Federal Trade Commission
Federal Trade Commission

Presidential advisor Steve Bannon famously told the Conservative Political Action Conference (CPAC) that the Trump Administration seeks to “deconstruct” the regulatory state. The President has issued several Executive Orders (EOs) on regulations designed to implement this policy, including the “two for one” EO, an EO on enforcing the regulatory agenda, and an EO on reorganizing the executive branch.  The three orders collectively promote a policy of deregulation and wholesale elimination of administrative functions deemed overly burdensome to business, redundant, or outdated.

This week, the White House followed through on that agenda by publishing a proposed budget that would impose sweeping budget reductions on almost every federal agency, with the exception of the Departments of Defense and Homeland Security.

The key consumer protection agencies—the Federal Trade Commission, Federal Communications Commission, and Consumer Financial Protection Bureau—are not directly subject to any of these EOs or addressed in the President’s Budget Request. But that does not mean these agencies are in the clear in terms of budget-cutting or deregulatory efforts.  Rather, it seems more likely that the administration is preoccupied with bigger fish at the moment; in the meantime, they are treading carefully.  Which raises the question:  what else is in store for these agencies once they regain the Trump Administration’s focus?

Continue Reading The President’s Regulatory Agenda and the FTC

Photo Credit: Jason Trim (Flickr)

Vizio Reaches $2.2 Million Settlement With FTC, New Jersey, For Failing to Obtain Viewer Consent to Track and Sell Viewing Habits to Third Parties

Traditionally, advertisers purchase ad inventory during television programs based on basic demographic information regarding viewer attributes. Thus, while ads may reach viewers of a particular gender and age range, those ads may not necessarily reach the consumers that are most interested in their products or services.  Thus, advertisers are increasingly interested in more finely targeting their advertising and sending a specific television commercial to a specific household based on the viewing activities in that household.  In order to pinpoint their targets, marketers rely on data extending beyond demographic information that includes information on consumer viewing and internet habits.  While targeting commercials to specific households can be highly beneficial to marketers (allowing them to send their ads to the consumers most interested in seeing them) and consumers (showing them the ads they most want to see), marketers must remember that the basic requirements of advertising law still apply.  Thus, in collecting data, marketers must ensure that they clearly disclose their data collection practices up front, obtain consent from consumers before collecting and sharing highly specific information regarding their viewing practices, and make it easy for consumers to opt out.

Continue Reading Failure to Obtain Viewer Consent Leads to $2.2 Million Settlement for Vizio

Photo credit: Flickr

Retailers and consumer products companies need to be aware of a new law affecting negative online reviews. On December 14, 2016, President Obama signed the Consumer Review Fairness Act of 2016 (H.R. 5111) into law. The Act voids “non-disparagement clauses” in form contracts designed to prevent consumers from posting negative comments and online reviews of products and services. The Act also makes it unlawful for companies to include these clauses in their form contracts. The Federal Trade Commission will enforce the Act in the same way it enforces against unfair or deceptive trade practices under its jurisdiction; state attorneys general may also enforce the Act under certain conditions. For existing contracts, the Act will take effect in 90 days and FTC/state enforcement may commence one year from now.

Continue Reading Consumer Review Fairness Act of 2016 — Beware of the Negative Online Review

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On February 12, 2016, the Federal Bar Association will host a day-long Fashion Law Conference at Parsons School of Design (Starr Foundation Hall in the New School’s stunning new University Center) on the last day of New York Fashion Week!

Speakers include in-house counsel from The Estee Lauder Companies, Inc., Tiffany & Co., New York & Company, and Global Brands Group.

Topics include cover anti-counterfeiting, FTC and trademark considerations, ethical sourcing and labor issues, the regulatory framework of labeling and disclosure, mergers/acquisitions and antitrust considerations, and the current legal issues in e-commerce and mobile apps.

We are privileged to have the Honorable Claire R. Kelly from the U.S. Court of International Trade provide opening remarks, and Professor Susan Scafidi, Academic Director of the Fashion Law Institute—and one of the foremost leaders in the field of fashion law—as our luncheon keynote speaker.

Please join Crowell & Moring’s, Cheryl Falvey, Chahira Solh, Frances Hadfield and a host of other speakers and experts for our cutting-edge fashion law panels (and of course plenty of networking opportunities). We look forward to seeing you there!

Photo credit: Federal Bar Association

Miller FTC Image Businesses that try to prevent disgruntled customers from sharing their experiences with other consumers may have to answer to the FTC for engaging in an unfair practice.

