One Direction’s song titled “18” is popular, but the FTC’s recent enforcement and policy moves suggest the agency will continue to pursue many 18 years of efforts to protect consumers. (Sorry. We expect new pop culture references in January.) In case you missed it (in no particular order), here are 10 FTC consumer protection topics worth watching in 2017.
Practices affecting small businesses. In 2017, the Federal Trade Commission targeted companies for deceptive promotions targeting small businesses. A pending lawsuit alleges that New York and Illinois-based A1 Janitorial Supply Corp. and other defendants defrauded small businesses out of millions of dollars by falsely offering “free” supply samples.Settlement agreements with Lighting X-Change and Midway Industries resolve allegations that the unrelated companies marketed “free” light bulbs or cleaning supplies to small businesses and then continued to issue invoices for Items not ordered. The FTC also takes action against companies that try to capitalize on America’s entrepreneurial spirit through unproven money-making claims. Examples include settlements with Work at Home EDU, Thrive Learning and Lift International and Advertising Strategies LLC. Don’t let 2017 end without reading the court’s preliminary injunction in the Federal Trade Commission’s case against invention promoter World Patent Marketing.
Health Claims. Advertisements promising effortless weight loss, miraculous relief from arthritis pain, easier recovery from opioid addiction, and cures for HIV, Alzheimer’s, dementia and cancer are sure to attract the attention of law enforcement — and in 2017 they did. Examples like NutriMost, XXL Impressions, Catlin Enterprises, Health Research Laboratories and NextGen Nutritionals show that companies need serious science to back up serious health claims about serious medical conditions. FTC reaches settlement with Breathometer, a smartphone breath analyzer promoted on TV show Shark Tank, illustrates similar concerns when security is at issue.If companies need a reminder of the importance of complying with orders in FTC cases, federal courts established Hi-Tech Pharmaceuticals, Jared Wheat and Stephen Smith Contempt of court for violating orders related to sales of weight loss products and $40 million judgment against company them.
Data security and consumer privacy. The Federal Trade Commission continues to scrutinize companies’ security and privacy commitments and practices. When it comes to data security, the 12-part “Stay Secure” blog post series provides businesses with practical advice based on lessons learned from recent enforcement actions, closed investigations, and what companies have shared about how to start with security. A notable development in 2017 was data security complaints and Privacy matters, as the proposed settlement with Lenovo and the settlements with Uber and TaxSlayer illustrate. (tax killer Pay special attention to the Gramm-Leach-Bliley Safeguards Rule and the Privacy Rule. ) The FTC’s actions against Vizio and Upromise allege that the companies collected consumer information without clearly disclosing what was going on behind the scenes. The Federal Trade Commission confirmed its commitment to the EU-US Privacy Shield framework and filed three cases challenging false claims about companies’ participation in Privacy Shield. While we’re on the subject of privacy issues, including consumers’ rights to respect their “do not call” preferences, a federal judge imposed a record-breaking fine on satellite TV provider Dish Network in a lawsuit filed by the Federal Trade Commission and the Commerce Department. $280 Million Civil Penalties DOJ is working with AGs in California, Illinois, North Carolina and Ohio. In the settlement, the FTC questioned Blue Global’s practices of using deceptive loans to get consumers to hand over sensitive personal information and then selling that data to virtually any consumer. Anyone willing to pay the price.
Debt collection. 2017 marks the 40th anniversary of the Fair Debt Collection Practices Act, and cases such as U.S. Municipal Services demonstrate the FTC’s commitment to ensuring that companies comply with the law when collecting debts they are owed. Another important priority is combating businesses that violate the FDCPA and FTC Act through debt collection. no Oweed. The FTC took action against ghost debt collectors Alliance Law Group, Lombardo Daniels & Moss and ACDI Group.In addition, the FTC’s lawsuit be opposed to Joel Tucker for Peddling fake payday loan packages led to $4.1 million verdict.
