The FTC had its hands full last week with enforcement actions—releasing orders and a warning letter in matters across the board from consumer privacy, to COVID-19, and to advertising. More on these actions, as well as an update on a forthcoming event on consumer privacy and data security, after the jump.

Monday, October 24, 2022

Bureau of Consumer Protection: Consumer Privacy

  • The FTC issued a proposed order against Drizly, Inc. and its CEO James Cory Rellas over allegations that Drizly failed to use appropriate information security practices to protect consumers’ personal information, and that as a result, a malicious actor was able to steal information relating to 2.5 million customers. Samuel Levine, the Director of the FTC’s Bureau of Consumer Protection commented that the proposed order “not only restricts what the company can retain and collect going forward but also ensures the CEO faces consequences for the company’s carelessness.” The FTC voted 4-0 to issue the proposed complaint and to accept the consent agreement with Drizly and Rellas. FTC Chair Lina Khan and Commissioner Alvaro Bedoya concurred in a joint statement. Commissioner Rebecca Kelly Slaughter also concurred separately. Commissioner Christine Wilson agreed with the outcome but dissented in part regarding Rellas’ inclusion as an individual defendant.

Bureau of Consumer Protection: Coronavirus (COVID-19)

  • The FTC, along with the FDA, issued a warning letter to Lakpura LLC demanding that Lakpura stop advertising and making claims that its products can cure, treat, prevent, or mitigate COVID-19. In particular, the FTC warned that continued advertisements could be unlawful under the FTC Act, which prohibits advertisements that a product can treat human diseases where there is no reliable scientific evidence to support the claim. 15 U.S.C. §41 et seq. The FTC also warned that continued violations could additionally violate the COVID-19 Consumer Protection Act, which prohibits deceptive claims related to the treatment, cure, prevention, or mitigation of COVID-19. Pub. L. No. 116-260.

Thursday, October 27, 2022

Bureau of Consumer Protection: Advertising and Marketing

  • The FTC issued final orders against companies that allegedly improperly restricted customers’ right to repair their purchased products. Through June and July of 2022, the FTC issued complaints against Weber-Stephen Products, LLC and Westinghouse Outdoor Power Equipment (MWE Investments, LLC). We first covered the Weber-Stephens action in a July post when the complaint was filed. Both complaints concerned allegations that the company at issue improperly claimed that repairing a product with third-party parts voids the company’s warranty. After the period for public comment, the FTC approved final orders against both Weber-Stephen and MWE Investments.

Friday, October 28, 2022

Bureau of Consumer Protection: Credit and Finance

  • The FTC issued a complaint and a stipulated proposed court order for an action against Ygrene Energy Fund Inc. before the U.S. District Court for the Central District of California. The complaint alleges that Ygrene deceived consumers about the potential financial impact of the company’s financing and unfairly recording liens on consumers’ homes without their consent. Specifically, the complaint alleges that Ygrene and its contractors falsely told consumers, in many instances through high-pressure sales tactics or outright forgery, that Ygrene’s financing would not interfere with the sale or refinancing of their homes. Samuel Levine, the Director of the FTC’s Bureau of Consumer Protection noted that the proposed order “would require Ygrene to clean up its business practices, monitor its sales force, and help defrauded consumers remove their liens.” The FTC voted 4-0 to approve and file the complaint and stipulated proposed order.

Bureau of Consumer Protection: Advertising and Marketing

  • The FTC approved a final order against Electrowarmth Products, LLC over allegedly deceptive claims that the heated fabric mattress pads Electrowarmth sells are made in the USA. This action began at the end of August when the FTC filed its complaint against Electrowarmth and Grindle. The final order comes as the period for public comment elapsed and as the FTC issued a letter to the commenters. When the complaint was filed, Samuel Levine, the Director of the FTC’s Bureau of Consumer Protection noted that the allegedly deceptive practices “harm competitors who tell the truth about product origin.” The FTC voted 4-0 to approve the final order and the letter to commenters.