In Roca Labs, the FTC filed a complaint against marketers of purported weight loss products who “spent millions of dollars … to serve online advertisements.”  Consumers who went online to complain about their experiences faced threats and lawsuits for violating “a Gag Clause purporting to prohibit purchasers from disparaging Roca Labs, its products, and its employees, regardless of the purchasers’ outcomes.” That Gag Clause, part of the terms and conditions Continue Reading Don’t Put a Sock In It: FTC Says “Let Customers Complain”

In the FTC’s administrative proceeding against ECM Biofilms, Inc., Administrative Law Judge Chappell rejected the FTC’s assertion, taken directly from the Green Guides, that marketing a product as “biodegradable” includes an implied claim that the product “will completely decompose into elements found in nature within one year after customary disposal.” ALJ Chappell ruled that the FTC failed to “demonstrate with probative, persuasive evidence” that ECM Biofilm’s claim that products made with its plastic additives were “biodegradable” also communicated an implied one-year claim to “a significant number of reasonable consumers.” ALJ Chappell’s traditional advertising claims analysis included ECM’s marketing materials, dictionary definitions of “biodegradable,” the absence of copy tests specific to ECM Biofilm’s claims, competing consumer surveys about biodegradability, and related expert testimony. ECM Biofilms did not escape unscathed, however: ALJ Chappell agreed with the FTC that more specific claims – “fully biodegradable in a landfill within 9 months to 5 years” – were false and unsubstantiated and thus violated the FTC Act.

Don’t scratch the implied one-year claim out of your copy of the Green Guides or change your substantiation practices regarding “bare” biodegradable claims just yet. Given the importance the FTC attaches in the Green Guides to conveying a reasonable time frame for biodegradability, expect the full Commission to sit as an appellate body in review of this ALJ decision.  If the Commission reaches a different result, expect the matter to go up to the DC Circuit for further appellate review, similar to the administrative proceeding and appeals process in the POM Wonderful proceeding.

Image courtesy of Flickr by StockMoneys.com.

The FTC continues its active presence in the environmental claims space with 20 warning letters targeting marketers of “dog waste bags” who make biodegradability and/or compostability claims for the bags and their, er, contents. The sweep contains no surprises in terms of FTC interpretation of environmental claims and is consistent with past FTC actions against marketers of such products as waste disposal bags, plastic lumber, low-VOC mattresses, and diapers. Marketers who want to include environmental claims in their pitch to consumers should avoid stepping into something messy by paying close attention to the FTC’s Green Guides.  Please click here for the full FTC report.

To tackle the challenges of launching products on the Internet of Things, the FTC recommends designing security into interconnected products from the outset as well as monitoring products post sale to quickly identify security risks. Most consumer product companies already have similar programs in place to ensure the safety of the products and meet CPSC reporting and compliance requirements. Whether designing for safety or security, regulators expect design engineers to play a central role in an overall program that operationalizes safety and security as part of ordinary business processes. Both the CPSC and FTC demand engineering solutions for legal compliance and ask companies to build multiple layers of safety and security into a product by design.

Protecting against cybersecurity risks and safeguarding data collected by products on the Internet of Things needs to become business as usual, not some special new legal requirement. Existing corporate process development programs built to ensure a continuous improvement loop in product design need to be updated to ensure that safety, security and privacy are built into every product on the Internet of Things. For more on the FTC’s recommendations for products on the Internet of Things read their report released today.

Image courtesy of Flickr by UMHealthSystem

 

At this year’s National Advertising Division (NAD) annual conference in New York City held on September 29-30, the hot news was old news—speakers from NAD, FTC and various stakeholders emphasized a back-to-basics focus.

For instance, Crowell & Moring’s Chris Cole moderated a panel on product demonstrations. The panel discussed recent NAD decisions, but these recent decisions revolved around the fundamental principles that product demonstrations must accurately reflect how the advertised product works, and must be adequately substantiated.

Even panels on “newer” advertising forms, like native advertising, came back to the concept that consumers should be provided enough information to know who is the author or promoter behind an “info-tisement,” so that they can weigh the information accordingly. Again, the themes of reasonable consumer expectations, accurate information, and adequate support reigned supreme.

Continue Reading Highlights from NAD and CARU Annual Conference in NYC: New Technology, But Old Principles

The choices facing American consumers are no longer just “paper or plastic” or “do you want fries with that?” Today, when strolling the aisles of a grocery store, customers have the option to buy local, organic, gluten-free, low-carb, or any other of a dozen choices. The local coffee shop offers a selection of responsibly-sourced coffees, shade grown coffees, and beans from Ethiopia, Yemen, or Guatemala. What savvy companies and marketers have realized is that American consumers like choice and they like to feel good about the products they buy.

And global trends— like safety concerns about foreign-made products, interest in supporting a flagging U.S. economy, or just plain patriotism—may encourage consumers to change their buying patterns—in favor of American goods. Smart manufacturers and marketers understand this and know that customers may be willing to pay a premium for American quality goods. And so, unsurprisingly, smart companies are doing what they can to make and market products as “Made in America.”

Continue Reading “Made in America” Claims: the Landscape, FTC Guidance, and Tips for Manufacturers and Marketers