Green marketing. The settlement with crib mattress company Moonlight Slumber is the FTC’s first case challenging “organic” product claims. In a proposed settlement with paint companies Benjamin Moore, Imperial Paints, ICP Construction and YOLO Colorhouse, claims of no emissions and no VOCs are at issue. Following last year’s historic $10 billion settlement with Volkswagen Group of America over false “clean diesel” claims for 2.0-liter cars, the Federal Trade Commission made a similar settlement to benefit owners of 3.0-liter cars. The U.S. Court of Appeals for the Sixth Circuit’s decision in ECM BioFilms v. FTC provides insight for companies making representations regarding biodegradability.
recognized. If there is a connection between the endorser and the marketer that is unexpected by consumers and affects consumers’ evaluation of the endorsement, this connection should be revealed. This has been a key point in FTC endorsement guidance since the 1970s—when only birds tweeted, # is the beginning of the tic-tac-toe game.timeThe importance of disclosing material relationships was conveyed in the FTC staff’s April 2017 education letter to influencers and marketers, a follow-up warning letter in September 2017, and the agency’s first settlement with an online influencer in CSGO Lotto . Additionally, FTC staff updated its Accreditation Guidelines: People’s Requirements Handbook to assist companies with their compliance efforts.
Seal and certification. In the realm of endorsements, the duck-lip pose in the mirror dropped to second place on our list of least-favorite selfies. The unenviable top spot has been taken by advertisers who promote their products through false independent third-party certifications. Benjamin Moore’s Green Promise mark, ICP Construction’s Eco-Assurance Seal, Moonlight Slumber’s Green Safety Shield, and NextGen Nutritionals’ ethical certification website are all examples that the FTC has challenged as deceptive. In addition, the U.S. Federal Trade Commission also claimed that the “Trampa Trampoline of the Year Award” awarded by an independent organization called “American Trampoline Safety” was actually a selfie seal awarded by two trampoline bed sellers to their own websites. The FTC’s settlement with Tarr, Inc. illustrates a related form of deception, Fakemat: An advertisement that mimics the format of a popular magazine, often containing false celebrity testimonials.
ROSCA and the “free” trial. Offer online negative options, “free” trials, or similar promotions? Under ROSCA—Restoring Online Shopper Confidence Act – You must: 1) clearly disclose all material terms of the transaction before obtaining the consumer’s billing information, 2) obtain the person’s express informed consent before charging, and 3) provide a simple mechanism to stop duplicate charges. The FTC’s actions against AdoreMe, Pact, AAFE Products and BNRI Corporation, Tarr and the Credit Bureau Center, as well as ongoing litigation against RevMountain, allege various violations of ROSCA.
causing economic losses to consumers. At the beginning of 2017, the Federal Trade Commission (FTC) announced a $586 million settlement with Western Union for turning a blind eye while consumers suffered huge losses from scammers on its system. The agreement between Western Union and the Justice Department resolves the criminal investigation and establishes a refund process for victims. (The deadline to file a chargeback claim is February 12, 2018.) Federal, state and international partners join the FTC’s Operation TechTrap, a global crackdown on tech support scams that defraud consumers Authors believe their computers are infected with viruses and malware and then charge high fees for unnecessary repairs. In Operation Loan Game, the FTC and state attorneys general filed 36 lawsuits against dozens of defendants accused of collecting more than $95 million in illegal fees through dubious student loan debt relief services. Distressed homeowners are being targeted by defendants behind Brookstone Law’s “mega-merger” lawsuits. The FTC’s action once again resulted in multiple orders, lifetime bans from the debt relief business, and judgments in excess of $18 million. Federal Trade Commission action against Amazon for unauthorized charges in children’s apps leaves consumers eligible for millions of dollars in refunds. A settlement with one auto dealer and an order enforcement action against another underscore the importance of clear disclosure of key financial terms.
on the horizon. In 2017, the Federal Trade Commission (FTC) played an important role in establishing a dialogue about how established consumer protection standards should be applied as technology evolves. The FTC-NHTSA Connected Car Conference, the Artificial Intelligence and Blockchain FinTech Forum, the FTC-Department of Education Student Privacy and Educational Technology Symposium, the 2nd PrivacyCon, and the Information Harms Symposium brought together advocates, academics, and industry members to discuss how Protect consumers while encouraging the emergence of innovative products and services.
This is just the tip of the iceberg of what the FTC is doing in 2017 that will be of interest to you and your clients. Check out our resources for consumers for tips on spotting scams, protecting your privacy, and managing your finances in 2018.