The FTC started the new year with a proposed new rule that would ban employers from imposing non-competes on their workers. It also announced increases to civil penalties connected to various federal provisions. These stories after the jump.
The FTC has not been quiet during the holidays. The agency is primarily tied up with its litigation against Meta, but it has also taken action in other industries, including finance and health products. These stories and more after the jump.
The Federal Trade Commission (“FTC” or “Commission”) recently announced that it has adjusted the maximum civil penalty dollar amounts for violations of 16 provisions that the Commission enforces. The increase is required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, and is intended to account for inflation. The act directs agencies to implement annual inflation adjustments based on a prescribed formula. Given the uptick in FTC enforcement actions, companies are likely to begin feeling the impact of the increased penalties in the coming year.
As our readers likely recall, the Supreme Court’s 2021 ruling in AMG Capital Management LLC v. Federal Trade Commission removed a powerful tool that the FTC had previously relied on to pursue monetary relief in federal court. The Supreme Court unanimously held that the Federal Trade Commission cannot obtain equitable monetary relief, such as disgorgement or restitution, when it pursues district court litigation directly under Section 13(b) of the Federal Trade Commission Act (“FTC Act” or “Act”). Rather, to obtain such relief, the FTC must first follow its administrative adjudication procedures under Section 5 of the Act.
Yesterday, the Federal Trade Commission proposed a sweeping new rule that would ban employers from including non-compete terms in employment agreements with virtually all of their workers – from janitors to senior executives. Describing such agreements as an “exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses,” the FTC’s rule deems non-compete agreements to be an “unfair method of competition” under Section 5 of the FTC Act, without regard for any business justifications or reasonableness. Potential rulemaking against non-compete clauses has been percolating for some time and has support from the White House, but the breadth of the proposed rule is nonetheless surprising.
The FTC’s push for this rule under its Section 5 authority surely will spark legal—including constitutional—challenges that could delay implementation of any final rule for months, if not years. Companies need not immediately start rescinding or avoiding reasonably tailored non-compete agreements with employees, but should take note that the FTC is not likely to sit on the sidelines and wait for a final rule to come into effect before taking further action against some employers based on the scope of their non-compete agreements. The proposed rulemaking and the FTC’s recent enforcement actions targeting specific companies’ use of non-compete provisions as violations of Section 5 reflect the FTC’s and DOJ’s aggressive approach to antitrust enforcement in the labor markets – including the FTC’s desire to bring enforcement actions in this area even before any final rule goes into effect.
The FTC kicked off the holiday season analyzing data on fraudulent online shopping, cryptocurrency, and employment advertisements that are popular on social media. The Commission also announced updates to the Eyeglass Rule while also announcing the public comment period for potential updates to the Green Guides. These stories and more after the jump.
The Federal Trade Commission (“FTC”) announced it is seeking public comment on potentially updating, expanding, and/or altering the Guides for the Use of Environmental Marketing Claims, known as the Green Guides (16 CFR pt 260). Yesterday, December 14, 2022, the FTC held an open Commission meeting where the Commissioners voted 4-0 to approve the publication of a Federal Register notice announcing a public comment period. The notice is expected to be published in mid-January. Once the notice is published in the Federal Register, comments will be due within sixty days.
The FTC’s Green Guides are designed to help advertisers avoid making environmental claims that may mislead consumers. 77 Fed. Reg. 62122 (Oct. 11, 2012). The Green Guides discourage unqualified environmental benefit claims, nothing that they are difficult, if not impossible, to substantiate. The Green Guides were first issued in 1992 and last updated in 2012. An update to the Green Guides has been expected and desired by many as the Green Guides help businesses to make accurate environmental marketing claims and, if followed, help businesses ward off allegations of deceptive advertising claims.
Thursday, December 16, 2021
Bureau of Consumer Protection: Deceptive and Misleading Conduct
- The FTC announced rulemaking geared towards combatting government and business impersonation fraud. During the COVID-19 pandemic, there has been a significant uptick in scammers utilizing various forms of communication to impersonate government agencies or businesses in order to steal money or a consumer’s
Wednesday, December 1, 2021
Consumer Protection: Advertising and Telemarketing
- The FTC finalized a settlement with New York-Based Lifewatch, Inc, an ambulatory cardiac monitoring service, which will result in paying back more than $1.8 million to consumers, including many older Americans. The FTC’s complaint, filed jointly with the Florida Attorney General’s Office, alleged that the defendants bombarded consumers with at least a billion unsolicited robocalls to pitch supposedly “free” medical alert systems. These pre-recorded messages claimed that Lifewatch’s medical alert system was endorsed or recommended by reputable organizations like the American Heart Association. The company’s telemarketers often told consumers that a medical alert system had been purchased for them, and they could receive it “at no cost whatsoever.” Consumers eventually learned that they were responsible for monthly monitoring fees and that it was difficult to cancel without paying a penalty. The defendants are also banned from telemarketing and misrepresenting the terms associated with the sale of any product or service.
Tuesday, November 23, 2021
Bureau of Consumer Protection: Telemarketing and Do Not Call
- The FTC released the National Do Not Call Registry Data Book for Fiscal Year 2021. The Data Book provides the most recent fiscal year information available on robocall complaints, the types of calls consumers reported to the FTC, and a complete
In recent weeks, the Federal Trade Commission (“FTC” or “Commission”) sent nearly two thousand letters with a “Notice of Penalty Offenses” to a who’s who of companies across America, putting them on notice that they might face steep potential civil penalties if they engage in deceptive conduct. The letters targeted top consumer products companies, leading retailers and retail platforms, major ad agencies, and other advertisers nationwide that engage in online marketing, multi-level marketing, offer “gig” economy jobs, or are in the for-profit education sector.
Continue Reading FTC “Notice of Penalty Offense” Letters – What Are They and What’s Next?