cash and credit cardsOn March 29, 2017 the Supreme Court of the United States held that a New York law prohibiting retailers from disclosing credit card surcharges, while allowing discounts for cash purchases (effectively eliminating the surcharge), regulates speech and not just conduct. The Court, however, passed on evaluating whether the statute violates the First Amendment. Instead, the Court remanded the case, Expressions Hair Design et al. v. Schneiderman et al., No. 15-1391, back to the Second Circuit for review under the First Amendment.

At issue in this case was New York’s “single sticker” requirement in General Business Law Section 518. In the Court’s Opinion, Chief Justice Roberts, explained that “[m]erchants who wish to employ differential pricing may do so in two ways relevant here: impose a surcharge for the use of a credit card, or offer a discount for the use of cash. In N.Y. Gen. Bus. Law §518, New York has banned the former practice.”

Continue Reading Supreme Court Rules New York Law Prohibiting Disclosure of Surcharges Regulates Speech, Sends Case to Second Circuit for First Amendment Analysis

Federal Trade Commission FTC SealDid you get a letter in March with the Federal Trade Commission (FTC) seal inquiring about your use of material connection disclosures in influencer campaigns and politely reminding you about the Endorsement Guides? If so, you are in good company as many other brand companies have received such letters as part of the FTC’s most recent sweep effort. If not, don’t get too comfortable. We believe this is the beginning not the end. After successfully negotiating a closing letter in the Machinima case for a party based on the presence of an effective compliance program, we have been asked many times; “What do I need to do to have a viable compliance program if the FTC comes knocking?” We have consistently told companies that the goalpost is moving as the FTC expects companies to be more knowledgeable and rigorous as time goes on and awareness builds. But the basic requirements for a brand company engaging influencers will always include training influencers and agents; monitoring for compliance; and enforcing consequences when you become aware of noncompliance. And it takes a village — every actor in the influencer stream has responsibility from the brand to the digital media, PR or influencer agency to the influencers themselves.

Continue Reading Operation Full Disclosure Part 2: FTC Compliance Sweep—Influencing the Use of Influencers

teeing offWe love golf, cooking, and the Restore Online Shoppers’ Confidence Act (“ROSCA”), so when the FTC brings a case involving all of this, we are compelled to blog. As it is almost Masters time, please feel free to put on your green jacket and read on.

On March 24th, the FTC filed suit in California against a group of online marketers for violating the FTC Act and ROSCA based on the defendants’ free trial/negative option marketing for golf-related products and cooking gadgets. According to the Complaint, the defendants’ websites, TV infomercials, and emails deceive consumers into believing that the products and services advertised are free by failing to clearly and conspicuously disclose that consumers would be charged if they did not cancel the “free trial” or return the “free” product. For instance, according to the Complaint, the Tour Z Golf Balls’ website’s first page makes a prominent claim that consumers can try the golf ball for free. See below.

Continue Reading There is No Such Thing as “Free Golf Balls”: The FTC Continues Crackdowns on Negative Option Marketers

Consumfinancial lawer data, UDAAP, debt collection, and fintech licensing are at the forefront of the March 30 edition of Venable’s Consumer Financial Services Digest.

In this issue, we discuss the importance of the Federal Trade Commission’s activities in the consumer finance world and the big changes on the horizon for credit reporting of public records data.

Continue Reading Consumer Financial Services Update

package deliveryThe plaintiffs’ bar is at it again, this time with a new target—the shipping and handling fees that retailers charge consumers in the course of delivering a product.

We may think in the day of Amazon Prime that when we shop on the web the product should arrive at our door for free. But there are obviously costs associated with mailing the items we buy online, costs that don’t exist when we pick up in store. E-Sellers have always understood the need to make these shipping and handling costs—as well as other terms and conditions of sale—clear and conspicuous to the customer before he buys the product. Similarly, e-Sellers understand when they advertise a product as “free” or as a “free trial” that charging additional fees such as shipping and handling, unless very clearly communicated, can pique the interest of state enforcers. The current class action attack on retailers focuses not on how clearly such charges are communicated but instead on the amounts charged and whether it is somehow unfair to charge more than the actual out-of-pocket shipping and handling cost, even if the charges are adequately disclosed.

