of points, affecting the ability of a holder to accumulate points, limiting or reducing rewards availability, limiting a holder’s use of points or the credit card account, otherwise diminishing the value of the rewards program or the credit card account to the holder or changing the obligations of the holder with respect to the rewards program or credit card account.”

Continue Reading Reminder: New York’s Credit Card Reward and Loyalty Program Law Is Now in Effect

In March, the Federal Trade Commission (FTC) asked for comments on a proposal to replace the Prenotification Negative Option Rule with a more expansive Negative Option Rule. Now that the FTC has had the chance to review those comments, the FTC has set an informal hearing to allow for testimony from six of the over 1,000 commenters.

Each presenter will be limited to ten minutes but can supplement their remarks with written content. The FTC has appointed Carol Fox Foelak, an administrative law judge at the Securities and Exchange Commission (SEC), to serve as presiding officer.

Continue Reading New Year, New Rule: FTC to Review Updates to Negative Option Rule During January Informal Hearing

The Federal Trade Commission (FTC) continues to focus its attention on “Made in the USA” claims, and this time the agency has fixed its gaze on a Florida-based company and its principal, whose claims regarding patriotic and Second Amendment-themed gifts were out of bounds.

In a recent complaint, the FTC alleged that the business, ExotoUSA LLC d/b/a/ Old Southern Brass, specifically targeted servicemembers and veterans by falsely stating that Old Southern Brass was a veteran-operated business that donated 10% of all sales to military charities. The FTC also charged that Old Southern Brass falsely represented, through express and implied claims, that all of its products were made in the United States. Statements such as “All of our products are made right here in the United States of America” directly contradicted evidence that many of the company’s products were either wholly imported from China or contained a significant amount of imported content.

Continue Reading Made in or Made up? The FTC Closely Reviews “Made in USA” Claims

With the holiday shopping season in full swing, companies will soon begin the annual fight for every consumer dollar. But before companies can make the sale, they will face an even more daunting task: grabbing customer attention in the crowded world of online shopping.

As social media companies integrate shopping features into their base platforms, an industry shift often called “social commerce,” influencer marketing becomes an increasingly important method for driving sales.

As innocuous as those 30-second influencer marketing social media clips may seem to be, companies and influencers should be aware that the Federal Trade Commission (FTC) is keeping a watchful eye. This month, the agency issued dozens of warning letters to influencers for the lack of adequate disclosures in their social media posts as required by the recently updated FTC Endorsement Guides.

Continue Reading Influencers on Notice: FTC Issues Warning Letters for Inadequate Disclosures

On Thursday, October 12, a bipartisan group of senators—Chris Coons (D-Del.), Thom Tillis (R-N.C.), Marsha Blackburn (R-Tenn.), and Amy Klobuchar (D-Minn.)—released a Discussion Draft of the Nurture Originals, Foster Art, and Keep Entertainment Safe (dubbed the “NO FAKES”) Act that would protect the voice, image, or visual likeness of all individuals from unauthorized AI-generated digital replicas, also referred to as “deepfakes.” This draft bill, while focusing on protections required by the advancement of AI, would establish the first federal right of publicity—the right to protect and control the use of one’s voice, image, and visual likeness. The NO FAKES Act could have widespread impacts on the entertainment and media industries, among others. 

Generative AI has opened new worlds of creative opportunities, but with these creative innovations also comes the ability to exploit another’s voice, image, or visual likeness by creating nearly indistinguishable digital replicas. This has caused great concern among musicians, celebrities, actors, and politicians regarding viral AI-created deepfakes circulating on social media and the Internet more broadly. To date, advancements in AI technology used to create digital replicas have outpaced the current legal framework governing unauthorized use. Although there are existing laws that may be used to combat digital replicas, these laws either vary from state to state, creating a patchwork of differing protections based on where one is located, or do not directly address the harms caused by producing and distributing unauthorized digital replicas.

Continue Reading AI Deepfake Bill: Senators Contemplate the First Federal Right of Publicity

The Federal Trade Commission (FTC) announced it has reached a settlement with the bankrupt crypto company Voyager over the company’s alleged deceptive crypto marketing practices. Specifically, the FTC’s complaint alleges that from at least 2018 until its declaration of bankruptcy in July 2022, Voyager enticed consumers with promises that their deposits were insured by the Federal Deposit Insurance Corporation (FDIC) and were “safe.” However, consumers’ deposits with Voyager were not eligible for FDIC insurance and were not protected in the event that Voyager failed.

The FDIC only insures deposits held by insured banks or savings associations, and only up to certain limits. Voyager, however, is not a chartered bank or savings association. While Voyager’s bank partner was FDIC-insured, FDIC deposit insurance protects deposits only in the event of the insured institution’s failure, not the failure of a non-bank partner in the event of that company’s failure. According to the FTC, Voyager’s false assurance lured customers into entrusting their funds to the company, resulting in significant losses for those affected by the company’s bankruptcy in July 2022.

Continue Reading FTC Settles with Bankrupt Crypto Company, but Pursues CEO for Deceptive FDIC Claims

In recent years, independent agencies have continued to face a number of constitutional and statutory challenges before the Supreme Court. AMG Capital Management struck down the Federal Trade Commission’s authority to obtain equitable monetary relief under Section 13(b). Seila Law severed the Consumer Finance Protection Bureau (CFPB) commissioner’s for-cause removal protections. This term, the Supreme Court will determine whether the CFPB’s funding structure is constitutional in CFPB v. CFSA. And, as we’ve previewed earlier this year, the Court will weigh three constitutional challenges to the SEC in SEC v. Jarkesy.

A quick primer: The Supreme Court will review three constitutional infirmities that the Fifth Circuit determined that the SEC suffered. First, the Fifth Circuit held that when the SEC brought claims for civil penalties in administrative proceedings, it deprived Jarkesy of its Seventh Amendment right to a jury trial. Second, the Fifth Circuit held that Congress unconstitutionally delegated legislative powers to the SEC without an “intelligible principle” by providing it with the discretion to choose whether to bring an enforcement action for monetary penalties in Article III courts or before an administrative law judge (ALJ). Finally, the Fifth Circuit determined that the statutory removal restrictions for SEC ALJs are unconstitutional.

Continue Reading Tracking the Impact of <em>Securities and Exchange Commission v. Jarkesy</em> and Other Constitutional Challenges Against the FTC