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On March 18, President Trump fired the two Democratic commissioners of the Federal Trade Commission (FTC). The removals of Alvaro Bedoya and Rebecca Kelly Slaughter are the latest in a series of executive actions that will limit the agency’s independence. 

They also present a direct challenge to Humphrey’s Executor v. United States, the Supreme Court’s 1935 decision holding that Congress may limit the president’s authority to remove members of the FTC without good cause. Both Slaughter and Bedoya stated that they had been “illegally fired.” If the commissioners challenge their terminations, the Supreme Court may be forced to confront the question of whether Humphrey’s Executor should be overruled—an issue the Court has avoided in several recent cases that significantly limited the decision’s application to other agencies, without overruling it. Continue Reading Trump Fires Democratic FTC Commissioners, Setting Up a Direct Challenge to Humphrey’s Executor

As we anxiously await the Federal Trade Commission’s (FTC) update of the Green Guides, advertisers should keep in mind the various “green” state laws that could affect the production and marketing of certain products. For example

Voluntary Carbon Market Disclosures Act (VCMDA)

The VCMDA is a new California law that imposes disclosure requirements on public and private companies of all sizes that:

  • Operate in California and/or make claims in California regarding their climate performance, including claims regarding the achievement of net zero emissions, that the entity (or its product) is carbon neutral and/or does not add net carbon dioxide or greenhouse gas (GHG) emissions, that the entity has made “significant reductions” to its GHG emissions, or similar claims
  • Operate in California and/or make climate-performance claims in California and use or purchase voluntary carbon offsets (VCOs) sold in California
  • Market or sell VCOs in California (regardless of whether they make climate-performance claims)

Continue Reading Making Green Claims? Keep in Mind New State Laws

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 Securities and Exchange Commission v. Jarkesy and Other Constitutional Challenges Against the FTC

With the end of the Supreme Court’s term in June, most eyes have been on the release of the last remaining merits decisions. In the midst of issuing the final opinions of the term, the Court also granted certiorari on a number of cases, one of which—Securities and Exchange Commission v. Jarkesy—might have implications for the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB).

In Jarkesy, the SEC sued talk radio host George Jarkesy and his two hedge funds (collectively, “the Jarkesy Parties”) through an administrative action before an SEC administrative law judge (ALJ). After an evidentiary hearing, the ALJ determined that the Jarkesy Parties committed securities fraud, and the Commission affirmed the ALJ’s decision, imposing a civil penalty, disgorgement of ill-gotten gains, and enjoining Jarkesy from various securities industry activities. The Jarkesy Parties proceeded to appeal the Commission’s decision to the U.S. Court of Appeals for the Fifth Circuit. The Jarkesy Parties appealed on several constitutional grounds previously raised and denied during the ALJ and Commission proceedings:Continue Reading Supreme Court Case Watch: Securities and Exchange Commission v. Jarkesy and Its Impact on Independent Agencies

Thirteen months after proposing sweeping changes to its Endorsements and Testimonial Guides (Guides), the Federal Trade Commission (FTC) has finalized its revised guidelines and released an updated set of FAQs to help guide the industry with respect to the proper use of customer reviews, influencer marketing, and traditional endorsements and testimonials. 

The new Guides are over 80 pages. We will dive into specific sections in greater depth in the coming weeks, but here are some highlights:Continue Reading FTC Finalizes Updated Endorsement and Testimonial Guides

The Federal Trade Commission (FTC) recently announced a settlement with a group of related companies and two of their officers that used a merchant of record (MoR) model to facilitate sales for merchants. According to the FTC, the MoR businesses violated the law by assisting and facilitating fraudulent telemarketing sales of tech support services and laundering credit card charges through the defendants’ own merchant processing accounts.

The MoR model is one of several novel models payments companies and platforms have launched in the marketplace. While numerous compliance questions related to money transmission and unlawful payments aggregation abound, this particular FTC case warns that consumer protection agencies are taking a closer look at risks presented by the MoR model.Continue Reading Increasing Regulatory Scrutiny for the Merchant of Record Model

On December 20th, 2022, the Federal Trade Commission published new guidance regarding claims about the benefits and safety of health-related products: Health Products Compliance Guidance. This guidance replaces the Commission’s previous guidance, Dietary Supplements: An Advertising Guide for Industry, issued in 1998. The new guidance expands the scope to include other health-related products, such as foods, over-the-counter drugs, and devices.Continue Reading FTC Announces Health Products Compliance Guidance

Last week, the Federal Trade Commission and state attorneys general in Arizona, California, Georgia, Illinois, Massachusetts, New York, and Texas settled with advertising giants Google and iHeartMedia for deceptive advertising and endorsements under Section 5 of the FTC Act.

The FTC and states allege that Google paid iHeartMedia to record and broadcast ads featuring “radio personalities” endorsing Google’s phone, the Pixel 4. In the ads, the radio personalities lavished praised on the Pixel 4, using first-person language to describe the Pixel 4’s functionalities and calling it their favorite phone.

The ads aired over 11,200 times between October and December 2019. The problem? The Pixel 4 had not been released for sale, and Google was unable to provide the phones to the radio personalities before the ads aired. In essence, the radio personalities were extolling the Pixel 4 without ever having used one.Continue Reading FTC Sues Advertising Behemoths Google and iHeartMedia for Deceptive Endorsements by Radio Personalities

Last week at its monthly open meeting, the Federal Trade Commission (FTC) unveiled two new rulemaking proceedings: the first deals with deceptive customer reviews and endorsements and the second with so-called junk fees. 

Both rulemakings are in their nascent stages. Last week’s actions—the issuance of two advance notices of proposed rulemaking (ANPRs)—simply request information from the public on the consumer harms caused by fake and paid reviews and junk fees. The road from ANPR to final trade rule is a long and winding one, particularly given the number of new rulemakings upon which this FTC has embarked, which Commissioner Christine Wilson has termed “Ruleapalooza.”Continue Reading FTC Issues New Rulemaking Proceedings on Customer Reviews and “Junk Fees”

The FTC’s ears must have been burning. Yesterday, just hours after we finished a webinar discussing the latest developments in the FTC’s push for more rulemaking, the FTC announced an upcoming open meeting where it will propose issuing three advanced notices of proposed rulemaking (ANPR).

First, the FTC will consider whether to initiate rulemaking to…