Continue Reading Retailers Confront a New Threat: Shipping and Handling Class Actions

busLegal history is replete with stories of persons or companies turning a manageable legal problem into a more serious one by trying to hide or destroy evidence, see Watergate and Arthur Anderson/Enron for two notable examples. A recent case involving a bus company executive provides a good case study in what not to do when facing a government investigation and the consequences of trying to hide or destroy evidence in an investigation.

Ralph Groen worked as a VP for Information Technology for Coach USA, a tour bus company. Beginning in 2009, the NY AG and the US DOJ began investigating Coach USA and another company forming a joint venture to corner the tour bus market in New York City and thereby drive up prices. The DOJ and NY AG sued the companies in 2012 and the companies settled in 2015 by agreeing to pay $7.5 million and breaking up much of the joint venture.

Continue Reading When the Cover Up Is Worse Than the Crime

financial lawWith all eyes on the CFPB and its future fate, it’s easy to overlook the FTC’s activities in the consumer finance world. But that would be a mistake. The FTC, led by the Division of Financial Practices, continues to share enforcement jurisdiction with the CFPB over many industries touching consumer finance, including credit reporting, debt collection, and consumer lending; the major difference between the jurisdiction of the FTC and CFPB is that the FTC does not have authority over financial institutions regulated by federal banking regulators.

Importantly, as an independent agency with a bipartisan commission, the FTC is more insulated from the political trade winds that executive agencies confront. And, whereas the CFPB—also an independent agency—is a young agency born out of and directly caught up in the hyper partisanship that defines Washington, the FTC has a 100+ year track record. If the CFPB’s authority is significantly curtailed, we can expect the FTC to step up to partially fill the void.

Continue Reading FTC Remains on Consumer Finance Enforcement Beat

online fundraisingLast week, the Federal Trade Commission (FTC) and the National Association of State Charity Officials (NASCO) hosted “Give & Take: Consumers, Contributions, and Charity,” a conference exploring consumer protection issues in the changing landscape of charitable giving. Day One of the conference kicked off with introductory remarks by Acting Director of the Bureau of Consumer Protection Tom Pahl, as well as Colorado Attorney General Cynthia Coffman (Day Two was not open to the public). Some of our readers may recognize General Coffman’s name because she was a panelist at Venable’s 2016 Advertising Law Symposium, where she also expressed her state’s strong interest in combatting charitable solicitation fraud. Government enforcers are clearly paying more attention to this industry, as we have written before.

Continue Reading Highlights of the FTC and NASCO Conference – Give & Take: Consumers, Contributions, and Charity

no phone scamsCriminal charges against six individuals allegedly involved in a telemarketing scheme targeting elderly people were brought today by the US Attorney’s Office for the Southern District of New York. According to the Complaint, the defendants contacted elderly consumers with business opportunities requiring nothing more than a simple cash investment. The consumers were promised that they would see large returns on that investment without them needing to do anything other than the initial investment. After making the investment, the consumers would then receive additional telemarketing calls offering other services such as coaching, business development, and tax preparation services. The Complaint alleges that none of the consumers received what they were promised.

Continue Reading Criminal Charges Brought Against Telemarketers

gaming keyboardThe ASA received 23 complaints from individuals believing that the game content for No Man’s Sky (“NMS”) was not the same as was advertised on Steam (Steam is an entertainment platform where, among other things, video games are advertised to Steam’s gaming community). The Complainants challenged a number of advertised NMS features including that: (1) the gameplay footage on Steam misrepresented the game; and (2) the in-game graphics did not match the advertisement.

The game developer — Hello Games — provided the ASA with evidence about NMS, including a play-through of the game from the beginning that lasted 4 hours; user-uploaded, video-sharing content of the game; and a copy of NMS. Hello Games responded to the complaints that “unlike most games” each part of NMS was “procedurally generated rather than manually developed.” In other words, NMS used algorithms to determine what content a particular plaintiff encountered; that the user experience was not scripted; and each player would have their own individual experience.

Continue Reading U.K. Advertising Standards Authority’s Second Look at No Man’s Sky Is Worth a Look for any Video Game Advertiser