On Wednesday, January 13, the Supreme Court heard arguments in AMG Capital Management LLC v. Federal Trade Commission. This case raises the question whether the Federal Trade Commission (FTC) has been properly using Section 13(b) of the FTC Act, the provision authorizing requests for preliminary and permanent injunctions where the FTC believes the defendant
Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Ms. Kim advises on a wide range of consumer protection issues, including green claims, influencers, native advertising, claim substantiation, Made in USA claims, children's privacy, subscription auto-renewal marketing, and other digital advertising matters. In addition, Ms. Kim actively practices before the NAD, including recent successful resolution of matters for both challengers and advertisers. She co-chairs Covington's Advertising and Consumer Protection Practice Group and participates in the firm's Internet of Things Initiative.
Ms. Kim re-joined Covington after a twelve-year tenure at the FTC, where she served as Assistant Director in two divisions of the Bureau of Consumer Protection, as well as Chief of Staff in the Bureau of Consumer Protection and Attorney Advisor to former Chairman William E. Kovacic. She worked on key FTC Rules and Guides such as the Green Guides, Jewelry Guides, and the Telemarketing Sales Rule. She supervised these and other rule making proceedings and oversaw dozens of the Commission’s investigations and enforcement actions involving compliance with these rules. Ms. Kim also supervised compliance monitoring for companies under federal court or Commission order.
Ms. Kim also served as Deputy Chief Enforcement Officer at the U.S. Department of Education, where she helped establish a new Enforcement Office within Federal Student Aid. In this role, she managed investigations of higher education institutions and oversaw issuance of fines and adverse actions for institutions in violation of federal student aid regulations. Ms. Kim also supervised the borrower defense to repayment division and the Clery campus safety and security division.
As consumers rely more and more on the “independent” reviews of their peers in choosing products and services, advertisers need to remain vigilant that their role (if any) in disseminating such reviews is fairly disclosed, accurate and not misleading. The pitfalls in this area were recently illustrated by a pair of enforcement actions brought by the Federal Trade Commission and the National Advertising Division of the Better Business Bureau. These actions, the latest in a series of similar enforcement efforts, confirm that review sites remain a hotbed of enforcement activity, and both actions serve as good reminders of the standards that review sites must observe to avoid similar actions.
The first of these actions is an FTC enforcement against LendEDU, which centered around the “objective,” “honest,” “accurate,” and “unbiased” rankings of financial products that LendEDU posted to its review site. The FTC alleged that, far from being objective and honest, these rankings were in fact determined based on compensation from the companies being ranked. In addition, the FTC alleged that over ninety percent of LendEDU’s “unbiased” positive reviews were in fact written by LendEDU employees and their friends and families.
Continue Reading FTC and NAD Actions Highlight Continued Scrutiny of Online Reviews
On May 5th, 2020, the California Assembly Committee on Privacy and Consumer Protection held a hearing and considered AB 2811, a bill that would amend existing California law governing automatic renewals. As currently drafted, AB 2811 would:
- require businesses to provide 3-7 days’ notice explaining how to cancel an automatic renewal offer or continuous service offer if the consumer accepted (1) a free gift or trial that lasts for a predetermined period of time as part of an automatic renewal or continuous service offer, or (2) the consumer accepted an automatic renewal or continuous service offer at a discounted price, and the applicability of that price was limited to a predetermined amount of time; and
- require businesses that permit consumers to accept automatic renewal or continuous service offers online to immediately terminate that service online.
The Federal Trade Commission has traditionally responded forcefully to public health and economic crises, and it is doing so again in response to the coronavirus pandemic. The current crisis does present some additional complications, however, because of its impact on the operations of the agency itself. Three particular aspects of the FTC’s consumer protection-related response stand out: (1) continuation of the agency’s scrutiny of false and deceptive product claims that seek to capitalize on the fears of consumers, (2) signs that the agency will work with businesses to accommodate the special pressures of the crisis, and (3) continuation but postponement of other, non-enforcement activities.
The FTC’s first consumer protection priority in response to the coronavirus pandemic has been to focus on especially egregious marketing scams that target particularly vulnerable populations. The FTC has already issued a number of warning letters to sellers of supposed COVID-19 cures ranging from tea to edible silver and to voice over internet protocol (“VoIP”) service providers facilitating illegal coronavirus-related calls. Fraud reports continue to rise rapidly: the FTC has received 7,800 coronavirus-related complaints this year, and almost half of these were filed in the last week.
Continue Reading The FTC’s Response to the Coronavirus Pandemic: Consumer Protection Priorities and Initial Actions
Last week, the Better Business Bureau’s National Advertising Division (NAD) announced a new expedited process for digital advertising challenges. The SWIFT (Single Well-defined Issue Fast Track) Process will allow businesses to address concerns of transparency and truthfulness on an accelerated basis, with decisions rendered within twenty business days of case initiation. The SWIFT process is currently limited to challenges involving one of three issues: the prominence or sufficiency of disclosures, including disclosure issues in influencer marketing, native advertising, and incentivized reviews; misleading pricing and sales claims; and misleading express claims that do not require review of complex evidence or substantiation such as clinical testing or consumer perception evidence.
Continue Reading The BBB’s National Advertising Division Launches Fast-Track SWIFT Process for Digital Advertising
Cardi B might like it, but the Federal Trade Commission (“FTC”) did not. On March 5, 2020, the agency sent Cardi B and other high-profile influencers warning letters alleging that the influencers made inadequate disclosures in their endorsements of Teami tea. The letters followed on the heels of the FTC’s proposed order against Teami, LLC for allegedly making deceptive claims about weight loss and other health benefits in their advertisements and failing to adequately instruct influencers about how to comply with the law when endorsing Teami products.
Continue Reading FTC Sends Warning Letters to Teami Tea Influencers
You may have heard the phrase “dark patterns” as shorthand for various user interfaces designed to influence users’ decisions. They can range from the perfectly innocent to the unethical, and even illegal. Whatever the form, dark patterns have recently drawn attention from the mainstream press.
Dark patterns are coming out from the shadows. And when that happens, class action lawyers can’t be far behind.Continue Reading Dark Patterns: What They Are and What You Should Know About Them
On May 8, 2019, the Federal Trade Commission (FTC) announced its first three cases that exclusively enforce the Consumer Review Fairness Act (CRFA). Enacted in December 2016 to protect consumers’ ability to share their honest reviews, the CRFA prohibits companies from using form contracts that bar consumers from writing negative reviews or threaten them with…
Vermont and the District of Columbia recently joined the growing list of states that have enacted automatic renewal statutes. Automatic renewal clauses (“auto-renewals”) allow providers of goods or services to bill consumers periodically without obtaining express consent before each billing cycle. These clauses are becoming increasingly common for a variety of goods and services. Regulators…
Companies that offer or are considering subscription-based plans should take note that new requirements for automatic renewal offers (“auto-renewals”) take effect in California on July 1, 2018. California Senate Bill No. 313 (“SB 313”) amends existing law to extend additional protections to consumers where an auto-renewal offer includes a free gift or trial or where promotional pricing will change once the promotional period ends. It also requires that certain consumers have the ability to opt-out exclusively online.
Continue Reading Updates to California Auto-Renewal Law Take Effect on July 1, 2018