The FTC closed out the year with significant developments in rulemaking, consumer protection enforcement actions, and priority setting for the new year.  From issuing the much-anticipated final Junk Fees Rule, to announcing its potential largest monetary judgment against an auto dealer, to further developing its Operation AI Comply initiative, the Commission ended 2024 on a busy note.  These stories, and more, after the jump.

Tuesday, December 17, 2024

Bureau of Consumer Protection: Advertising and Marketing

• The Commission announced a final Junk Fees Rule that bans bait-and-switch pricing tactics used to hide total pricing and junk fees for companies that offer live-event tickets and short-term lodging.  The final Rule follows a multi-year rulemaking process, first beginning in 2022 when the Commission requested public input on whether a such a rule would be effective.  Following public comment, the FTC issued a proposed rule in October 2023 and sought more public comment. The final Junk Fees Rule will require live-event ticketing and short-term lodging companies to clearly and conspicuously disclose the total price (i.e., inclusive of all mandatory fees) whenever advertising the price.  Additionally, the Rule will require affected business to distinguish and make more prominent the total price compared to other pricing information that is presented. Further, as it pertains to fees that are not required to be incorporated into the total price up front (e.g., shipping and taxes) to conspicuously disclose those fees before consumers agree to pay.  FTC Chair Lina M. Khan commented that the Rule “will put an end to junk fees around live event tickets, hotels, and vacation rentals, saving Americans billions of dollars and millions of hours in wasted time” and urged enforcers “to continue cracking down on these unlawful fees and encourage state and federal policymakers to build on this success with legislation that bans unfair and deceptive junk fees across the economy.”  The Commission voted 4-1 to approve publication of the final rule with Chair Khan, Commissioner Rebecca Kelly Slaughter, and Commissioner Melissa Holyoak each issuing a separate statement.  Commissioner Andrew Ferguson issued a dissenting statement.
• The FTC and the Illinois Attorney General simultaneously filed a complaint and stipulated final order in the United States District Court for the North District of Illinois against Grubhub Inc. and Grubhub Holdings Inc. for a host of alleged unlawful practices. The state and federal regulators allege that Grubhub  misrepresented delivery fees to consumers, blocked diners’ access to their accounts and funds, deceived workers about what they would earn in delivery fees, and included restaurants on its platform without their consent. According to the FTC and Attorney General Kwame Raoul, these practices violate  Section 5(a) of the FTC Act, the Restore Online Shoppers’ Confidence Act, the Impersonation Rule, and various Illinois state consumer protection statutes.  The stipulated final order imposed a monetary judgment of $140 million, some of which was partially suspended based on Grubhub’s inability to pay. Ultimately, Grubhub agreed to pay almost $25 million,  and to tell consumers the total cost of delivery, advertise potential earnings to drivers in an honest manner, and list on its platform only those restaurants that have consented.  Chair Khan explained that the lawsuit “holds Grubhub to account, putting an end to these illegal practices and securing nearly $25 million for the people cheated by Grubhub’s tactics. There is no ‘gig platform’ exemption to the laws on the books.”  The Commission voted 5-0 to approve the complaint and stipulated final order.  Commissioner Ferguson issued a statement concurring in part and dissenting in part, while Commissioner Holyoak concurred in the matter but dissented as to certain counts in the complaint.

Wednesday, December 18, 2024

Bureau of Consumer Protection: Advertising and Marketing

• The Commission issued a final consent order against Rytr LLC for purportedly offering consumers the means to generate false and deceptive online reviews.  We first wrote about in the FTC’s action against Rytr in September 2024 when the Commission originally announced this action as part of a new law enforcement initiative entitled Operation AI Comply.  Under the terms of the final order, Rytr is prohibited from engaging in similar unlawful conduct and is barred from selling, advertising, or otherwise promoting any service that generates consumer reviews in the future.  The FTC voted 3-2 to approve the final consent order with Commissioner Holyoak writing a dissenting statement joined by Commissioner Ferguson.

Thursday, December 19, 2024

Bureau of Consumer Protection: Advertising and Marketing

• The FTC announced an informal hearing that will take place on January 17, 2025, at 1:00 p.m. ET to discuss a proposed amendment to the Impersonation Rule. The current Rule came into effect on April 1, 2024 and prohibits government and business impersonation. The FTC’s proposed amendment would also ban the impersonation of individuals. While the FTC previously published a notice of proposed rulemaking to extend the existing rule to ban both the impersonation of individuals  and the provisions of the means and instrumentalities to impersonate, the Commission clarified that it “has decided not to proceed with the proposed means and instrumentalities provision at this time.”  The informal hearing will instead solely focus on issues relating to the proposed prohibition on impersonating individuals.  Additionally, during the hearing, nine commenters including trade associations and consumer advocate groups will present oral statements regarding their respective positions. The FTC voted 5-0 to approve publication of the notice in the Federal Register.
• The Commission and Attorney General of Illinois filed a complaint and stipulated final order in the United States District Court for the Northern District of Illinois against 10 car dealerships doing business as Leader Automotive Group and their parent company, AutoCanada, for allegedly deceiving customers about the price of cars by using bait-and-switch pricing tactics in violation of Section 5(a) of the FTC Act, the FTC’s Used Car Rule, and various Illinois state consumer protection statutes.  Defendants agreed to pay $20 million in refunds to harmed consumers, to make clear disclosures about a car’s offering price, and to obtain consumer consent for all charges. According to the Commission, the $20 million settlement against these dealerships represents the FTC’s largest monetary judgment against an auto dealer.  Samuel Levine, Director of the Bureau of Consumer Protection commented that by working with the Illinois Attorney General, “we are holding these dealerships accountable for unlawfully extracting millions of dollars from consumers through a textbook bait-and-switch scheme, and bolstering their poor reputation with fake reviews” and indicated that the FTC would “continue our work to ensure that consumers are not being overcharged for cars, and that honest dealers do not need to compete with firms that cheat.”  The Commission voted 5-0 to authorize filing of the complaint and stipulated final order.

Thursday, December 26, 2024

Bureau of Consumer Protection: Horseracing

• On October 23, 2024, the Federal Trade Commission published in the Federal Register a proposed rule modification to its Assessment Methodology Rule recommended by the Horseracing Integrity and Safety Authority. The Commission issued an order on December 26, 2024 approving the proposed modification.  This modification changes the methodology the methodology the Authority uses  to determine assessments to fund Authority programs. The FTC voted 5-0 to approve the modification to the Assessment Methodology Rule.
• The original Assessment Methodology Rule took effect in April 2022 and was amended following an FTC-approved modification on January 9, 2023.  The newly approved modification will take effect on January 22, 2025.

Friday, December 27, 2024

Advertising and Marketing: Deceptive and Misleading Conduct

• On December 27, 2024, the FTC and the Maryland Attorney General filed a complaint against Lindsay Automotive Group, alleging that the company systematically deceived and overcharged car-buying consumers, costing them millions in junk fees and unwanted add-ons.  The complaint claims that Lindsay advertised false prices, required financing through their dealerships, and charged for unauthorized add-ons.  The FTC and the AG are seeking redress for the consumers harmed by Lindsay’s deceptive conduct.  The Commission vote authorizing the complaint’s filing was 5-0.